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Embodied Carbon Tariffs

Christoph Böhringer, Jared Carbone () and Thomas F. Rutherford ()
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Thomas F. Rutherford: ETH Zurich, Switzerland

No V-340-11, Working Papers from University of Oldenburg, Department of Economics

Abstract: In a world where the prospects of a global agreement to control greenhouse gas emissions are bleak, the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies. Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in imported goods. The appeal seems obvious: as OECD countries are, on average, large net importers of embodied emissions from non-OECD countries, carbon tariffs could substantially extend the reach of OECD climate policies. We investigate this claim by simulating the effects of embodied carbon tariffs with a computable general equilibrium model of global trade and energy use. We find that embodied carbon tariffs do effectively reduce carbon leakage. However, the scope for improvements in the global cost-effectiveness of unilateral climate policy is limited. The main welfare effect of the tariffs is to shift the burden of OECD climate policy to the developing world.

JEL-codes: F18 H23 Q54 Q56 (search for similar items in EconPapers)
Date: 2011-09, Revised 2011-09
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Published in Oldenburg Working Papers V-340-11

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http://www.wipol.uni-oldenburg.de/bilder/Diskussionspapiere/DP_V-340_11.pdf First version, 2011 (application/pdf)

Related works:
Working Paper: Embodied Carbon Tariffs (2014) Downloads
Working Paper: Embodied Carbon Tariffs (2013) Downloads
Working Paper: Embodied Carbon Tariffs (2011) Downloads
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