Cost-Effective Unilateral Climate Policy Design: Size Matters
Given the bleak prospects for a global agreement on coordinated policies to mitigate climate change, political pressure is increasing among industrialized countries for unilateral abatement. A major challenge thereby is the appropriate response to the threat of emissions leakage. Border carbon adjustments and output-based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own. We assess the relative attractiveness of these anti-leakage measures as a function of the abatement coalition size. We first develop a partial equilibrium analytical framework to gain generic insights on how these instruments affect emissions within and outside the coalition. We then employ a large-scale computable general equilibrium model of international trade and energy use to assess the cost-effectiveness of alternative anti-leakage strategies as the coalition evolves toward global coverage. We find that full border adjustments rank first in global cost-effectiveness, followed by import tariffs and then output-based rebates. The differences across anti-leakage measures and the overall appeal of such measures decline with the size of the abatement coalition. In terms of cost incidence, the abatement coalition prefers border carbon adjustments over output-based rebates; the opposite holds true for countries outside the coalition.
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.:
- Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
- Hoel, Michael, 1991.
"Global environmental problems: The effects of unilateral actions taken by one country,"
Journal of Environmental Economics and Management,
Elsevier, vol. 20(1), pages 55-70, January.
- Hoel, M., 1989. "Global Environmental Problems: The Effects Of Unilateral Actions Taken By One Country," Memorandum 11/1989, Oslo University, Department of Economics.
- 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.
- Jean-Marc Burniaux & Joaquim Oliveira Martins, 2012. "Carbon leakages: a general equilibrium view," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(2), pages 473-495, February.
- Böhringer, Christoph & Bye, Brita & Fæhn, Taran & Rosendahl, Knut Einar, 2012. "Alternative designs for tariffs on embodied carbon: A global cost-effectiveness analysis," Energy Economics, Elsevier, vol. 34(S2), pages 143-153.
- Christoph Böhringer & Brita Bye & Taran Fæhn & Knut Einar Rosendahl, 2012. "Alternative Designs for Tariffs on Embodied Carbon: A Global Cost-Effectiveness Analysis," Working Papers V-345-12, University of Oldenburg, Department of Economics, revised Jun 2012.
- Christoph Böhringer & Brita Bye & Taran Fæhn & Knut Einar Rosendahl, 2012. "Alternative designs for tariffs on embodied carbon. A global cost-effectiveness analysis," Discussion Papers 682, Statistics Norway, Research Department.
- Felder Stefan & Rutherford Thomas F., 1993. "Unilateral CO2 Reductions and Carbon Leakage: The Consequences of International Trade in Oil and Basic Materials," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 162-176, September.
- Dong, Yan & Whalley, John, 2011. "Carbon motivated regional trade arrangements: Analytics and simulations," Economic Modelling, Elsevier, vol. 28(6), pages 2783-2792.
- Yan Dong & John Whalley, 2009. "Carbon Motivated Regional Trade Arrangements: Analytics and Simulations," NBER Working Papers 14880, National Bureau of Economic Research, Inc.
- Azusa OKAGAWA & Kanemi BAN, 2008. "Estimation of substitution elasticities for CGE models," Discussion Papers in Economics and Business 08-16, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- repec:dau:papers:123456789/7970 is not listed on IDEAS
- Boehringer Christoph & Fischer Carolyn & Rosendahl Knut Einar, 2010. "The Global Effects of Subglobal Climate Policies," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-35, December.
- Böhringer, Christoph & Fischer, Carolyn & Rosendahl, Knut Einar, 2010. "The Global Effects of Subglobal Climate Policies," Discussion Papers dp-10-48, Resources For the Future.
- Christoph Böhringer & Carolyn Fischer & Knut Einar Rosendahl, 2010. "The Global Effects of Subglobal Climate Policies," Discussion Papers 634, Statistics Norway, Research Department.
- Hoel Michael, 1994. "Efficient Climate Policy in the Presence of Free Riders," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 259-274, November.
- Hoel, M., 1993. "Efficient Climate Policy in the Presence of Free Riders," Memorandum 04/1993, Oslo University, Department of Economics.
- Böhringer, Christoph & Carbone, Jared C. & Rutherford, Thomas F., 2012. "Unilateral climate policy design: Efficiency and equity implications of alternative instruments to reduce carbon leakage," Energy Economics, Elsevier, vol. 34(S2), pages 208-217.
- Christoph Böhringer & Thomas F. Rutherford, 2010. "The Costs of Compliance: A CGE Assessment of Canada's Policy Options under the Kyoto Protocol," The World Economy, Wiley Blackwell, vol. 33(2), pages 177-211, 02.
- Niven Winchester, 2012. "The Impact of Border Carbon Adjustments Under Alternative Producer Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 354-359.
- Ben Lockwood & John Whalley, 2010. "Carbon-motivated Border Tax Adjustments: Old Wine in Green Bottles?," The World Economy, Wiley Blackwell, vol. 33(6), pages 810-819, 06.
- Ben Lockwood & John Whalley, 2008. "Carbon Motivated Border Tax Adjustments: Old Wine in Green Bottles?," NBER Working Papers 14025, National Bureau of Economic Research, Inc.
- 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.
- Rob Dellink & Gregory Briner & Christa Clapp, 2011. "The Copenhagen Accord/Cancún Agreements Emission Pledges For 2020: Exploring Economic And Environmental Impacts," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 53-78.
- Christoph Böhringer & Thomas Rutherford, 2002. "Carbon Abatement and International Spillovers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 391-417, July.
- 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.
- Graham, Paul & Thorpe, Sally & Hogan, Lindsay, 1999. "Non-competitive market behaviour in the international coking coal market," Energy Economics, Elsevier, vol. 21(3), pages 195-212, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-11-34. 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: (Webmaster)
If references are entirely missing, you can add them using this form.