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  1. Optimal unilateral climate policy with carbon leakage at the extensive and the intensive margin
    Erschienen: July 2021
    Verlag:  CESifo, Center for Economic Studies & Ifo Institute, Munich, Germany

    We analyse the optimal design of unilateral climate policy in an open economy where the government is committed to a target for reduction of domestic CO2 emissions but where it is also concerned about carbon leakage. We highlight the importance of... mehr

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    We analyse the optimal design of unilateral climate policy in an open economy where the government is committed to a target for reduction of domestic CO2 emissions but where it is also concerned about carbon leakage. We highlight the importance of distinguishing between leakage at the extensive margin where firms relocate to a foreign country to avoid the domestic carbon tax, and leakage at the intensive margin where domestic firms lose world market shares to foreign competitors due to the tax. Assuming that the government cannot implement border carbon adjustments, we show that the optimal allocation can still be implemented through a combination of taxes on emissions, taxes on domestic consumption of energy and final goods, an output subsidy as well as a lump-sum location subsidy to leakage-exposed firms, subsidies to carbon capture, taxes on domestic production of fossil fuels, and a subsidy to domestic production of green energy. Simulation experiments indicate that the social welfare gain from implementing the optimal leakage-adjusted tax-subsidy scheme rather than a single uniform emissions tax could amount to 0.5 percent of national income. A location subsidy aimed at reducing leakage at the extensive margin contributes to reducing the welfare loss from leakage.

     

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    hdl: 10419/245366
    Schriftenreihe: CESifo working paper ; no. 9185 (2021)
    Schlagworte: carbon leakage; optimal carbon taxation in an open economy
    Umfang: 1 Online-Ressource (circa 41 Seiten)
  2. Revisiting carbon leakage
    Erschienen: August 2021
    Verlag:  International Monetary Fund, [Washington, D.C.]

    This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations... mehr

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    This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations along two lines. First, we exploit recently published data on sector-country-specific changes in energy prices to identify changes in domestic carbon emissions and other flows (rather than the historically limited variation in carbon prices or adherence to international climate agreements). Second, we present a simple accounting framework to derive carbon leakage rates from reduced-form regressions in contrast to existing papers, thereby making our results directly comparable to model-based estimates of carbon leakage. We show that carbon leakage rates differ across countries and could be larger than what existing estimates suggest

     

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    ISBN: 9781513593029
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    Schriftenreihe: IMF working paper ; WP/21, 207
    Schlagworte: carbon leakage; CO2 content of trade; emission spillovers; competitiveness; Climate; Environment and Development; Global Warming; Natural Disasters and Their Management; Trade and Environment
    Umfang: 1 Online-Ressource (circa 27 Seiten), Illustrationen
  3. Global externalities, local policies, and firm selection
    Erschienen: [2021]
    Verlag:  MIT Center for Energy and Environmental Policy Research, Cambridge, MA, USA

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    Schriftenreihe: Working paper series / MIT Center for Energy and Environmental Policy Research ; 2021, 019 (December 2021)
    Schlagworte: Externalities; mechanism design; private information; climate change; emissions trading; carbon leakage
    Umfang: 1 Online-Ressource (circa 66 Seiten), Illustrationen
  4. Carbon pricing of basic materials
    incentives and risks for the value chain and consumers
    Erschienen: 2021
    Verlag:  DIW Berlin, German Institute for Economic Research, Berlin

    For the European Union to realise its ambition of carbon neutrality, emissions from basic material production need to be reduced through low-carbon production processes, material efficiency and substitution, as well as enhanced recycling. Different... mehr

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    For the European Union to realise its ambition of carbon neutrality, emissions from basic material production need to be reduced through low-carbon production processes, material efficiency and substitution, as well as enhanced recycling. Different reform options for the EU ETS are discussed that ensure a consistent carbon price incentive for all these mitigation options, while avoiding the risk of carbon leakage. This paper offers a first quantification of potential carbon leakage risks, distributional implications and additional revenues associated with different mechanisms: an import- only border carbon adjustment (BCA), a symmetric BCA, and an excise for embodied carbon emissions at a fixed benchmark level in combination with continued free allocation. We estimate the product-level carbon intensities for about 4,400 commodity groups, including basic materials, material products, and manufactured goods and compute implied price changes and cost increases relative to gross value added to assess the scale of carbon leakage risks.

