TRADE IN CARBON AND THE EFFECTIVENESS OF CARBON TARIFFS

Christoph Böhringer, Jan Schneider (jan.schneider@uni-oldenburg.de) and Emmanuel Asane-Otoo (asane.otoo@uni-oldenburg.de)
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Emmanuel Asane-Otoo: University of Oldenburg, Department of Economics

No V-388-16, Working Papers from University of Oldenburg, Department of Economics

Abstract: Carbon-based import tariffs are discussed as policy measures to reduce carbon leakage and increase the global cost-effectiveness of unilateral CO2 emission pricing. We assess how the potential of carbon tariffs to increase cost-effectiveness of unilateral climate policy depends on the magnitude and composition of carbon embodied in trade. For our assessment, we combine multi-region input-output (MRIO) analysis with computable general equilibrium (CGE) analysis based on data from the World Input-Output Database (WIOD) for the period 1995 to 2007. The MRIO analysis confirms that carbon embodied in trade has sharply increased during this period. Yet, the CGE analysis suggests that the effectiveness of carbon tariffs in reducing leakage and improving global-cost effectiveness of unilateral climate policy does not increase over time, whereas the potential to shift the economic burden of CO2 emissions reduction from abating developed regions to non-abating developing regions increases substantially.

Keywords: carbon tariffs; unilateral climate policy; computable general equilibrium (search for similar items in EconPapers)
JEL-codes: D57 D58 Q58 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2016-04, Revised 2016-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Oldenburg Working Papers V-388-16

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Related works:
Working Paper: TRADE IN CARBON AND THE EFFECTIVENESS OF CARBON TARIFFS (2016)
Working Paper: Trade in Carbon and the Effectiveness of Carbon Tariffs (2016)
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