Abstract: Efficient energy subsidy policy is considered to be one of an effective means to improve industrial competitiveness, but will also induce excessive energy consumption and environmental pollution problems. The paper constructs a dynamic computable general equilibrium model(dynamic CGE model)to simulate the impact on Chinese economy, carbon emissions reduction, and smog emissions from a long-term span by energy subsidies. The research shows that: energy subsidy has a positive role in promoting macroeconomic for China, but will stimulate the energy consumption intensity to a certain extent; and the different types of energy subsidies program have differences affect on promoting economic growth. At the same time, energy subsidy will have an adverse impact on environmental improvement and carbon emission targets. In particular, coal subsidies can reduce energy use costs and greatly promote total industrial output and economic growth, but it will not help the environment, and subsidies for renewable energy will benefit. To improve the environment and carbon emissions, coal subsidy policy can directly reduce energy prices, the cost of the total industry output and the greatest impact on economic growth. Energy subsidy policy will have major environmental pollutants and carbon emissions greater negative impact, and renewable energy subsidies are in favor of energy efficiency and improve earnings per capita resources; hence, under the comprehensive view of economic growth and reduction of energy subsidies, the government must focus policy program coordination and integrity to adjust the energy policy of the socio-economic and environmental systems. In the short term, we should focus on fossil energy subsidies. In the long run, Gradually increasing subsidies for renewable energy is more conducive to low-carbon transformation and environmental improvement.

Key words: energy subsidies, dynamic CGE model, economic growth, environmental improvement