Policies to Decarbonize Industry While Addressing Competitiveness and Carbon Leakage

Ian Parry, Simon Black, Danielle Minnett and Karlygash Zhunussova

No 12272, CESifo Working Paper Series from CESifo

Abstract: This paper discusses the attributes and design of alternative mitigation instruments for the industrial sector, their competitiveness and emissions leakage impacts, and supplementary measures to address these effects. A quantitative analysis indicates, for selective countries, production cost increases under a $50 per tonne unilateral CO2 price in 2030 are 4-8 percent for steel, 20-30 percent for chemicals, and 30-35 percent for cement with leakage rates of 20-50 percent across these industries. Competitiveness and leakage impacts are however much smaller under pricing with border adjustments, other mitigation instruments like feebates and performance standards, or internationally coordinated pricing.

Keywords: climate mitigation; carbon pricing; competitiveness; emission leakage; border carbon adjustment; feebates (search for similar items in EconPapers)
JEL-codes: H23 Q31 Q35 Q48 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12272

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