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Trade in Carbon and the Effectiveness of Carbon Tariffs

Author

Listed:
  • Christoph Böhringer

    (University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW))

  • Jan Schneider

    (University of Oldenburg)

  • Emmanuel Asane-Otoo

    (University of Oldenburg)

Abstract

Carbon-based import tariffs are discussed as policy measures to reduce carbon leakage and increase the global cost-effectiveness of unilateral CO2 emission pricing. We assess how the potential of carbon tariffs to increase cost-effectiveness of unilateral climate policy depends on the magnitude and composition of carbon embodied in trade. For our assessment, we combine multi-region input-output (MRIO) analysis with computable general equilibrium (CGE) analysis based on data from the World Input-Output Database (WIOD) for the period 1995 to 2007. The MRIO analysis confirms that carbon embodied in trade has sharply increased during this period. Yet, the CGE analysis suggests that the effectiveness of carbon tariffs in reducing leakage and improving global-cost effectiveness of unilateral climate policy does not increase over time, whereas the potential to shift the economic burden of CO2 emissions reduction from abating developed regions to non-abating developing regions increases substantially.

Suggested Citation

  • Christoph Böhringer & Jan Schneider & Emmanuel Asane-Otoo, 2016. "Trade in Carbon and the Effectiveness of Carbon Tariffs," ZenTra Working Papers in Transnational Studies 65 / 2016, ZenTra - Center for Transnational Studies, revised Sep 2016.
    • Handle: RePEc:zen:wpaper:65
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    References listed on IDEAS

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    Cited by:

    1. Yang, Changjiang & Yan, Xiaoxuan, 2023. "Impact of carbon tariffs on price competitiveness in the era of global value chain," Applied Energy, Elsevier, vol. 336(C).
    2. Marten, Alex L. & Garabccio, Richard, 2018. "An Applied General Equilibrium Model for the Analysis of Environmental Policy: SAGE v1.0 Technical Documentation," National Center for Environmental Economics-NCEE Working Papers 280948, United States Environmental Protection Agency (EPA).
    3. Thomas Kuhn & Radomir Pestow & Anja Zenker, 2019. "Building Climate Coalitions on Preferential Free Trade Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 539-569, October.
    4. Lien-Chieh Lee & Yuan Wang & Yuanyuan Yan & Jian Zuo, 2018. "Greenhouse Gas Emissions Embodied in the Chinese International Trade of Computer Products," Sustainability, MDPI, vol. 10(5), pages 1-15, May.

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    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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