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The Consequences of Unilateral Withdrawals from the Paris Agreement

Mario Larch () and Joschka Wanner ()

No 7804, CESifo Working Paper Series from CESifo

Abstract: We develop a multi-sector structural trade model with emissions from production and a con- stant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we find that a US withdrawal would eliminate a third of the world emissions reduction (25.7% direct effect and 7% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 19.4% (8.2% direct effect and 11.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.

Keywords: climate change; international trade; carbon leakage; fossil fuel supply (search for similar items in EconPapers)
JEL-codes: F14 F18 Q56 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ene and nep-env
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