The global warming caused by massive energy consumption is one of today’s most serious global environmental problems. CO2 emissions by the electricity industry in China accounted for 10% of global CO₂ emissions in 2015. This paper studies the impact of different electricity production taxes on China’s energy, economy, and environment. Nine electricity tax scenarios with different tax rates and a dynamic recursive computable general equilibrium (CGE) model were created to analyze this issue. The results show that sectorial output in the coal industry is most sensitive to the tax, and that raising the electricity tax will directly increase the price of electricity. Moreover, increasing the electricity production tax will be helpful for achieving the goal of economic transformation, and to reduce energy consumption as well as CO₂ emissions. The longer the implementation of changing the tax, the lower the cost of emission reduction will be. Therefore, this paper suggests that China can increase the production tax rate of power enterprises moderately in order to reduce energy consumption and adjust the energy structure.