Carbon Leakages: A General Equilibrium View

Jean-Marc Burniaux () and Joaquim Oliveira Martins
Additional contact information
Jean-Marc Burniaux: OECD

A chapter in The Economics of the Global Environment, 2016, pp 341-363 from Springer

Abstract: Abstract The effectiveness of unilateral action to curb carbon emissions has been dismissed because of possible “carbon leakages”, this referring to the rise of emissions in non-participating countries. This paper offers a general equilibrium (GE) exploration of the key mechanisms and factors underlying the size of carbon leakages. We developed a two-region, two-goods simplified GE framework, incorporating three types of fossil fuels (coal, oil and low-carbon energy), international trade and capital mobility. The model was designed to make tractable extensive multidimensional sensitivity analysis. The results suggest that the coal supply elasticity plays a critical role, while substitution elasticities between traded goods and international capital mobility appear relatively less influential. The shape of the production function also matters for the size of the leakages. Confirming the results obtained with large computable GE models, for a wide range of parameters’ values carbon leakages appear to be small. Therefore, the argument that unilateral carbon abatement action taken by a large group of countries (such as the Annex 1 group) is flawed by significant carbon leakages is not supported by our sensitivity analysis. The likelihood of small leakages favours in fact the formation of a worldwide coalition to stabilise climate change.

Keywords: Carbon leakages; Climate change; Computable and applied general equilibrium models; Energy supply and demand (search for similar items in EconPapers)
JEL-codes: D58 Q32 Q43 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Carbon leakages: a general equilibrium view (2012)
Working Paper: Carbon leakages: a general equilibrium view (2012)
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:spr:steccp:978-3-319-31943-8_16

Ordering information: This item can be ordered from
http://www.springer.com/9783319319438

DOI: 10.1007/978-3-319-31943-8_16

Access Statistics for this chapter

More chapters in Studies in Economic Theory from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().