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Vicki Duscha, Everett Peterson, Joachim Schleich and Katja Schumacher
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Vicki Duscha: Fraunhofer Institute for Systems and Innovation Research, Breslauer Straße, 76139 Karlsruhe, Germany
Katja Schumacher: #xA7;Öko Institut, Schicklerstrasse 5-7, 10179 Berlin, Germany

Climate Change Economics (CCE), 2019, vol. 10, issue 01, 1-27

Abstract: In the wake of the Paris Climate Agreement, countries may employ sectoral approaches. These allow for efficiency gains while at the same time addressing the concerns of competitiveness and carbon leakage. Applying a multi-country, multi-sector dynamic CGE model, this paper explores the role of sector emission targets for the steel sector in an international agreement, their interaction with emissions trading systems, and to which extent sector targets may address competitiveness concerns. To better reflect technological realities, the steel sector is disaggregated into its two main industries: primary fossil fuel-based steel production (BOF) and secondary scrap recycling steel production (EAF). The policy simulations suggest that sectoral targets may effectively counter the (negative) output and competitiveness effects of differences in the stringency of climate policy across countries. BOF steel contributes significantly more to emission reductions than EAF steel. Moreover, the output effects of BOF and EAF are of opposite signs.

Keywords: Sectoral targets; steel sector; competitiveness; carbon leakage; climate policy (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1142/S2010007819500015

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