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Trade In Carbon And The Effectiveness Of Carbon Tariffs

Author

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  • Christoph Böhringer

    () (University of Oldenburg, Department of Economics)

  • Jan Schneider

    () (University of Oldenburg, Department of Economics)

  • Emmanuel Asane-Otoo

    () (University of Oldenburg, Department of Economics)

Abstract

Carbon-based import tariffs are discussed as policy measures to reduce carbon leakage and increase the global cost-effectiveness of unilateral CO2 emission pricing. We assess how the potential of carbon tariffs to increase cost-effectiveness of unilateral climate policy depends on the magnitude and composition of carbon embodied in trade. For our assessment, we combine multi-region input-output (MRIO) analysis with computable general equilibrium (CGE) analysis based on data from the World Input-Output Database (WIOD) for the period 1995 to 2007. The MRIO analysis confirms that carbon embodied in trade has sharply increased during this period. Yet, the CGE analysis suggests that the effectiveness of carbon tariffs in reducing leakage and improving global-cost effectiveness of unilateral climate policy does not increase over time, whereas the potential to shift the economic burden of CO2 emissions reduction from abating developed regions to non-abating developing regions increases substantially.

Suggested Citation

  • Christoph Böhringer & Jan Schneider & Emmanuel Asane-Otoo, 2016. "Trade In Carbon And The Effectiveness Of Carbon Tariffs," Working Papers V-388-16, University of Oldenburg, Department of Economics, revised Apr 2016.
    • Handle: RePEc:old:dpaper:388
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    References listed on IDEAS

    as
    1. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2016. "The Strategic Value of Carbon Tariffs," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 28-51, February.
    2. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
    3. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2018. "Embodied Carbon Tariffs," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(1), pages 183-210, January.
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    5. Christoph Böhringer & Brita Bye & Taran Fæhn & Knut Einar Rosendahl, 2015. "Targeted carbon tariffs. Carbon leakage and welfare effects," Discussion Papers 805, Statistics Norway, Research Department.
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    Cited by:

    1. Thomas Kuhn & Radomir Pestow & Anja Zenker, 2019. "Building Climate Coalitions on Preferential Free Trade Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 539-569, October.
    2. Lien-Chieh Lee & Yuan Wang & Yuanyuan Yan & Jian Zuo, 2018. "Greenhouse Gas Emissions Embodied in the Chinese International Trade of Computer Products," Sustainability, MDPI, Open Access Journal, vol. 10(5), pages 1-1, May.

    More about this item

    Keywords

    carbon tariffs; unilateral climate policy; computable general equilibrium;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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