IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkpb/151.html
   My bibliography  Save this paper

A CO2-border adjustment mechanism as a building block of a climate club

Author

Listed:
  • Bierbrauer, Felix
  • Felbermayr, Gabriel
  • Ockenfels, Axel
  • Schmidt, Klaus M.
  • Südekum, Jens

Abstract

The EU steps up its efforts to curb its territorial CO2-emissions. It is planning to introduce a carbon border adjustment mechanism (CBAM) to level the playing field and to raise own resources. However, unilateral European climate policy action, whether shored up with a CBAM or not, can only play a limited role in reducing global CO2-emissions. A U-CBAM cannot stop indirect leakage, it has ambiguous effects on other countries' mitigation efforts, and it poses the risk of conflicts with trade partners.The EU, together with the US and other like-minded countries, should push hard to establish a climate club with a common minimum price of CO2and a common CBAM applied to third countries. Such a framework would incentivize other countries to join while limiting leakage and reducing the risk of trade policy disputes.

Suggested Citation

  • Bierbrauer, Felix & Felbermayr, Gabriel & Ockenfels, Axel & Schmidt, Klaus M. & Südekum, Jens, 2021. "A CO2-border adjustment mechanism as a building block of a climate club," Kiel Policy Brief 151, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkpb:151
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/232523/1/1752576446.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Roland Ismer & Karsten Neuhoff & Alice Pirlot, 2020. "Border Carbon Adjustments and Alternative Measures for the EU ETS: An Evaluation," Discussion Papers of DIW Berlin 1855, DIW Berlin, German Institute for Economic Research.
    3. Sato, Misato & Dechezleprêtre, Antoine, 2015. "Asymmetric industrial energy prices and international trade," Energy Economics, Elsevier, vol. 52(S1), pages 130-141.
    4. Aichele, Rahel & Felbermayr, Gabriel, 2012. "Kyoto and the carbon footprint of nations," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 336-354.
    5. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    6. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2012. "The Empirics of Firm Heterogeneity and International Trade," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 283-313, July.
    7. Rahel Aichele & Gabriel Felbermayr, 2015. "Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 104-115, March.
    8. Grunewald, Nicole & Martinez-Zarzoso, Inmaculada, 2016. "Did the Kyoto Protocol fail? An evaluation of the effect of the Kyoto Protocol on CO2 emissions," Environment and Development Economics, Cambridge University Press, vol. 21(1), pages 1-22, February.
    9. Böhringer, Christoph & Rosendahl, Knut Einar & Storrøsten, Halvor Briseid, 2017. "Robust policies to mitigate carbon leakage," Journal of Public Economics, Elsevier, vol. 149(C), pages 35-46.
    10. repec:clg:wpaper:2008-02 is not listed on IDEAS
    11. Frédéric Branger, Philippe Quirion, Julien Chevallier, 2017. "Carbon Leakage and Competitiveness of Cement and Steel Industries Under the EU ETS: Much Ado About Nothing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    12. Branger, Frédéric & Quirion, Philippe, 2014. "Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," Ecological Economics, Elsevier, vol. 99(C), pages 29-39.
    13. William Nordhaus, 2015. "Climate Clubs: Overcoming Free-Riding in International Climate Policy," American Economic Review, American Economic Association, vol. 105(4), pages 1339-1370, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Galina Kolev & Jürgen Matthes, 2021. "Protektionismus und Abschottungstendenzen bremsen und verändern die Globalisierung," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(11), pages 845-849, November.
    2. Mörsdorf, George, 2022. "A simple fix for carbon leakage? Assessing the environmental effectiveness of the EU carbon border adjustment," Energy Policy, Elsevier, vol. 161(C).
    3. Claudia Kettner & Gerald Feichtinger, 2021. "Fit for 55? Das neue Klima- und Energiepaket der EU," WIFO Monatsberichte (monthly reports), WIFO, vol. 94(9), pages 665-677, September.
    4. Galina Kolev, 2021. "Carbon Border Adjustment and Other Trade Policy Approaches for Climate Protection," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(6), pages 310-316, November.
