Leakage from Sub-national Climate Policy: The Case of California’s Cap-and-Trade Program

Justin Caron, Sebastian Rausch and Niven Winchester

The Energy Journal, 2015, vol. 36, issue 2, 167-190

Abstract: With federal policies to curb carbon emissions stagnating in the U.S., California is taking action alone. Sub-national policies can lead to high rates of emissions leakage to other regions as state-level economies are closely connected, including integration of electricity markets. Using a calibrated general equilibrium model, we estimate that California’s cap-and-trade program without restrictions on imported electricity increases out-of-state emissions by 45% of the domestic reduction. When imported electricity is included in the cap and “resource shuffling†is banned, as set out in California’s legislation, emissions reductions in electricity exporting states partially offset leakage elsewhere and overall leakage is 9%.

Keywords: Climate policy; Cap-and-trade; California; Electricity imports; Resource shuffling; Computable general equilibrium; State-level climate policy; Border effect (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.5547/01956574.36.2.8 (text/html)

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:sae:enejou:v:36:y:2015:i:2:p:167-190

DOI: 10.5547/01956574.36.2.8

Access Statistics for this article

More articles in The Energy Journal
Bibliographic data for series maintained by SAGE Publications ().