Climate cooperation with technology investments and border carbon adjustment

Carsten Helm and Robert Schmidt

European Economic Review, 2015, vol. 75, issue C, 112-130

Abstract: A central question in climate policy is whether early investments in low-carbon technologies are a useful first step towards a more effective climate agreement in the future. We introduce a climate cooperation model with endogenous R&D investments where countries protect their international competitiveness via border carbon adjustments (BCA). BCA raises the scope for cooperation and leads to a non-trivial relation between countries׳ prior R&D investments and participation in the coalition. We find that early investments in R&D render free-riding more attractive. Therefore, with delayed cooperation on emission abatement and ex-ante R&D investments, the outcome is often characterized by high participation but inefficiently low technology investments and abatement.

Keywords: Climate treaty; Border carbon adjustment; Border tax adjustment; Coalitions; R&D (search for similar items in EconPapers)
JEL-codes: D62 F53 H23 Q55 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Working Paper: Climate cooperation with technology investments and border carbon adjustment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:75:y:2015:i:c:p:112-130

DOI: 10.1016/j.euroecorev.2015.01.007

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