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Trade in'virtual carbon': empirical results and implications for policy

Author

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  • Atkinson, Giles
  • Hamilton, Kirk
  • Ruta, Giovanni
  • Van Der Mensbrugghe, Dominique

Abstract

The fact that developing countries do not have carbon emission caps under the Kyoto Protocol has led to the current interest in high-income countries in border taxes on the"virtual"carbon content of imports. The authors use Global Trade Analysis Project data and input-output analysis to estimate the flows of virtual carbon implicit in domestic production technologies and the pattern of international trade. The results present striking evidence on the wide variation in the carbon-intensiveness of trade across countries, with major developing countries being large net exporters of virtual carbon. The analysis suggests that tax rates of $50 per ton of virtual carbon could lead to very substantial effective tariff rates on the exports of the most carbon-intensive developing nations.

Suggested Citation

  • 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.
  • Handle: RePEc:wbk:wbrwps:5194
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dieter Helm & Cameron Hepburn & Giovanni Ruta, 2012. "Trade, climate change, and the political game theory of border carbon adjustments," Oxford Review of Economic Policy, Oxford University Press, vol. 28(2), pages 368-394, SUMMER.
    2. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters,in: Handbook of Sustainable Development, chapter 25, pages 399-417 Edward Elgar Publishing.
    3. Misato Sato, 2014. "Embodied Carbon In Trade: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 831-861, December.
    4. Youguo Zhang, 2012. "Scale, Technique and Composition Effects in Trade-Related Carbon Emissions in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 371-389, March.
    5. Marta Antonelli & Martina Sartori, 2014. "Unfolding the Potential of the Virtual Water Concept. What is still under debate?," IEFE Working Papers 74, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    6. Carol McAusland & Nouri Najjar, 2015. "Carbon Footprint Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(1), pages 37-70, May.
    7. Alessandro Antimiani & Valeria Costantini & Chiara Martini & Luca Salvatici, 2011. "Cooperative and non-cooperative solutions to carbon leakage," Departmental Working Papers of Economics - University 'Roma Tre' 0136, Department of Economics - University Roma Tre.
    8. Weitzel, Matthias & Ma, Tao, 2014. "Emissions embodied in Chinese exports taking into account the special export structure of China," Energy Economics, Elsevier, vol. 45(C), pages 45-52.
    9. Morihiro Yomogida & Nori Tarui, 2013. "Emission Taxes and Border Tax Adjustments for Oligopolistic Industries," Pacific Economic Review, Wiley Blackwell, vol. 18(5), pages 644-673, December.
    10. Nicole A. MATHYS & Jaime DE MELO, 2011. "The Political Economy of Climate Change Policies: Political Economy Aspects of Climate Change Mitigation Efforts," Working Papers P24, FERDI.
    11. Chen, G. & Chen, B. & Zhou, H. & Dai, P., 2013. "Life cycle carbon emission flow analysis for electricity supply system: A case study of China," Energy Policy, Elsevier, vol. 61(C), pages 1276-1284.
    12. Douglas, Stratford & Nishioka, Shuichiro, 2012. "International differences in emissions intensity and emissions content of global trade," Journal of Development Economics, Elsevier, vol. 99(2), pages 415-427.
    13. Kala Krishna, 2011. "Limiting Emissions and Trade: Some Basic Ideas," NBER Chapters,in: The Design and Implementation of U.S. Climate Policy, pages 53-61 National Bureau of Economic Research, Inc.
    14. Mehdi Abbas, 2013. "Libre-échange et changements climatiques : " soutien mutuel " ou divergence ?," Post-Print halshs-00844818, HAL.
    15. Sato, Misato, 2014. "Product level embodied carbon flows in bilateral trade," Ecological Economics, Elsevier, vol. 105(C), pages 106-117.
    16. M. Antonelli & R. Roson & M. Sartori, 2012. "Systemic Input-Output Computation of Green and Blue Virtual Water ‘Flows’ with an Illustration for the Mediterranean Region," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(14), pages 4133-4146, November.
    17. López, Luis Antonio & Arce, Guadalupe & Zafrilla, Jorge Enrique, 2013. "Parcelling virtual carbon in the pollution haven hypothesis," Energy Economics, Elsevier, vol. 39(C), pages 177-186.
    18. Paola Rocchi & Iñaki Arto & Jordi Roca & Mònica Serrano, 2015. "Carbon-motivated border tax adjustment: a proposal for the EU," UB Economics Working Papers 2015/327, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    19. Antimiani, Alessandro & Costantini, Valeria & Martini, Chiara & Salvatici, Luca & Tommasino, Maria Cristina, 2013. "Assessing alternative solutions to carbon leakage," Energy Economics, Elsevier, vol. 36(C), pages 299-311.
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    21. Xia, Yan & Fan, Ying & Yang, Cuihong, 2015. "Assessing the impact of foreign content in China’s exports on the carbon outsourcing hypothesis," Applied Energy, Elsevier, pages 296-307.
    22. Aaditya Mattoo & Arvind Subramanian & Dominique Mensbrugghe & Jianwu He, 2013. "Trade effects of alternative carbon border-tax schemes," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 587-609, September.
    23. Roberto Roson & Martina Sartori, 2010. "Water Scarcity and Virtual Water Trade in the Mediterranean," Working Papers 2010_08, Department of Economics, University of Venice "Ca' Foscari".
    24. Chang, Ning, 2013. "Sharing responsibility for carbon dioxide emissions: A perspective on border tax adjustments," Energy Policy, Elsevier, vol. 59(C), pages 850-856.

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    Keywords

    Climate Change Mitigation and Green House Gases; Environmental Economics&Policies; Climate Change Economics; Economic Theory&Research; Environment and Energy Efficiency;

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