The consequences of unilateral withdrawals from the Paris Agreement

Mario Larch and Joschka Wanner

No 2236, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: International cooperation is at the core of multilateral climate policy. How is its effectiveness harmed by individual countries dropping out of the global mitigation effort? We develop a multisector structural trade model with emissions from production and a constant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we îond that a US withdrawal would eliminate more than a third of the world emissions reduction (31.8% direct effect and 6.4% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 24.1% (11.9% direct effect and 12.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.

Keywords: Climate change; International trade; Carbon leakage; Fossil fuel supply (search for similar items in EconPapers)
JEL-codes: F14 F18 Q56 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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https://www.econstor.eu/bitstream/10419/266191/1/1821614496.pdf (application/pdf)

Related works:
Working Paper: The Consequences of Unilateral Withdrawals from the Paris Agreement (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:2236

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