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Estimating carbon leakage and the efficiency of border adjustments in general equilibrium — Does sectoral aggregation matter?

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  • Caron, Justin

Abstract

Estimates of the carbon leakage resulting from sub-global climate policies tend to be lower when using economy-wide general equilibrium models than what technology-specific and bottom-up models suggest. In order to test whether this difference is due to excessive sectoral aggregation, I exploit disaggregated data and estimate unobserved values to create a dataset with rich industrial sector detail. The bias caused by sectoral aggregation is estimated by calibrating a computable general equilibrium model to this dataset and comparing results with those generated from more aggregated data.

Suggested Citation

  • 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 111-126.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:s2:p:s111-s126
    DOI: 10.1016/j.eneco.2012.08.015
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    Cited by:

    1. Li, Aijun & Du, Nan & Wei, Qian, 2014. "The cross-country implications of alternative climate policies," Energy Policy, Elsevier, vol. 72(C), pages 155-163.
    2. Lennox, James A. & Turner, James & Daigneault, Adam J. & Jhunjhnuwala, Kanika, 2013. "Regional, sectoral and temporal differences in carbon leakage," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152164, Australian Agricultural and Resource Economics Society.
    3. Paroussos, Leonidas & Fragkos, Panagiotis & Capros, Pantelis & Fragkiadakis, Kostas, 2015. "Assessment of carbon leakage through the industry channel: The EU perspective," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 204-219.
    4. Christoph Böhringer & André Müller & Jan Schneider, 2015. "Carbon Tariffs Revisited," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 629-672.
    5. Sheldon, Ian & McCorriston, Steve, 2014. "Climate Policy and Border Measures: The Case of the US Aluminum Industry," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169544, Agricultural and Applied Economics Association.
    6. Alessandro Antimiani & Valeria Costantini & Elena Paglialunga, 2015. "An analysis of the sensitivity of a dynamic climate-economy CGE model (GDynE) to empirically estimated energy-related elasticity parameters," SEEDS Working Papers 0515, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Mar 2015.
    7. repec:eee:jrpoli:v:52:y:2017:i:c:p:173-180 is not listed on IDEAS
    8. repec:eee:appene:v:201:y:2017:i:c:p:188-199 is not listed on IDEAS
    9. Antimiani, Alessandro & Costantini, Valeria & Kuik, Onno & Paglialunga, Elena, 2016. "Mitigation of adverse effects on competitiveness and leakage of unilateral EU climate policy: An assessment of policy instruments," Ecological Economics, Elsevier, vol. 128(C), pages 246-259.
    10. 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 97-110.
    11. Antimiani, Alessandro & Costantini, Valeria & Paglialunga, Elena, 2015. "The sensitivity of climate-economy CGE models to energy-related elasticity parameters: Implications for climate policy design," Economic Modelling, Elsevier, vol. 51(C), pages 38-52.
    12. Sakai, Marco & Barrett, John, 2016. "Border carbon adjustments: Addressing emissions embodied in trade," Energy Policy, Elsevier, vol. 92(C), pages 102-110.
    13. Branger, Frédéric & Quirion, Philippe, 2014. "Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," Ecological Economics, Elsevier, vol. 99(C), pages 29-39.
    14. Britz, Wolfgang & van der Mensbrugghe, Dominique, 2016. "Reducing unwanted consequences of aggregation in large-scale economic models - A systematic empirical evaluation with the GTAP model," Economic Modelling, Elsevier, vol. 59(C), pages 463-472.
    15. repec:wsi:apjorx:v:34:y:2017:i:01:n:s0217595917400048 is not listed on IDEAS
    16. Jared C. Carbone & Nicholas Rivers, 2014. "Climate policy and competitiveness: Policy guidance and quantitative evidence," Working Papers 2014-05, Colorado School of Mines, Division of Economics and Business.
    17. Yuanying Chi & Zhengquan Guo & Yuhua Zheng & Xingping Zhang, 2014. "Scenarios Analysis of the Energies’ Consumption and Carbon Emissions in China Based on a Dynamic CGE Model," Sustainability, MDPI, Open Access Journal, vol. 6(2), pages 1-26, January.

    More about this item

    Keywords

    General equilibrium; CGE; Climate policy; Sectoral aggregation; Disaggregation; Aggregation bias; Carbon leakage; Border carbon adjustments;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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