By specifying a dynamic general equilibrium model including energy consumption, carbon emission and carbon emission reduction policies, a simulation analysis of both emission reduction effects and economic effects of carbon cap policy and carbon intensity policy was performed. The results showed that different carbon reduction policies effectively controlled carbon emission and achieved the goal of reducing carbon intensity. However, due to different policy strengths and different paths taken in the policy, carbon cap reduction policy had a strong inhibitory effect on economic growth while the negative impact of carbon intensity reduction policy on economic growth was relatively weak. Furthermore, based on the perspectives of social welfare and emission reduction cost, a cost-benefit analysis of the different carbon emission reduction policies was done. The findings were that compared with the carbon intensity policy, the carbon cap policy had comparative strengths in enhancing social welfare and lowering emission reduction cost. Thus, the transition from carbon intensity policy to carbon cap policy was the key to welfare enhancement, environmental improvement and other dividends.