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Impacts of climate policy on the competitiveness of Canadian industry: How big and how to mitigate?

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  • Rivers, Nic

Abstract

Competitiveness concerns have been at the forefront of climate policy debates in Canada particularly as a result of its high energy intensity and significant exposure to international markets. This paper uses a dynamic computable general equilibrium model to assess the likely impacts on sectoral competitiveness that would accompany efforts to meet greenhouse gas mitigation targets that have been set by the Canadian government. Additionally, it evaluates several design mechanisms that could be used to reduce the negative competiveness impacts associated with adoption of domestic climate policies. The analysis suggests that several sectors would likely face significant competiveness challenges under a reference scenario in which permits are given to emitters in lump sum. However, it finds that competiveness impacts can be minimized by using output-based recycling of permits, or by using border tax adjustments.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 32 (2010)
Issue (Month): 5 (September)
Pages: 1092-1104

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Handle: RePEc:eee:eneeco:v:32:y:2010:i:5:p:1092-1104

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Web page: http://www.elsevier.com/locate/eneco

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Keywords: Climate change Competitiveness Border tax;

References

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Cited by:
  1. Qin Bao & Ling Tang & ZhongXiang Zhang & Han Qiao & Shouyang Wang, 2011. "Impacts of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibrium Model," Working Papers 2011.93, Fondazione Eni Enrico Mattei.
  2. Zhang, Zhong Xiang, 2012. "Competitiveness and Leakage Concerns and Border Carbon Adjustments," International Review of Environmental and Resource Economics, now publishers, vol. 6(3), pages 225-287, December.
  3. Stephanie MacLeod & Yves Filion, 2012. "Issues and Implications of Carbon-Abatement Discounting and Pricing for Drinking Water System Design in Canada," Water Resources Management, Springer, vol. 26(1), pages 43-61, January.
  4. Yazid Dissou & Qian Sun, 2013. "GHG Mitigation Policies and Employment: A CGE Analysis with Wage Rigidity and Application to Canada," Canadian Public Policy, University of Toronto Press, vol. 39(s2), pages 53-66, August.
  5. Ling Tang & Qin Bao & ZhongXiang Zhang & Shouyang Wang, 2013. "Carbon-based Border Tax Adjustments and China's International Trade: Analysis based on a Dynamic Computable General Equilibrium Model," CCEP Working Papers 1301, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  6. Christoph Böhringer & Brita Bye & Taran Fæhn & Knut Einar Rosendahl, 2014. "Output-based rebating of carbon taxes in the neighbor’s backyard. Competitiveness, leakage and welfare," Discussion Papers 783, Research Department of Statistics Norway.

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