Allocating Emissions among Co-products: Implications for Procurement, Offsetting and Border Adjustment

Nur Sunar and Erica Plambeck
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Nur Sunar: University of NC
Erica Plambeck: Stanford University

Research Papers from Stanford University, Graduate School of Business

Abstract: A state with climate policy may impose a tax on imported products for greenhouse gas emissions that occur in production and transportation to its border (a so-called border adjustment). A buyer may voluntarily commit to offset its upstream supply chain emissions, with similar effect. When a process yields co-products in fixed proportions, how should emissions from the process be allocated among the co-products? We address that question from the perspective of a border adjustment policy maker and buyer, in turn. Emissions and a buyer's profit can increase due to border adjustment, or because a buyer is required to use a higher allocation or pay a higher tax (offset price) per unit emissions.

Date: 2014-01
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-mfd
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:3177

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