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Alternative designs for tariffs on embodied carbon: A global cost-effectiveness analysis

  • Böhringer, Christoph
  • Bye, Brita
  • Fæhn, Taran
  • Rosendahl, Knut Einar

In the absence of effective world-wide cooperation to curb global warming, import tariffs on embodied carbon have been proposed as a potential supplement to unilateral emissions pricing. We systematically consider alternative designs for such tariffs, and analyze their effects on global welfare within a multi-region, multi-sector computable general equilibrium (CGE) model of global trade and energy. Our analysis shows that systems more likely to comply with international law yield very little in terms of carbon leakage and efficiency. Generally, the effectiveness increases substantially with complexity. However, regionalising the tariffs seems not to be worthwhile. Also, the most effective system we identify is not based on fully input–output-corrected carbon contents, but on direct plus electricity emissions, only. This reflects the more general problem of finding systems that are both feasible and well-targeted in a real global economy.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): S2 ()
Pages: S143-S153

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:s2:p:s143-s153
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  1. Hoel, Michael, 1994. "Should a Carbon Tax be Differentiated Across Sectors?," CEPR Discussion Papers 1066, C.E.P.R. Discussion Papers.
  2. Böhringer, Christoph & Fischer, Carolyn & Rosendahl, Knut Einar, 2010. "The Global Effects of Subglobal Climate Policies," Discussion Papers dp-10-48, Resources For the Future.
  3. Christoph Böhringer & Carolyn Fischer & Knut Einar Rosendahl, 2011. "Cost-effective unilateral climate policy design: Size Matters," Discussion Papers 664, Statistics Norway, Research Department.
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  13. Roland Ismer & Karsten Neuhoff, 2007. "Border tax adjustment: a feasible way to support stringent emission trading," European Journal of Law and Economics, Springer, vol. 24(2), pages 137-164, October.
  14. 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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