Subglobal climate agreements and energy-intensive activities: An evaluation of carbon leakage in the copper industry

Bruno Lanz, Thomas F. Rutherford () and John Tilton ()
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Thomas F. Rutherford: ETH Zurich, Switzerland

No 13/174, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: Subglobal climate policies induce changes in international competitiveness and favor a relocation of carbon-emitting activities to non-abating regions. In this paper, we evaluate the potential for CO2 abatement and the emissions `leakage' effect in the copper industry, a prominent energy-intensive trade-exposed sector. We formulate a plant-level spatial equilibrium model for copper commodities in which parameters describing the behavioral response of agents are calibrated to econometric estimates of price elasticities. We find producers and consumers to be price inelastic even in the long-run, making the copper industry unresponsive to climate policies. Monte Carlo simulations with our model based on statistical uncertainty on elasticity estimates suggest that around 30% of emissions reductions in industrialized countries would be compensated by an increase of emissions in non-abating countries.

Keywords: Carbon leakage; Pollution haven effect; Climate policy; International environmental agreements; International trade; Copper industry. (search for similar items in EconPapers)
JEL-codes: F18 F55 H23 Q54 Q58 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2013-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Subglobal Climate Agreements and Energy-intensive Activities: An Evaluation of Carbon Leakage in the Copper Industry (2013)
Working Paper: Subglobal Climate Agreements and Energy-Intensive Activities: Is there a Carbon Haven for Copper? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eth:wpswif:13-174

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