Regional, sectoral and temporal differences in carbon leakage

James Lennox, James Turner, Adam Daigneault () and Kanika Jhunjhnuwala

No 152164, 2013 Conference (57th), February 5-8, 2013, Sydney, Australia from Australian Agricultural and Resource Economics Society

Abstract: While greenhouse gas emissions trading schemes, taxes and other measures have already been implemented or are proposed in many countries and regions, global action to mitigate climate change remains insufficient. A major concern in many countries is that actions taken alone, or even in a limited coalition of countries, might result in competitive disadvantage to firms in emissions-intensive, tradeexposed industries. Additionally, this might results in emissions leakage, reducing environmental effectiveness. The problem of emissions leakage has been extensively studied in the case of mitigation by individual or coalitions of developed countries, most often, using comparative static partial or general equilibrium models. In this paper we use a multiregional dynamic general equilibrium model to study the imposition of harmonised carbon taxes on industrial and energy greenhouse gas emissions in OECD countries and in China. This tax rate is increasing over time. We find that the overall rate of emissions leakage is very low and decreases over time. We also find significant differences between regions in the marginal rates of leakage with respect to their participation (or not) in the carbon-pricing coalition. Differences in leakage rates and their change over time can be related to differences in energy systems, general economic structure and growth rates.

Keywords: Environmental Economics and Policy; Research and Development/Tech Change/Emerging Technologies; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 24
Date: 2013-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare13:152164

DOI: 10.22004/ag.econ.152164

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