    5. Wifo, 2021. "WIFO-Monatsberichte, Heft 9/2021," WIFO Monatsberichte (monthly reports), WIFO, vol. 94(9), September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dechezleprêtre, Antoine & Gennaioli, Caterina & Martin, Ralf & Muûls, Mirabelle & Stoerk, Thomas, 2022. "Searching for carbon leaks in multinational companies," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    2. Gabriel Felbermayr & Sonja Peterson & Joschka Wanner, 2022. "The Impact of Trade and Trade Policy on the Environment and the Climate. A Review," WIFO Working Papers 649, WIFO.
    3. Jakob, Michael, 2021. "Climate policy and international trade – A critical appraisal of the literature," Energy Policy, Elsevier, vol. 156(C).
    4. Garnadt, Niklas & Grimm, Veronika & Reuter, Wolf Heinrich, 2020. "Carbon adjustment mechanisms: Empirics, design and caveats," Working Papers 11/2020, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    5. Shon Ferguson & Mark Sanctuary, 2019. "Why is carbon leakage for energy-intensive industry hard to find?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(1), pages 1-24, January.
    6. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2023. "Regulatory Stringency and Emission Leakage Mitigation," DEOS Working Papers 2302, Athens University of Economics and Business.
    7. Ernst, Anne & Hinterlang, Natascha & Mahle, Alexander & Stähler, Nikolai, 2022. "Carbon pricing, border adjustment and climate clubs: An assessment with EMuSe," Discussion Papers 25/2022, Deutsche Bundesbank.
    8. Wang, Junbo & Ma, Zhenyu & Fan, Xiayang, 2023. "We are all in the same boat: The welfare and carbon abatement effects of the EU carbon border adjustment mechanism," MPRA Paper 118978, University Library of Munich, Germany.
    9. Al Khourdajie, Alaa & Finus, Michael, 2020. "Measures to enhance the effectiveness of international climate agreements: The case of border carbon adjustments," European Economic Review, Elsevier, vol. 124(C).
    10. Halvor Briseid Storrøsten & Christoph Böhringer & Knut Einar Rosendahl, 2015. "Smart hedging against carbon leakage," Discussion Papers 822, Statistics Norway, Research Department.
    11. Stede, Jan & Pauliuk, Stefan & Hardadi, Gilang & Neuhoff, Karsten, 2021. "Carbon pricing of basic materials: Incentives and risks for the value chain and consumers," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 189.
    12. Naegele, Helene & Zaklan, Aleksandar, 2019. "Does the EU ETS cause carbon leakage in European manufacturing?," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 125-147.
    13. Cary, Michael, 2023. "Climate policy boosts trade competitiveness: Evidence from timber trade networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 188(C).
    14. Clemens Fuest & Volker Meier, 2021. "Will the Centralisation of Carbon Pricing Revenue in the EU Lead to Laxer Climate Policy?," CESifo Working Paper Series 8979, CESifo.
    15. Rios, Vicente & Gianmoena, Lisa, 2018. "Convergence in CO2 emissions: A spatial economic analysis with cross-country interactions," Energy Economics, Elsevier, vol. 75(C), pages 222-238.
    16. Bellora, Cecilia, 2020. "Carbon Border Adjustment and Alternatives," Conference papers 333210, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Elisabeth Christen & Bettina Meinhart & Franz Sinabell & Gerhard Streicher, 2021. "Transportkostenwahrheit im internationalen Handel," WIFO Studies, WIFO, number 67045, February.
    18. He, Ling-Yun & Chen, Kun-Xian, 2023. "Does China's regional emission trading scheme lead to carbon leakage? Evidence from conglomerates," Energy Policy, Elsevier, vol. 175(C).
    19. Mario Larch & Joschka Wanner, 2019. "The Consequences of Unilateral Withdrawals from the Paris Agreement," CESifo Working Paper Series 7804, CESifo.
    20. Ernst, Anne & Hinterlang, Natascha & Mahle, Alexander & Stähler, Nikolai, 2023. "Carbon pricing, border adjustment and climate clubs: Options for international cooperation," Journal of International Economics, Elsevier, vol. 144(C).

    More about this item

    Keywords

    Climate Policy; Carbon Leakage; Carbon Border Adjustment; Climate Club; Klimapolitik; Carbon Leakage; CO2-Grenzausgleich; Klimaclub;
    All these keywords.

    JEL classification:

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ifwkpb:151. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.