Consumption-Based Approaches in International Climate Policy: An Analytical Evaluation of the Implications for Cost-Effectiveness, Carbon Leakage, and the International Income Distribution
As an agreement on an international climate treaty appears out of sight in the short run, many countries rely on unilateral greenhouse gas abatement strategies. The reach of such unilateral policies can be extended beyond the borders of the abating country by a switch to a consumption-based policy orientation. Such a policy does not target the emissions discharged on the territory of the country that abates, but the emissions embodied in the goods it consumes. If industrialized countries adopt this approach, they can bring the large and increasing amount of emissions embodied in imports from emerging economies into the scope of the policy. The policy switch could be implemented by means of border carbon adjustments; according to theoretic arguments such adjustments can improve the efficiency of unilateral policies. This paper develops a 2-region, 5-good analytical partial-equilibrium model to study the effects of a switch of the policy base. We especially focus on changes in production technology triggered by the policy. We find that a policy targeting consumption – when using a leakage definition appropriate for consumption-based approaches – does not cause leakage through the non-energy market leakage channel. In addition, the question whether a consumption-based policy is environmentally more effective is decided through policy transmission in non-energy markets, but not in energy markets. Still, despite the many arguments in favour of consumption-based approaches, we find that none of these arguments per se suffices to make a consumption-based policy the environmentally more effective or the more cost-effective option. Whether it is indeed more effective depends on (i) demand and production parameters and (ii) the precise design of the border tax (or any other appropriate policy instrument). In particular, the availability of “green” technology in emerging economies influences the results. Additionally, a switch of the policy base may also cause a substantial redistribution of the costs of the policy between abating and non-abating countries.
|Date of creation:||Mar 2013|
|Contact details of provider:|| Postal: University of Graz, Universitaetsstr. 15/F4, 8010 Graz, Austria|
Phone: ++43 316 380-3440
Fax: ++43 316 380-9520, 9521
Web page: http://volkswirtschaftslehre.uni-graz.at/
More information through EDIRC
|Order Information:||Web: http://www100.uni-graz.at/vwlwww/forschung/RePEc/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ferng, Jiun-Jiun, 2003. "Allocating the responsibility of CO2 over-emissions from the perspectives of benefit principle and ecological deficit," Ecological Economics, Elsevier, vol. 46(1), pages 121-141, August.
- Lenzen, Manfred & Murray, Joy & Sack, Fabian & Wiedmann, Thomas, 2007. "Shared producer and consumer responsibility -- Theory and practice," Ecological Economics, Elsevier, vol. 61(1), pages 27-42, February.
- Böhringer, Christoph & Balistreri, Edward J. & Rutherford, Thomas F., 2012. "The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)," Energy Economics, Elsevier, vol. 34(S2), pages 97-110.
- Christoph Bohringer & Jared Carbone & Thomas F. Rutherford, "undated".
"Embodied Carbon Tariffs,"
2013-24, Department of Economics, University of Calgary, revised 11 Oct 2013.
- Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2013. "Embodied Carbon Tariffs," ZenTra Working Papers in Transnational Studies 25 / 2014, ZenTra - Center for Transnational Studies, revised Jan 2014.
- Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2011. "Embodied Carbon Tariffs," Working Papers V-340-11, University of Oldenburg, Department of Economics, revised Sep 2011.
- Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2011. "Embodied Carbon Tariffs," NBER Working Papers 17376, National Bureau of Economic Research, Inc.
- Böhringer, Christoph & Lange, Andreas & Rutherford, Thomas F., 2014. "Optimal emission pricing in the presence of international spillovers: Decomposing leakage and terms-of-trade motives," Journal of Public Economics, Elsevier, vol. 110(C), pages 101-111.
- Christoph Böhringer & Andreas Lange & Thomas F. Rutherford, 2010. "Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives," NBER Working Papers 15899, National Bureau of Economic Research, Inc.
- Christoph Böhringer & Andreas Lange & Thomas F. Rutherford, 2012. "Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives," Working Papers V-347-12, University of Oldenburg, Department of Economics, revised Jun 2012.
- Rothman, Dale S., 1998. "Environmental Kuznets curves--real progress or passing the buck?: A case for consumption-based approaches," Ecological Economics, Elsevier, vol. 25(2), pages 177-194, May.
