Leakage from sub-national climate initiatives: The case of California

Justin Caron, Sebastian Rausch and Niven Winchester

No 332193, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: With federal policies to curb carbon emissions stagnating in the US, 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 46% 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 compensate for leakage elsewhere and overall leakage is 2%.

Keywords: Environmental Economics and Policy; Agricultural and Food Policy (search for similar items in EconPapers)
Pages: 35
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332193

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