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Alternative designs for tariffs on embodied carbon: A global cost-effectiveness analysis

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  • Böhringer, Christoph
  • Bye, Brita
  • Fæhn, Taran
  • Rosendahl, Knut Einar

Abstract

In the absence of effective world-wide cooperation to curb global warming, import tariffs on embodied carbon have been proposed as a potential supplement to unilateral emissions pricing. We systematically consider alternative designs for such tariffs, and analyze their effects on global welfare within a multi-region, multi-sector computable general equilibrium (CGE) model of global trade and energy. Our analysis shows that systems more likely to comply with international law yield very little in terms of carbon leakage and efficiency. Generally, the effectiveness increases substantially with complexity. However, regionalising the tariffs seems not to be worthwhile. Also, the most effective system we identify is not based on fully input–output-corrected carbon contents, but on direct plus electricity emissions, only. This reflects the more general problem of finding systems that are both feasible and well-targeted in a real global economy.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): S2 ()
Pages: S143-S153

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:s2:p:s143-s153

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

Related research

Keywords: Carbon leakage; Embodied carbon; Border tariffs;

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References

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  1. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
  2. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2013. "Embodied Carbon Tariffs," ZenTra Working Papers in Transnational Studies 25 / 2014, ZenTra - Center for Transnational Studies, revised Jan 2014.
  3. Niven Winchester, 2012. "The Impact of Border Carbon Adjustments Under Alternative Producer Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 354-359.
  4. Robbie Andrew & Glen Peters & James Lennox, 2009. "Approximation And Regional Aggregation In Multi-Regional Input-Output Analysis For National Carbon Footprint Accounting," Economic Systems Research, Taylor & Francis Journals, vol. 21(3), pages 311-335.
  5. Kuik, Onno & Hofkes, Marjan, 2010. "Border adjustment for European emissions trading: Competitiveness and carbon leakage," Energy Policy, Elsevier, vol. 38(4), pages 1741-1748, April.
  6. Hidemichi Yonezawa & Edward J. Balistreri & Daniel T. Kaffine, 2012. "The suboptimal nature of applying Pigouvian rates as border adjustments," Working Papers 2012-02, Colorado School of Mines, Division of Economics and Business.
  7. Graham, Paul & Thorpe, Sally & Hogan, Lindsay, 1999. "Non-competitive market behaviour in the international coking coal market," Energy Economics, Elsevier, vol. 21(3), pages 195-212, June.
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Cited by:
  1. Qi, Tianyu & Winchester, Niven & Karplus, Valerie J. & Zhang, Xiliang, 2014. "Will economic restructuring in China reduce trade-embodied CO2 emissions?," Energy Economics, Elsevier, vol. 42(C), pages 204-212.
  2. Böhringer, Christoph & Fischer, Carolyn & Einar Rosendahl, Knut, 2011. "Cost-Effective Unilateral Climate Policy Design: Size Matters," Discussion Papers dp-11-34, Resources For the Future.
  3. Taran Fæhn & Cathrine Hagem & Lars Lindholt & Ståle Mæland & Knut Einar Rosendahl, 2013. "Climate policies in a fossil fuel producing country. Demand versus supply side policies," Discussion Papers 747, Research Department of Statistics Norway.
  4. Christoph Böhringer & Knut Einar Rosendahl & Jan Schneider, 2013. "Unilateral Climate Policy: Can OPEC resolve the Leakage Probem?," Working Papers V-355-13, University of Oldenburg, Department of Economics, revised Mar 2013.
  5. repec:old:wpaper:355 is not listed on IDEAS

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