Author
Listed:
- Peterson, Everett B.
- Schleich, Joachim
Abstract
Taxing imports from regions which are not subject to climate policy and subsidizing exports into these regions have recently been proposed to address presumed negative effects of the EU Emissions Trading Scheme (EU ETS) on industry competitiveness and carbon leakage. This paper analyzes the economic and environmental effects of alternative border tax adjustment (BTA) mechanisms using an extended version of the GTAP-E model that explicitly includes domestic trade and transport margins. The BTAs are imposed on regions which have not committed to emission targets under the Kyoto Protocol or which failed to ratify the Kyoto Protocol. The analyses distinguish between effects of the BTAs on the EU15 countries and on the rest of the EU (REU). Likewise, the analyses single out the effects of climate policy with and without BTAs on domestic output changes which are due to changes in import competition and export competitiveness. Implementing a BTA whose power is equal to the percentage change in production costs in the energy-intensive sectors in the EU has different impacts for those sectors in the EU15 countries compared with the REU countries. In the EU15, the BTA effectively neutralizes import competition in the energy-intensive sectors while enhancing the export competitiveness of these sectors. Conversely, in the REU, the BTA is not effective in neutralizing increased import competition or decreased export competitiveness because the majority of trade by the REU is with countries/regions that are not included in the BTA. Overall, implementing a BTA has little effect on the marginal abatement costs of achieving the emission reductions in the Kyoto Protocol and does little in reducing carbon leakage.
Suggested Citation
Peterson, Everett B. & Schleich, Joachim, 2007.
"Economic and environmental effects of border tax adjustments,"
Working Papers "Sustainability and Innovation"
S1/2007, Fraunhofer Institute for Systems and Innovation Research (ISI).
Handle:
RePEc:zbw:fisisi:s12007
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fisisi:s12007. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/isfhgde.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.