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Industrial and terrestrial carbon leakage under climate policy fragmentation

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  • Mikel González-Eguino
  • Iñigo Capellán-Pérez
  • Iñaki Arto
  • Alberto Ansuategi
  • Anil Markandya

Abstract

One of the main concerns in international climate negotiations is policy fragmentation, which could increase the carbon emissions of non-participating countries. Until very recently the carbon leakage literature has focused mainly on “industrial†carbon leakage through various channels, such as the induced changes in the prices of fossil fuels. But there is another potential channel that has received little attention so far: the carbon leakage triggered by land use changes, referred to as “terrestrial†carbon leakage. This paper explores the magnitudes of these two forms of leakage in a situation where CO2 emissions in all sectors, including from land use change, are taxed equally. We explore the implications of different fragmentation scenarios using the GCAM integrated assessment model. Our results show that total carbon leakage is at its highest when the biggest developing regions do not participate, but its rate decreases with the size of the coalition. We also show that under different fragmentation scenarios terrestrial carbon leakage may be the dominant type of leakage up to 2050, due to deforestation in non-participating regions. The implications of shifting food and bioenergy production to non-participating regions are also analyzed.

Suggested Citation

  • Mikel González-Eguino & Iñigo Capellán-Pérez & Iñaki Arto & Alberto Ansuategi & Anil Markandya, 2016. "Industrial and terrestrial carbon leakage under climate policy fragmentation," Working Papers 2016-02, BC3.
  • Handle: RePEc:bcc:wpaper:2016-02
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    References listed on IDEAS

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    1. Otto, Sander A.C. & Gernaat, David E.H.J. & Isaac, Morna & Lucas, Paul L. & van Sluisveld, Mariësse A.E. & van den Berg, Maarten & van Vliet, Jasper & van Vuuren, Detlef P., 2015. "Impact of fragmented emission reduction regimes on the energy market and on CO2 emissions related to land use: A case study with China and the European Union as first movers," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 220-229.
    2. Kriegler, Elmar & Riahi, Keywan & Bauer, Nico & Schwanitz, Valeria Jana & Petermann, Nils & Bosetti, Valentina & Marcucci, Adriana & Otto, Sander & Paroussos, Leonidas & Rao, Shilpa & Arroyo Currás, T, 2015. "Making or breaking climate targets: The AMPERE study on staged accession scenarios for climate policy," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 24-44.
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    Cited by:

    1. Pan, Wenqi & Kim, Man-Keun & Ning, Zhuo & Yang, Hongqiang, 2020. "Carbon leakage in energy/forest sectors and climate policy implications using meta-analysis," Forest Policy and Economics, Elsevier, vol. 115(C).
    2. Nieto, Jaime & Carpintero, Óscar & Miguel, Luis J., 2018. "Less than 2°C? An Economic-Environmental Evaluation of the Paris Agreement," Ecological Economics, Elsevier, vol. 146(C), pages 69-84.
    3. Leslie S. Abrahams & Constantine Samaras & W. Michael Griffin & H. Scott Matthews, 2017. "Effect of crude oil carbon accounting decisions on meeting global climate budgets," Environment Systems and Decisions, Springer, vol. 37(3), pages 261-275, September.

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