Unilateral climate policy and competitiveness: Differential emission pricing from a sectoral, regional and global perspective

Christoph Böhringer and Victoria Alexeeva-Talebi

No 332058, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Unilateral emission reduction commitments raise concerns on international competitiveness and emission leakage that result in preferential regulatory treatment of domestic energy-intensive and trade-exposed industries. Our analysis illustrates the potential pitfalls of climate policy design which narrowly focuses on competitiveness concerns about energy-intensive and trade-exposed branches. The sector-specific gains of preferential regulation in favour of these branches must be traded off against the additional burden imposed on other industries and economy-wide excess costs to meet the unilateral emission reduction target. From the perspective of global cost-effectiveness, however, preferential emission pricing for domestic energy-intensive and trade-exposed sectors can reduce leakage and thereby lower overall cost of cutting global emissions as compared to uniform emission pricing.

Keywords: Environmental Economics and Policy; International Relations/Trade (search for similar items in EconPapers)
Pages: 28
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332058

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