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Trade in Carbon and Carbon Tariffs

Author

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  • Christoph Böhringer

    (University of Oldenburg)

  • Jan Schneider

    (University of Oldenburg)

  • Emmanuel Asane-Otoo

    (University of Oldenburg)

Abstract

Carbon-based import tariffs are proposed as a policy measure to reduce carbon leakage and increase the global cost-effectiveness of unilateral CO2 emission pricing. We investigate the case for carbon tariffs. For our assessment, we combine multi-region input–output and computable general equilibrium analyses based on data from the World Input–Output Database for the period 2000–2014. The multi-region input–output analysis confirms that carbon embodied in trade has increased during this period, but trade flows from Non-OECD to OECD countries became less important in relative terms since the 2007–2008 financial crisis. The computable general equilibrium analysis suggests that carbon tariffs’ efficacy in combating leakage increases in periods when trade in carbon increases. However, its potential to improve the global-cost effectiveness of unilateral emission pricing remains modest. On the other hand, we find that the potential of carbon tariffs to shift the economic burden of CO2 emission reduction from abating developed regions to non-abating developing regions increases sharply between 2000 and 2007, but declines after the financial crisis.

Suggested Citation

  • Christoph Böhringer & Jan Schneider & Emmanuel Asane-Otoo, 2021. "Trade in Carbon and Carbon Tariffs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 669-708, April.
  • Handle: RePEc:kap:enreec:v:78:y:2021:i:4:d:10.1007_s10640-021-00548-y
    DOI: 10.1007/s10640-021-00548-y
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    Cited by:

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    3. Perdana, Sigit & Vielle, Marc, 2022. "Making the EU Carbon Border Adjustment Mechanism acceptable and climate friendly for least developed countries," Energy Policy, Elsevier, vol. 170(C).
    4. Zhong, Jiarui & Pei, Jiansuo, 2022. "Beggar thy neighbor? On the competitiveness and welfare impacts of the EU's proposed carbon border adjustment mechanism," Energy Policy, Elsevier, vol. 162(C).
    5. Bellora, Cecilia & Fontagné, Lionel, 2023. "EU in search of a Carbon Border Adjustment Mechanism," Energy Economics, Elsevier, vol. 123(C).
    6. Gu, Rongrong & Guo, Ji & Huang, Yuxiang & Wu, Xianhua, 2023. "Impact of the EU carbon border adjustment mechanism on economic growth and resources supply in the BASIC countries," Resources Policy, Elsevier, vol. 85(PB).
    7. Wang, Junbo & Ma, Zhenyu & Fan, Xiayang, 2023. "We are all in the same boat: The welfare and carbon abatement effects of the EU carbon border adjustment mechanism," MPRA Paper 118978, University Library of Munich, Germany.
    8. Sigit Perdana & Marc Vielle, 2023. "Carbon border adjustment mechanism in the transition to net-zero emissions: collective implementation and distributional impacts," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 299-329, July.
    9. Bayramoglu, Basak & Jacques, Jean-François & Nedoncelle, Clément & Neumann-Noel, Lucille, 2023. "International climate aid and trade," Journal of Environmental Economics and Management, Elsevier, vol. 117(C).
    10. Siying Chen & Zhixiong Tan & Xingwang He & Lichen Zhang, 2023. "The Measurements and Analysis of Spatial-Temporal Variations of Human Development Index Based on Planetary Boundaries in China: Evidence from Provincial-Level Data," Land, MDPI, vol. 12(3), pages 1-22, March.
    11. Zhou, Xiaoyang & Zhu, Qiuyun & Xu, Lei & Wang, Kai & Yin, Xiang & Mangla, Sachin Kumar, 2024. "The effect of carbon tariffs and the associated coping strategies: A global supply chain perspective," Omega, Elsevier, vol. 122(C).
    12. Stefano Carattini & Giseong Kim & Givi Melkadze & Aude Pommeret, 2023. "Carbon Taxes and Tariffs, Financial Frictions, and International Spillovers," CESifo Working Paper Series 10851, CESifo.

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    More about this item

    Keywords

    Embodied carbon; Carbon tariffs; Unilateral climate policy; Computable general equilibrium;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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