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Carbon Tariffs Revisited

Author

Listed:
  • Christoph Böhringer

    (University of Oldenburg - Economic Policy & ZenTra)

  • Andre Müller

    (Ecoplan)

  • Jan Schneider

    (University of Oldenburg - Economic Policy)

Abstract

Concerns about adverse impacts on domestic energy-intensive and trade-exposed (EITE) industries are at the fore of the political debate about unilateral climate policies. Tariffs on the carbon embod-ied in imported goods from countries without emission pricing appeal as a measure to reduce carbon leakage and protect domestic EITE industries. We show that the introduction of carbon tariffs can do more harm than good to domestic EITE industries. Two determinants drive the sign and magnitude of EITE impacts. Firstly, the composition of embodied emissions in goods: if a large share of embodied carbon is imported in intermediate inputs, industries might suffer from carbon tariffs. Secondly, the share of domestic output that is supplied to the export market: while carbon tariffs level the playing field on domestic markets, they increase the cost-disadvantage vis-à-vis competitors from abroad in foreign markets.

Suggested Citation

  • Christoph Böhringer & Andre Müller & Jan Schneider, 2014. "Carbon Tariffs Revisited," ZenTra Working Papers in Transnational Studies 33 / 2014, ZenTra - Center for Transnational Studies, revised Feb 2014.
  • Handle: RePEc:zen:wpaper:33
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    References listed on IDEAS

    as
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    14. 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.
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    Citations

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    Cited by:

    1. Böhringer, Christoph & Rosendahl, Knut Einar & Briseid Storrøsten, Halvor, 2015. "Smart hedging against carbon leakage," Working Paper Series 14-2015, Norwegian University of Life Sciences, School of Economics and Business.
    2. 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).
    3. Klotz, Richard & Sharma, Rishi R., 2023. "Trade barriers and CO2," Journal of International Economics, Elsevier, vol. 141(C).
    4. Zhang, Zengkai & Zhang, Zhongxiang, 2017. "Intermediate input linkage and carbon leakage," Environment and Development Economics, Cambridge University Press, vol. 22(6), pages 725-746, December.
    5. Christoph Böhringer, Xaquin Garcia-Muros, and Mikel González-Eguino, 2019. "Greener and Fairer: A Progressive Environmental Tax Reform for Spain," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    6. Noha Elboghdadly & Michael Finus, 2020. "Enforcing Climate Agreements: The Role of Escalating Border Carbon Adjustments," Graz Economics Papers 2020-11, University of Graz, Department of Economics.
    7. Böhringer, Christoph & Rosendahl, Knut Einar, 2022. "Europe beyond coal – An economic and climate impact assessment," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    8. Larch, Mario & Wanner, Joschka, 2017. "Carbon tariffs: An analysis of the trade, welfare, and emission effects," Journal of International Economics, Elsevier, vol. 109(C), pages 195-213.
    9. Christoph Boehringer & Carolyn Fischer, 2020. "Kill Bill or Tax: An Analysis of Alternative CO2 Price Floor Optionsfor EU Member States," Working Papers V-432-20, University of Oldenburg, Department of Economics, revised Oct 2020.
    10. Oliver Schenker & Simon Koesler & Andreas Löschel, 2018. "On the effects of unilateral environmental policy on offshoring in multi-stage production processes," Canadian Journal of Economics, Canadian Economics Association, vol. 51(4), pages 1221-1256, November.
    11. Böhringer, Christoph & García-Muros, Xaquín & González-Eguino, Mikel, 2022. "Who bears the burden of greening electricity?," Energy Economics, Elsevier, vol. 105(C).
    12. Ferguson, Shon & Heijmans, Roweno J.R.K., 2023. "Climate Policy and Trade in Polluting Technologies," Working Paper Series 1470, Research Institute of Industrial Economics.
    13. Zhong, Jiarui & Pei, Jiansuo, 2022. "Beggar thy neighbor? On the competitiveness and welfare impacts of the EU's proposed carbon border adjustment mechanism," Energy Policy, Elsevier, vol. 162(C).
    14. Soham Baksi & Amrita Ray Chaudhuri, 2016. "International Trade and Environmental Cooperation among Heterogeneous Countries," Departmental Working Papers 2016-03, The University of Winnipeg, Department of Economics.
    15. Christoph Böhringer & Jan Schneider & Emmanuel Asane-Otoo, 2021. "Trade in Carbon and Carbon Tariffs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 669-708, April.
    16. Schneider, Jan & Hagen, Achim, 2018. "Boon or Bane? Trade Sanctions and the Stability of International Environmental Agreements," Conference papers 333013, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    Keywords

    carbon tariffs; unilateral climate policy; multi-region input-output analysis; CGE;
    All these keywords.

    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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