Climate cooperation with technology investments and border carbon adjustment

Carsten Helm and C. Schmidt
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C. Schmidt: Humboldt University, Berlin

No V-371-14, Working Papers from University of Oldenburg, Department of Economics

Abstract: A central question in climate policy is whether early investments in low-carbon technologies are a useful first step towards a more effective climate agreement in the future. We introduce a climate cooperation model with endogenous R&D investments where countries protect their international competitiveness via border carbon adjustments (BCA). BCA raises the scope for cooperation and leads to a non-trivial relation between countries' prior R&D investments and participation in the coalition. We find that early investments in R&D render free-riding more attractive. Therefore, with delayed cooperation on emission abatement and ex-ante R&D investments, the outcome is often characterized by high participation but inefficiently low technology investments and abatement.

Keywords: climate treaty; border carbon adjustment; border tax adjustment; coalitions; R&D (search for similar items in EconPapers)
JEL-codes: D62 F53 H23 Q55 (search for similar items in EconPapers)
Date: 2014-11, Revised 2014-11
New Economics Papers: this item is included in nep-ene, nep-env and nep-ino
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Citations: View citations in EconPapers (4)

Published in Oldenburg Working Papers V-371-14

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Journal Article: Climate cooperation with technology investments and border carbon adjustment (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:old:dpaper:371

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