     

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    hdl: 10419/233046
    Schriftenreihe: Discussion papers / Deutsches Institut für Wirtschaftsforschung ; 1935
    Schlagworte: emissions trading; border carbon adjustment (BCA); excise duty; carbon intensity; carbon leakage; distributional effects; fiscal revenues
    Umfang: 1 Online-Ressource (circa 30 Seiten), Illustrationen
  5. A simple fix for carbon leakage?
    assessing the environmental effectiveness of the EU carbon border adjustment
    Erschienen: April 2021
    Verlag:  ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Munich, Germany

    As part of its ambitious European Green Deal package, at the heart of which stands the commitment to become carbon-neutral by 2050, the European Commission announced that it would propose a "carbon border adjustment mechanism" to address the risk of... mehr

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    As part of its ambitious European Green Deal package, at the heart of which stands the commitment to become carbon-neutral by 2050, the European Commission announced that it would propose a "carbon border adjustment mechanism" to address the risk of carbon leakage. This study models the measure in a Computable General Equilibrium framework and analyses how effective it would be in reducing the incidence of carbon leakage. The analysis suggests that even a sectorally limited EU carbon border adjustment would reduce the carbon leakage rate by up to two thirds, making it more effective than the current system of free allocation. Besides environmental benefits, it would also offset competitiveness losses of European energy-intensive industries incurred by a higher EU carbon price and generate additional income for public budgets. At the same time, the analysis shows that around a third of the overall incidence of carbon leakage is driven not by competitiveness but by energy price effects, making it impossible to offset by border measures.

     

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    hdl: 10419/233025
    Schriftenreihe: Ifo working papers ; 350 (2021)
    Schlagworte: Carbon border adjustment; carbon leakage; Computable General Equilibrium; EU climate policy; energy-intensive industries
    Umfang: 1 Online-Ressource (circa 35 Seiten), Illustrationen
  6. The case for a Carbon Border Adjustment
    where do economists stand?
    Erschienen: [2022]
    Verlag:  EconomiX - UMR7235, Université Paris Nanterre, Nanterre

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    Schriftenreihe: Working paper / EconomiX ; 2022, 1
    Schlagworte: climate policy; carbon border adjustment; carbon leakage
    Umfang: 1 Online-Ressource (circa 39 Seiten), Illustrationen
  7. The impact of climate legislation on trade-related carbon emissions, 1997–2017
    Erschienen: July 2021
    Verlag:  Grantham Research Institute on Climate Change and the Environment, London

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    Schriftenreihe: Centre for Climate Change Economics and Policy working paper ; no. 395
    Grantham Research Institute on Climate Change and the Environment working paper ; no. 367
    Schlagworte: climate change legislation; climate policy; carbon leakage; pollution havens; production emissions; consumption emissions
    Umfang: 1 Online-Ressource (circa 45 Seiten), Illustrationen
  8. Comparing scenarios for a European carbon border adjustment mechanism
    trade, FDI and welfare effects with a focus on the Austrian economy
    Erschienen: [2022]
    Verlag:  Verein "Wiener Institut für Internationale Wirtschaftsvergleiche" (wiiw), Wien

    As the European carbon border adjustment (CBA) mechanism is high up on the European Commission's agenda and soon to be implemented, it is important to understand the economic and environmental implications of alternative designs of such a mechanism.... mehr

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    As the European carbon border adjustment (CBA) mechanism is high up on the European Commission's agenda and soon to be implemented, it is important to understand the economic and environmental implications of alternative designs of such a mechanism. To this end and with a view to informing the decision-making process, this study analyses and compares a series of alternative scenarios, which differ along several dimensions of a potential CBA mechanism. Two main scenarios are defined: the first one is labelled 'future ETS price scenario', which assumes a carbon price of EUR 44 and a continuation of the current practice of free allowances; the other is labelled 'IMF carbon tax scenario' and assumes a carbon price of EUR 67, which is taken from a recent publication by the IMF, and that free allowances in the industries by the CBA mechanism are abandoned. The scenario analyses rely on the multi-sector quantitative trade model by Larch and Wanner (2017) for trade and on the quantitative FDI model by Anderson et al. (2019). Overall, we find relatively small effects on EU exports, GDP and CO2 emissions. These small quantitative changes at the aggregate, however, mask larger changes at the sectoral level. As expected, the CBA mechanism is more effective when designed in a comprehensive manner, including export rebates in addition to carbon border taxes. The greater economic and environmental effectiveness of such a comprehensive design must be weighed against a heightened legal risk and fiercer opposition by developing countries which perceive the CBA mechanism as 'green protectionism' in disguise.

