Trade, climate change and the political game theory of border carbon adjustments
The lack of real progress at the Durban climate change conference in 2011ï¿½postponing effective action until at least 2020ï¿½has many causes, one of which is the failure to address trade issues and in particular carbon leakage. This paper advances two arguments. First, it argues that the conventional view of Border Carbon Adjustments (BCAs) as a ï¿½dirtyï¿½ trade barrier should be turned on its head. Rather, the absence of a carbon price comprises an implicit subsidy to dirtier production in non-regulated markets. Second, BCAs could act as a gamechanger when climate policy negotiations move at a glacial pace, if at all. Materially stronger progress could be achieved indirectly from the threat of unilateral trade policies. The paper shows how this could come about, using a simple political game theory model. The appropriate game form is one in which parties move unilaterally and sequentially, given the failure to agree on a common course of action, and are fully aware of the impacts of their actions. The paper shows that properly crafted BCAs could help reduce trade distortions, limit the competiveness effects, and help build a broader coalition of interests for more global actions.
|Date of creation:||May 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/grantham.
More information through EDIRC
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.:
- Stiglitz Joseph, 2006. "A New Agenda for Global Warming," The Economists' Voice, De Gruyter, vol. 3(7), pages 1-4, July.
- Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2011.
"Embodied Carbon Tariffs,"
NBER Working Papers
17376, National Bureau of Economic Research, Inc.
- 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 Bohringer & Jared Carbone & Thomas F. Rutherford, 2013. "Embodied Carbon Tariffs," Working Papers 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.
- Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
- Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
- Damien Demailly & Philippe Quirion, 2006. "CO2 abatement, competitiveness and leakage in the European cement industry under the EU ETS: Grandfathering vs. output-based allocation," Post-Print halshs-00639327, HAL.
- repec:cup:cbooks:9780521196475 is not listed on IDEAS
- Druckman, A. & Bradley, P. & Papathanasopoulou, E. & Jackson, T., 2008. "Measuring progress towards carbon reduction in the UK," Ecological Economics, Elsevier, vol. 66(4), pages 594-604, July.
- Hepburn, C.J. & Quah, J.K.-H. & Ritz, R.A., 2012.
"Emissions Trading with Profit-Neutral Permit Allocations,"
Cambridge Working Papers in Economics
1235, Faculty of Economics, University of Cambridge.
- Hepburn, Cameron J. & Quah, John K.-H. & Ritz, Robert A., 2013. "Emissions trading with profit-neutral permit allocations," Journal of Public Economics, Elsevier, vol. 98(C), pages 85-99.
- Cameron Hepburn & John K.-H. Quah & Robert A. Ritz, 2008. "Emissions Trading with Profit-Neutral Permit Allocations," Economics Papers 2008-W12, Economics Group, Nuffield College, University of Oxford.
- Cameron Hepburn & John Quah & Robert A. Ritz, 2008. "Emissions Trading with Profit-Neutral Permit Allocations," Economics Series Working Papers 2008-W12, University of Oxford, Department of Economics.
- Grossman, Gene M. & Helpman, Elhanan, 1995.
"Trade Wars and Trade Talks,"
3450062, Harvard University Department of Economics.
- Gene M. Grossman & Elhanan Helpman, 1993. "Trade Wars and Trade Talks," NBER Working Papers 4280, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1992. "Trade Wars and Trade Talks," Papers 163, Princeton, Woodrow Wilson School - Public and International Affairs.
- Grossman, G.M. & Helpman, E., 1993. "Trade Wars and Trade Talks," Papers 1-93, Tel Aviv.
- Grossman, Gene & Helpman, Elhanan, 1993. "Trade Wars and Trade Talks," CEPR Discussion Papers 806, C.E.P.R. Discussion Papers.
- De Perthuis, Christian & Convery, Frank J. & Ellerman, Denny, 2010. "Pricing carbon : the European Union Emissions Trading Scheme," Economics Papers from University Paris Dauphine 123456789/10174, Paris Dauphine University.
- Robert A. Ritz, 2009. "Carbon leakage under incomplete environmental regulation: An industry-level approach," Economics Series Working Papers 461, University of Oxford, Department of Economics.
- Atkinson, Giles & Hamilton, Kirk & Ruta, Giovanni & Van Der Mensbrugghe, Dominique, 2010. "Trade in'virtual carbon': empirical results and implications for policy," Policy Research Working Paper Series 5194, The World Bank.
- Reyer Gerlagh & Onno Kuik, 2007. "Carbon Leakage with International Technology Spillovers," Working Papers 2007.33, Fondazione Eni Enrico Mattei.
- 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.
- Onno Kuik & Reyer Gerlagh, 2003. "Trade Liberalization and Carbon Leakage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 97-120.
- Sergey V. Paltsev, 2001. "The Kyoto Protocol: Regional and Sectoral Contributions to the Carbon Leakage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 53-80.
- Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September.
When requesting a correction, please mention this item's handle: RePEc:lsg:lsgwps:wp80. 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: (The GRI Administration)
If references are entirely missing, you can add them using this form.