- Philippe Quirion, 2010. "Competitiveness and Leakage," Chapters,in: Climate Change Policies, chapter 6 Edward Elgar Publishing.
- Copeland, Brian R. & Taylor, M. Scott, 2005. "Free trade and global warming: a trade theory view of the Kyoto protocol," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 205-234, March.
- Brian R. Copeland & M. Scott Taylor, 2000. "Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol," NBER Working Papers 7657, National Bureau of Economic Research, Inc.
- Copeland,B.R. & Taylor,M.S., 2000. "Free trade and global warming : a trade theory view of the Kyoto protocol," Working papers 4, Wisconsin Madison - Social Systems.
- Kondo, Y. & Moriguchi, Y. & Shimizu, H., 1998. "CO2 Emissions in Japan: Influences of imports and exports," Applied Energy, Elsevier, vol. 59(2-3), pages 163-174, February.
- Lenzen, Manfred & Murray, Joy, 2010. "Conceptualising environmental responsibility," Ecological Economics, Elsevier, vol. 70(2), pages 261-270, December.
- Susanne Droege, 2011. "Do border measures have a role in climate policy?," Climate Policy, Taylor & Francis Journals, vol. 11(5), pages 1185-1190, September.
- Munksgaard, Jesper & Pedersen, Klaus Alsted, 2001. "CO2 accounts for open economies: producer or consumer responsibility?," Energy Policy, Elsevier, vol. 29(4), pages 327-334, March.
- Peters, Glen P., 2008. "From production-based to consumption-based national emission inventories," Ecological Economics, Elsevier, vol. 65(1), pages 13-23, March.
- Wiedmann, Thomas, 2009. "A review of recent multi-region input-output models used for consumption-based emission and resource accounting," Ecological Economics, Elsevier, vol. 69(2), pages 211-222, December.
- Bastianoni, Simone & Pulselli, Federico Maria & Tiezzi, Enzo, 2004. "The problem of assigning responsibility for greenhouse gas emissions," Ecological Economics, Elsevier, vol. 49(3), pages 253-257, July.
- Kuik, Onno & Hofkes, Marjan, 2010. "Border adjustment for European emissions trading: Competitiveness and carbon leakage," Energy Policy, Elsevier, vol. 38(4), pages 1741-1748, April.
- Barrett, Scott, 1998. "Political Economy of the Kyoto Protocol," Oxford Review of Economic Policy, Oxford University Press, vol. 14(4), pages 20-39, Winter.
- Fischer, Carolyn & Fox, Alan K., 2012. "Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 199-216.
- Satoshi Nakano & Asako Okamura & Norihisa Sakurai & Masayuki Suzuki & Yoshiaki Tojo & Norihiko Yamano, 2009. "The Measurement of CO2 Embodiments in International Trade: Evidence from the Harmonised Input-Output and Bilateral Trade Database," OECD Science, Technology and Industry Working Papers 2009/3, OECD Publishing.
- Muñoz, Pablo & Steininger, Karl W., 2010. "Austria's CO2 responsibility and the carbon content of its international trade," Ecological Economics, Elsevier, vol. 69(10), pages 2003-2019, August.
- Marques, Alexandra & Rodrigues, João & Lenzen, Manfred & Domingos, Tiago, 2012. "Income-based environmental responsibility," Ecological Economics, Elsevier, vol. 84(C), pages 57-65.
- Susanne Droege, 2011. "Using border measures to address carbon flows," Climate Policy, Taylor & Francis Journals, vol. 11(5), pages 1191-1201, September.
- Nadim Ahmad & Andrew Wyckoff, 2003. "Carbon Dioxide Emissions Embodied in International Trade of Goods," OECD Science, Technology and Industry Working Papers 2003/15, OECD Publishing.
- Jean-Marc Burniaux & Jean Chateau & Romain Duval, 2013. "Is there a case for carbon-based border tax adjustment? An applied general equilibrium analysis," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2231-2240, June.
- Jean-Marc Burniaux & Jean Château & Romain Duval, 2010. "Is there a Case for Carbon-Based Border Tax Adjustment?: An Applied General Equilibrium Analysis," OECD Economics Department Working Papers 794, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:grz:wpaper:2013-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael Scholz)
If references are entirely missing, you can add them using this form.