     

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    hdl: 10419/266045
    Schriftenreihe: Research report / wiiw ; 460 (July 2022)
    Schlagworte: Carbon border taxes; carbon tariffs; carbon leakage; climate change
    Umfang: 1 Online-Ressource (circa 98 Seiten), Illustrationen
  9. Emission pricing and capital replacement
    evidence from aircraft fleet renewal
    Autor*in: Jong, Gerben de
    Erschienen: [2022]
    Verlag:  Tinbergen Institute, Amsterdam, The Netherlands

    This paper empirically studies how emission pricing affects capital replacement and adoption of embodied environmental technology. A pricing policy encourages firms to accelerate retirement of old capital assets and replace them with newer more... mehr

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    This paper empirically studies how emission pricing affects capital replacement and adoption of embodied environmental technology. A pricing policy encourages firms to accelerate retirement of old capital assets and replace them with newer more efficient assets, but this may crowd out replacements outside the policy. Using asset-level data from the airline industry, I show that the inclusion of intra-European aviation in the European Union Emissions Trading Scheme decreased the retirement age of 'regulated' short-haul aircraft by 2.8 years (14 percent), while the retirement age of 'unregulated' long-haul aircraft increased by 2 years (11 percent). Accounting for the higher emissions of long-haul operations, the net environmental benefit of induced fleet renewal is virtually zero and may even be negative. This demonstrates that regulators must consider the impacts beyond regulated capital when environmental policies are incomplete.

     

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    hdl: 10419/265836
    Schriftenreihe: Array ; TI 2022, 060
    Schlagworte: environmental policy; emission pricing; carbon leakage; capital replacement; technology adoption; airline industry
    Umfang: 1 Online-Ressource (circa 42 Seiten), Illustrationen
  10. The EU proposal for a carbon border adjustment mechanism (CBAM)
    an analysis under wto and climate change law
    Erschienen: 01 November 2022
    Verlag:  Centre for Economic Policy Research, London

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    Schriftenreihe: Array ; DP17629
    Schlagworte: carbon leakage; CBAM; border carbon taxes; trade and climate
    Umfang: 1 Online-Ressource (circa 33 Seiten)
  11. The EU proposal for a carbon border adjustment mechanism (CBAM)
    an analysis under WTO and climate change law
    Erschienen: [2022]
    Verlag:  World Trade Institute, Universität Bern, Bern, Switzerland

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    Schriftenreihe: WTI working paper ; no. 2022, 06
    Schlagworte: carbon leakage; CBAM; border carbon taxes; trade and climate
    Umfang: 1 Online-Ressource (circa 31 Seiten)
  12. Environmental policy and investment location
    the risk of carbon leakage in the EU ETS
    Erschienen: October 2022
    Verlag:  Fondazione Eni Enrico Mattei, Milano, Italia

    This paper empirically investigates the effect of the European Emission Trading Scheme (EU ETS) on cross-country investments. To avoid carbon leakage, the scheme allocates a number of free allowances to firms at risk of relocating investments in... mehr

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    This paper empirically investigates the effect of the European Emission Trading Scheme (EU ETS) on cross-country investments. To avoid carbon leakage, the scheme allocates a number of free allowances to firms at risk of relocating investments in areas outside the EU ETS. To study this problem, we employ a model of the firm's investment decision in conjunction with novel firm-level data. In contrast with most previous literature, we stress the importance of firms' heterogeneity in the analysis and leverage it. We derive conditions for the firm's optimal emissions to construct a measure of investment sensitivity to carbon pricing from observed pollution data. This allows to identify the effect of the EU ETS on international investments by comparing the expected profits from investing in several different countries. We find that investments react to carbon pricing and that the effect is stronger for more polluting investments. However, the aggregate amount of diverted investments is small. We moreover show that the lost investments do not justify, alone,the generous compensations scheme aimed at retaining investments.

     

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    hdl: 10419/267492
    Schriftenreihe: Working paper / Fondazione Eni Enrico Mattei ; 2022, 27
    Schlagworte: Emission trading; carbon leakage; investment location; EU ETS
    Umfang: 1 Online-Ressource (circa 55 Seiten), Illustrationen
  13. Climate policy with electricity trade
    Erschienen: March 2023
    Verlag:  [Toulouse School of Economics], [Toulouse]

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    Schriftenreihe: Working papers / Toulouse School of Economics ; no 1422
    Schlagworte: Intermittent renewables; electricity interconnection; carbon pricing; carbon border adjustment mechanism; renewable subsidy; carbon leakage
    Umfang: 1 Online-Ressource (circa 40 Seiten), Illustrationen
  14. The economics of carbon leakage mitigation policies
    Erschienen: January 2023
    Verlag:  [Toulouse School of Economics], [Toulouse]

