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Carbon Tariffs Revisited

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  • Christoph Böhringer

    ()
    (University of Oldenburg - Economic Policy & ZenTra)

  • Andre Müller

    ()
    (Ecoplan)

  • Jan Schneider

    ()
    (University of Oldenburg - Economic Policy)

Abstract

Concerns about adverse impacts on domestic energy-intensive and trade-exposed (EITE) industries are at the fore of the political debate about unilateral climate policies. Tariffs on the carbon embod-ied in imported goods from countries without emission pricing appeal as a measure to reduce carbon leakage and protect domestic EITE industries. We show that the introduction of carbon tariffs can do more harm than good to domestic EITE industries. Two determinants drive the sign and magnitude of EITE impacts. Firstly, the composition of embodied emissions in goods: if a large share of embodied carbon is imported in intermediate inputs, industries might suffer from carbon tariffs. Secondly, the share of domestic output that is supplied to the export market: while carbon tariffs level the playing field on domestic markets, they increase the cost-disadvantage vis-à-vis competitors from abroad in foreign markets.

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Bibliographic Info

Paper provided by ZenTra - Center for Transnational Studies in its series ZenTra Working Papers in Transnational Studies with number 33 / 2014.

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Length: 31 pages
Date of creation: Feb 2014
Date of revision: Feb 2014
Handle: RePEc:zen:wpaper:33

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Keywords: carbon tariffs; unilateral climate policy; multi-region input-output analysis; CGE;

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  1. Christoph Böhringer & Brita Bye & Taran Fæhn & Knut Einar Rosendahl, 2012. "Alternative Designs for Tariffs on Embodied Carbon: A Global Cost-Effectiveness Analysis," Working Papers V-345-12, University of Oldenburg, Department of Economics, revised Jun 2012.
  2. Balistreri, Edward J. & Rutherford, Thomas F., 2012. "Subglobal carbon policy and the competitive selection of heterogeneous firms," Energy Economics, Elsevier, vol. 34(S2), pages S190-S197.
  3. Ringlund, Guro Bornes & Rosendahl, Knut Einar & Skjerpen, Terje, 2008. "Does oilrig activity react to oil price changes An empirical investigation," Energy Economics, Elsevier, vol. 30(2), pages 371-396, March.
  4. Fischer, Carolyn & Fox, Alan K., 2012. "Climate policy and fiscal constraints: Do tax interactions outweigh carbon leakage?," Energy Economics, Elsevier, vol. 34(S2), pages S218-S227.
  5. Caron, Justin, 2012. "Estimating carbon leakage and the efficiency of border adjustments in general equilibrium — Does sectoral aggregation matter?," Energy Economics, Elsevier, vol. 34(S2), pages S111-S126.
  6. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
  7. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
  8. 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.
  9. 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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