Subglobal Climate Agreements and Energy-Intensive Activities: Is there a Carbon Haven for Copper?
AbstractSubglobal climate policies induce changes in international competitiveness and favor a relocation of carbon-emitting activities. We argue that many energy-intensive activities are also capital-intensive, so that carbon policies could affect rents rather than abatement or location. Taking copper as an example, we formulate a plant-level spatial equilibrium model of the industry, and we estimate a set of elasticities to calibrate the behavioral parameters of the model. Given 2007 market conditions, Monte Carlo simulations suggest that a $50/tCO2 tax in industrialized countries induces emissions reductions of less than one percent in the copper industry, with a mean emission leakage rate of 25%. Our results conform with empirical findings on the pollution haven effect but challenge projections from computable general equilibrium models.
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Bibliographic InfoPaper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 1103.
Date of creation: Feb 2011
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-ENE-2011-10-15 (Energy Economics)
- NEP-ENV-2011-10-15 (Environmental Economics)
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- Aaditya Mattoo & Arvind Subramanian & Dominique Mensbrugghe & Jianwu He, 2013. "Trade effects of alternative carbon border-tax schemes," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 149(3), pages 587-609, September.
- Birgit Bednar-Friedl & Veronika Kulmer & Thomas Schinko, 2012. "The effectiveness of anti-leakage policies in the European Union: results for Austria," Empirica, Springer, vol. 39(2), pages 233-260, May.
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