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    Schriftenreihe: Working papers / Toulouse School of Economics ; no 1408
    Schlagworte: Carbon pricing; trade; carbon leakage; CBAM; free allowances; export rebates
    Umfang: 1 Online-Ressource (circa 51 Seiten), Illustrationen
  15. Carbon pricing and industrial competitiveness
    border adjustment or free allocation?
    Autor*in: Ritz, Robert A.
    Erschienen: [2022]
    Verlag:  University of Cambridge, Faculty of Economics, [Cambridge]

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    Schriftenreihe: Cambridge working paper in economics ; 2234
    EPRG working paper ; 2211
    Schlagworte: Cap-and-trade; carbon border adjustment; carbon leakage; industrial competitiveness
    Umfang: 1 Online-Ressource (circa 14 Seiten), Illustrationen
  16. Does pricing carbon mitigate climate change?
    firm-level evidence from the European Union emissions trading scheme
    Erschienen: 2023
    Verlag:  National Bank of Belgium, Brussels

    In theory, market-based regulatory instruments correct market failures at least cost. However, evidence on their efficacy remains scarce. Using administrative data, we estimate that, on average, the EU ETS – the world’s first and largest market-based... mehr

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    In theory, market-based regulatory instruments correct market failures at least cost. However, evidence on their efficacy remains scarce. Using administrative data, we estimate that, on average, the EU ETS – the world’s first and largest market-based climate policy – induced regulated manufacturing firms to reduce carbon dioxide emissions by 14-16% with no detectable contractions in economic activity. We find no evidence of outsourcing to unregulated firms or markets; instead firms made targeted investments, reducing the emissions intensity of production. These results indicate that the EU ETS induced global emissions reductions, a necessary and sufficient condition for mitigating climate change. We show that the absence of any negative economic effects can be rationalized in a model where inattentive firms underinvest in energy-saving capital prior to regulation. Guided by the predictions of this model, we classify firms with low initial productivity or high energy intensity as potentially inattentive. We estimate larger reductions in emissions and increases in economic activity for those firms, consistent with regulation-induced cost savings or efficiency increases.

     

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    Schriftenreihe: Working paper research / National Bank of Belgium ; no 438 (June 2023)
    Schlagworte: cap-and-trade; carbon leakage; investment; climate policy
    Umfang: 1 Online-Ressource (circa 81 Seiten), Illustrationen
  17. Climate policy and trade in polluting technologies
    Erschienen: August 14, 2023
    Verlag:  Research Institute of Industrial Economics, Stockholm, Sweden

    This study estimates the impact of carbon pricing on international trade in equipment used in the combustion of fossil fuels during the period 1995-2021. Using detailed data on bilateral trade combined with data on domestic carbon prices, we find... mehr

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    This study estimates the impact of carbon pricing on international trade in equipment used in the combustion of fossil fuels during the period 1995-2021. Using detailed data on bilateral trade combined with data on domestic carbon prices, we find that carbon pricing policies are associated with greater exports of this equipment. We provide a simple model of international trade in polluting technologies that can explain this outcome. Our results provide new evidence for this unexplored form of leakage due to more stringent climate policies.

     

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    Schriftenreihe: IFN working paper ; no. 1470 (2023)
    Schlagworte: emissions pricing; cap and trade; carbon leakage; international trade in technologies
    Umfang: 1 Online-Ressource (circa 25 Seiten), Illustrationen
  18. Does emissions trading scheme induce innovation and carbon leakage?
    evidence from Japan
    Erschienen: [2023]
    Verlag:  Waseda INstitute of Political EConomy, Waseda University, Tokyo, Japan

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    Schriftenreihe: Array ; no. 22, 17 (March 2023)
    Schlagworte: Emissions trading scheme; Japan; innovation; carbon leakage; outsourcing activity; difference-in-differences
    Umfang: 1 Online-Ressource (circa 33 Seiten), Illustrationen
  19. Revisiting carbon leakage
    Erschienen: August 2021
    Verlag:  International Monetary Fund, [Washington, D.C.]

