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Climate Campaigns, Cap and Trade, and Carbon Leakage: Why Trying to Reduce Your Carbon Footprint Can Harm the Climate

Listed author(s):
  • Grischa Perino

Governments and environmental NGOs campaign for carbon footprint reductions by households. Many of the behavioral changes recommended reduce demand for goods produced by sectors covered by cap-and-trade schemes. With a binding cap, greenhouse gas emissions from those sectors do not change. I show that climate campaigns create leakage effects if coverage of cap-and-trade schemes is incomplete. Campaigns that shift demand away from sectors subject to a cap increase aggregate emissions, as do campaigns to reduce carbon footprints generally if the capped sectors are emission intensive. However, campaigns targeting sectors not covered by a cap-and-trade scheme or propagating retiring of emission allowances reduce emissions.

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File URL: http://dx.doi.org/10.1086/682572
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/682572
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of the Association of Environmental and Resource Economists.

Volume (Year): 2 (2015)
Issue (Month): 3 ()
Pages: 469-495

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Handle: RePEc:ucp:jaerec:doi:10.1086/682572
Contact details of provider: Web page: http://www.journals.uchicago.edu/JAERE/

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