Border Carbon Adjustments When Carbon Intensity Varies across Producers: Evidence from California

Meredith Fowlie, Claire Petersen and Mar Reguant

AEA Papers and Proceedings, 2021, vol. 111, 401-05

Abstract: Governments taxing carbon emissions within their jurisdiction can impose a commensurate tax on emissions embodied in imports in order to mitigate emissions leakage. California offers a rare opportunity to investigate how such a border carbon adjustment (BCA) is working in practice. Experience to date highlights important tensions between greenhouse gas accounting accuracy, market efficiency, and concerns about trade protectionism. We simulate electricity market outcomes under BCA designs that differ in terms of how the carbon intensity of imports is assessed. Simulations suggest significant potential for leakage via resource shuffling. Realized emissions outcomes indicate that this potential has not been fully realized.

JEL-codes: H23 H25 H32 H71 H73 Q54 Q58 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pandp.20211073 (application/pdf)
https://www.aeaweb.org/doi/10.1257/pandp.20211073.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/pandp.20211073.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

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: https://EconPapers.repec.org/RePEc:aea:apandp:v:111:y:2021:p:401-05

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/subscribe.html

DOI: 10.1257/pandp.20211073

Access Statistics for this article

AEA Papers and Proceedings is currently edited by William Johnson and Kelly Markel

More articles in AEA Papers and Proceedings from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().