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Kyoto and the carbon content of trade

Rahel Aichele and Gabriel Felbermayr ()

No 10-2010, FZID Discussion Papers from University of Hohenheim, Center for Research on Innovation and Services (FZID)

Abstract: A unilateral tax on CO2 emissions may drive up indirect carbon imports from non-committed countries, leading to carbon leakage. Using a gravity model of carbon trade, we analyze the effect of the Kyoto Protocol on the carbon content of bilateral trade. We construct a novel data set of CO2 emissions embodied in bilateral trade flows. Its panel structure allows dealing with endogenous selection of countries into the Protocol. We find strong statistical evidence for Kyoto commitments to affect carbon trade. On average, the Kyoto protocol led to substantial carbon leakage but its total effect on carbon trade was only minor.

Keywords: Carbon leakage; gravity model; international trade; climate change; embodied emission; input-output analysis (search for similar items in EconPapers)
JEL-codes: F18 Q54 Q56 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fziddp:102010

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