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National policies for global emission reductions: Effectiveness of carbon emission reductions in international supply chains

Stefan Nabernegg (), Birgit Bednar-Friedl (), Pablo Munoz, Michaela Tietz and Johanna Vogel
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Stefan Nabernegg: University of Graz, Austria
Birgit Bednar-Friedl: University of Graz, Austria
Pablo Munoz: United Nations University, Bonn, Germany
Michaela Tietz: Environment Agency Austria, Vienna, Austria

No 2018-10, Graz Economics Papers from University of Graz, Department of Economics

Abstract: In a world with diverging emission reduction targets, national climate policies might be ineffective in reducing consumption-based CO2 emissions (carbon footprints), i.e. emissions of final demand that are embodied in domestic and international supply chains. We analyse a set of different policies in three areas with particularly high consumption-based emissions in Austria: building construction, public health, and transport. To capture both, substitution possibilities triggered by these policies and the induced emission reductions along the full global supply chain, our analysis combines a Computable General Equilibrium with a Multi-Regional Input-Output model. For building construction we find that a carbon added tax is highly effective in reducing consumption-based emissions whereas an information obligation on vacant dwellings combined with a penalty payment when vacant buildings are not made available is ineffective because of reallocated investment capital. Mandatory energy efficiency improvements in public health and mobility are found equally effective in reducing consumption- and production-based emissions while a decarbonization of domestic logistics stronger reduces production-based emissions. Overall, the effectiveness of policies, to mitigate consumption-based emissions, is therefore determined by the backward and forward linkages of the sector addressed by the policy as well as the substitution effects within final demand.

Keywords: Carbon footprint; National climate policy; Emissions embodied in trade; Policy analysis; Computable general equilibrium analysis; Multi-regional input-output model (search for similar items in EconPapers)
JEL-codes: C67 C68 F18 Q56 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-env
Date: 2018-05
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