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International spillovers and carbon pricing Policies

Author

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  • Geoffroy Dolphin

    (Cambridge Judge Business School and Energy Policy Research Group, University of Cambridge)

  • Michael G. Pollitt

    (Cambridge Judge Business School and Energy Policy Research Group, University of Cambridge)

Abstract

Globally coordinated climate action has resulted in sub-optimal emissions reductions and unilateral (second-best) climate policies have so far provided the bulk of emissions reductions. This paper argues that the development of new unilateral carbon pricing policies was fostered by international signalling and technological spillover effects. The strength of both effects hinges, for each jurisdiction, on trade relations with other CO2-abating jurisdictions. We provide a stylised theoretical discussion in support of our proposition and investigate it using data on a panel of 121national jurisdictions over the period 1990-2014. Results show a strong positive association between import-weighted exposure to CO2-pricing partners and domestic environmental policy. The analysis also supports the technological spillover channel: trade-weighted installed capacity of wind and solar energy seems to prompt implementation of and more stringent carbon pricing policies.
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Suggested Citation

  • Geoffroy Dolphin & Michael G. Pollitt, 2018. "International spillovers and carbon pricing Policies," Working Papers EPRG 1802, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1802
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    Cited by:

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    2. Muth, Daniel, 2023. "Pathways to stringent carbon pricing: Configurations of political economy conditions and revenue recycling strategies. A comparison of thirty national level policies," Ecological Economics, Elsevier, vol. 214(C).

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    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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