Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates

Carolyn Fischer and Alan Keith Fox ()

Discussion Papers from Resources For the Future

Abstract: We explore conditions determining which anti-leakage policies might be more effective complements to domestic greenhouse gas emissions regulation. We consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness: a border tax on imports, a border rebate for exports, full border adjustment, and a domestic production rebate (as might be implemented with output-based allocation of emissions allowances). Each option faces different potential legal hurdles in international trade law; each also has different economic impacts. While all have the potential to support domestic production, none is necessarily effective at reducing global emissions. Nor is it possible to rank order the options. In each case, the effectiveness depends on the relative emissions rates, elasticities of substitution, and consumption volumes. We illustrate these results with simulations for the energy-intensive sectors of two different economies, the United States and Canada.

Keywords: environmental tax; rebate; border tax adjustment; emissions leakage; climate (search for similar items in EconPapers)
JEL-codes: Q2 Q43 H2 D61 (search for similar items in EconPapers)
Date: 2009-02-15
View list of references View citations in EconPapers

Downloads: (external link)
http://www.rff.org/documents/RFF-DP-09-02.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:rff:dpaper:dp-09-02

Access Statistics for this paper

More papers in Discussion Papers from Resources For the Future
Series data maintained by Webmaster ().