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Reducing Coal Subsidies and Trade Barriers: Their Contribution to Greenhouse Gas Abatement

Author

Listed:
  • Kym Anderson

    (University of Adelaide, Centre for International Economic Studies
    Centre for Economic Policy Research)

  • Warwick J. McKibbin

    (Australian National University, Research School of Pacific and Asian Studies, Economics Division
    The Brookings Institution)

Abstract

International negotiations for an agreement to reduce the emission of greenhouse gases are unlikely to produce concrete and comprehensive policies for effective emission reductions in the near term, not least because the policy measures being considered are economically very costly to major industries in rich countries and are unlikely to prevent 'leakage' through a re-location of carbon-intensive activities to poorer countries. An alternative or supplementary approach that is more likely to achieve carbon and methane emission reductions, and at the same time generate national and global economic benefits rather than costs, involves lowering coal subsidies and trade barriers. Past coal policies which encouraged excessive production of coal in a number of industrial countries and excessive coal consumption in numerous developing and transition economies are currently under review and in some cases are being reformed. This paper documents those distortions and outlines the circumstances under which their reform could not only improve the economy but also lower greenhouse gas emissions globally. It also provides modelling results which quantify the orders of magnitudes that could be involved in reducing those distortions. The effects on economic activity as well as global carbon emissions are examined using the G-Cubed multi-country general equilibrium model of the world economy. Both the gains in economic efficiency and the reductions in carbon dioxide emissions that could result from such reforms are found to be substantial - a 'no regrets' outcome or win-win Pareto improvement for the economy and the environment that contrasts markedly with many of the costly proposals currently being advocated to reduce greenhouse gases.

Suggested Citation

  • Kym Anderson & Warwick J. McKibbin, 1997. "Reducing Coal Subsidies and Trade Barriers: Their Contribution to Greenhouse Gas Abatement," Economics and Environment Network Working Papers 9703, Australian National University, Economics and Environment Network.
  • Handle: RePEc:anu:eenwps:9703
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    References listed on IDEAS

    as
    1. Steenblik, R. P. & Wigley, K. J., 1990. "Coal policies and trade barriers," Energy Policy, Elsevier, vol. 18(4), pages 351-367, May.
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    6. W. J. McKibbin & P. J. Wilcoxen, "undated". "Economic Implications of Greenhouse Gas Policy," Discussion Papers 116, Brookings Institution International Economics.
    7. Steenblik, Ronald P & Coroyannakis, Panos, 1995. "Reform of coal policies in Western and Central Europe : Implications for the environment," Energy Policy, Elsevier, vol. 23(6), pages 537-553, June.
    8. Anderson, Kym & Peng, Chao Yang, 1998. "Feeding and fueling China in the 21st century," World Development, Elsevier, vol. 26(8), pages 1413-1429, August.
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    More about this item

    Keywords

    greenhouse gases; policy reforms;

    JEL classification:

    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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