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Embodied Carbon Tariffs

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  • Christoph Bohringer
  • Jared Carbone

    (University of Calgary)

  • Thomas F. Rutherford

Abstract

Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in trade — an idea popularized by countries seeking to extend the reach of domestic carbon regulations. We investigate their effectiveness using simulations from an applied general equilibrium model of global trade and energy use. We find that the tariffs do reduce foreign emissions, but their ability to improve the global cost-effectiveness of climate policy is limited. Their main welfare effect is to shift the burden of developed-world climate policies to the developing world.

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Bibliographic Info

Paper provided by Department of Economics, University of Calgary in its series Working Papers with number 2013-24.

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Date of creation: 11 Oct 2013
Date of revision: 11 Oct 2013
Handle: RePEc:clg:wpaper:2013-24

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  1. Mattoo, Aaditya & Subramanian, Arvind & van der Mensbrugghe, Dominique & He, Jianwu, 2009. "Reconciling climate change and trade policy," Policy Research Working Paper Series 5123, The World Bank.
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  7. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, November.
  8. James Bushnell & Carla Peterman & Catherine Wolfram, 2008. "Local Solutions to Global Problems: Climate Change Policies and Regulatory Jurisdiction," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 175-193, Summer.
  9. Böhringer, Christoph & Balistreri, Edward J. & Rutherford, Thomas F., 2012. "The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)," Energy Economics, Elsevier, vol. 34(S2), pages S97-S110.
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  11. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
  12. Warwick J. McKibbin & Peter J. Wilcoxen, 2009. "The Economic And Environmental Effects Of Border Tax Adjustments For Climate Policy," CAMA Working Papers 2009-09, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  13. Fischer, Carolyn & Fox, Alan K., 2009. "Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates," Discussion Papers dp-09-02, Resources For the Future.
  14. Markusen, James R., 1975. "International externalities and optimal tax structures," Journal of International Economics, Elsevier, vol. 5(1), pages 15-29, February.
  15. Jean-Marc Burniaux & Joaquim Oliveira Martins, 2000. "Carbon Emission Leakages: A General Equilibrium View," OECD Economics Department Working Papers 242, OECD Publishing.
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Cited by:
  1. Böhringer, Christoph & Bye, Brita & Fæhn, Taran & Rosendahl, Knut Einar, 2012. "Alternative designs for tariffs on embodied carbon: A global cost-effectiveness analysis," Energy Economics, Elsevier, vol. 34(S2), pages S143-S153.
  2. Elliott, Joshua & Fullerton, Don, 2014. "Can a unilateral carbon tax reduce emissions elsewhere?," Resource and Energy Economics, Elsevier, vol. 36(1), pages 6-21.
  3. Bohringer, Christoph & Rutherford, Thomas F. & Springmannc, Marco, 2013. "Clean-development investments : an incentive-compatible CGE modeling framework," Policy Research Working Paper Series 6720, The World Bank.
  4. Christoph Böhringer & Thomas F. Rutherford & Marco Springmann, 2013. "Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework," ZenTra Working Papers in Transnational Studies 23 / 2013, ZenTra - Center for Transnational Studies, revised Dec 2013.
  5. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2013. "The Strategic Value of Carbon Tariffs," CESifo Working Paper Series 4482, CESifo Group Munich.
  6. Springmann, Marco & Böhringer, Christoph & Rutherford, Thomas F., 2013. "Clean-development investments: an incentive-compatible CGE modeling framework," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79939, Verein für Socialpolitik / German Economic Association.

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