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Carbon Leakages, Consumption‐based Carbon Taxes and International Climate Change Agreements

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  • Harry Clarke

Abstract

The issue of devising an efficient and equitable global climate change mitigation agreement is examined. While the possibility of catastrophic damages contingent on unmitigated climate change provides cogent reasons for self‐interested, large countries to unilaterally mitigate there are practical reasons for them not to do so. A key concern for developed countries is possible carbon leakages. For developing countries, the need to pursue growth objectives can restrict the proclivity to mitigate. Carbon leakage issues can be addressed using border tax adjustments although these raise computational complexity, GATT‐rules consistency and equity issues for developing countries. If the efficiency gains from utilising border tax adjustments are to be realised, compensation schemes must address these equity issues. An analysis is provided explicitly addressing the role of China and the United States.

Suggested Citation

  • Harry Clarke, 2010. "Carbon Leakages, Consumption‐based Carbon Taxes and International Climate Change Agreements," Economic Papers, The Economic Society of Australia, vol. 29(2), pages 156-168, June.
    • Handle: RePEc:bla:econpa:v:29:y:2010:i:2:p:156-168
    DOI: 10.1111/j.1759-3441.2010.00068.x
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    References listed on IDEAS

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    1. Harry Clarke, 2010. "Strategic issues in global climate change policy ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 165-184, April.
    2. Auffhammer, Maximilian & Carson, Richard T., 2008. "Forecasting the path of China's CO2 emissions using province-level information," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 229-247, May.
    3. Löschel, Andreas & Alexeeva-Talebi, Victoria & Mennel, Tim, 2008. "Climate Policy and the Problem of Competitiveness: Border Tax Adjustments or Integrated Emission Trading?," ZEW Discussion Papers 08-061, ZEW - Leibniz Centre for European Economic Research.
    4. Trevor Houser & Rob Bradley & Britt Childs, 2008. "Leveling the Carbon Playing Field: International Competition and US Climate Policy Design," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4204, October.
    5. John Whalley & Sean Walsh, 2008. "Bringing the Copenhagen Global Climate Change Negotiations to Conclusion," CESifo Working Paper Series 2458, CESifo.
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    Cited by:

    1. Chang, Ning, 2013. "Sharing responsibility for carbon dioxide emissions: A perspective on border tax adjustments," Energy Policy, Elsevier, vol. 59(C), pages 850-856.

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