    This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations... mehr

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    This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations along two lines. First, we exploit recently published data on sector-country-specific changes in energy prices to identify changes in domestic carbon emissions and other flows (rather than the historically limited variation in carbon prices or adherence to international climate agreements). Second, we present a simple accounting framework to derive carbon leakage rates from reduced-form regressions in contrast to existing papers, thereby making our results directly comparable to model-based estimates of carbon leakage. We show that carbon leakage rates differ across countries and could be larger than what existing estimates suggest

     

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    Quelle: Staatsbibliothek zu Berlin
    Sprache: Englisch
    Medientyp: Ebook
    Format: Online
    ISBN: 9781513593029
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    Schriftenreihe: IMF working paper ; WP/21, 207
    Schlagworte: carbon leakage; CO2 content of trade; emission spillovers; competitiveness; Climate; Environment and Development; Global Warming; Natural Disasters and Their Management; Trade and Environment
    Umfang: 1 Online-Ressource (circa 27 Seiten), Illustrationen
  20. Factors affecting carbon dioxide emissions embodied in trade
    Erschienen: 2023
    Verlag:  Asian Development Bank, Metro Manila, Philippines

    Trade encourages economic expansion and improves welfare based on international division of labor. However, trade also has an environmental footprint, particularly in the form of carbon dioxide (CO2) and other emissions. This paper examines the... mehr

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    Trade encourages economic expansion and improves welfare based on international division of labor. However, trade also has an environmental footprint, particularly in the form of carbon dioxide (CO2) and other emissions. This paper examines the impact of environmental regulation in exporter and importer economies on cross-border carbon flows. It uses pooled estimation, random effects, fixed effects, fixed effects with instrumental variables, and Poisson pseudomaximum likelihood models to estimate the effect of more stringent environmental regulation, while controlling for scale, technique, and composition effects associated with CO2 emissions. While stricter environmental regulations help reduce CO2 emissions from domestic production, leading to lower CO2 emissions embodied in exports, stricter regulations on the importing side lead to higher CO2 emissions embodied in imports. More importantly, stricter environmental regulations could encourage further outsourcing of intermediate inputs by exporters, prompting carbon leakages in the upstream segment of global value chains.

     

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    Schriftenreihe: ADB economics working paper series ; no. 700 (October 2023)
    Schlagworte: CO2 emissions; carbon leakage; trade; global value chain
    Umfang: 1 Online-Ressource (circa 37 Seiten), Illustrationen
  21. Optimal carbon leakage
    Autor*in: Hokkanen, Topi
    Erschienen: 25 October 2023
    Verlag:  Bank of Finland, Helsinki

    Carbon leakage is one of the major issues facing policymakers today when designing environmental regulation. While the empirical and trade literature on carbon leakage is rich, much less is known about the implications of carbon leakage risk on... mehr

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    Carbon leakage is one of the major issues facing policymakers today when designing environmental regulation. While the empirical and trade literature on carbon leakage is rich, much less is known about the implications of carbon leakage risk on optimal regulatory policies under asymmetric information. To this end, I derive the optimal incentive compatible mechanism to regulate polluting firms under asymmetric information of both their abatement costs and carbon leakage risk, which I model as type-dependent outside options. The resulting regulatory distortions depend on the affiliation between the firm's abatement and relocation costs. The optimal policy is less strict than first-best whenever this affiliation is negative or mildly positive, whereas under strong positive affiliation I find a novel upwards distortion in the optimal policy. My results imply that rather than being a byproduct of unsuccessful regulation, carbon leakage may be the optimally induced outcome of incentive compatible regulation, contrasting with the received wisdom in policy debate.

     

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    Sprache: Englisch
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    ISBN: 9789523234499
    Weitere Identifier:
    hdl: 10419/279565
    Schriftenreihe: Bank of Finland research discussion papers ; 2023, 15
    Schlagworte: carbon leakage; mechanism design; externalities; asymmetric information
    Umfang: 1 Online-Ressource (circa 41 Seiten), Illustrationen
  22. Short-term economic effect of EU-CBAM on Japanese industries
    Autor*in: Sugino, Makoto
    Erschienen: [2023]
    Verlag:  RIETI, [Tokyo, Japan]

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    Schriftenreihe: RIETI discussion paper series ; 23-E, 060 (August 2023)
    Schlagworte: carbon pricing; carbon border adjustment measure; input-output analysis; effective carbon rates; carbon leakage
    Umfang: 1 Online-Ressource (circa 18 Seiten), Illustrationen
  23. Pollution havens?
    carbon taxes, globalization, and the geography of emissions
    Erschienen: [2023]
    Verlag:  European Central Bank, Frankfurt am Main, Germany

    This paper studies the impact of national carbon taxes on CO2 emissions. To do so, we run local projections on a cross-country panel dataset, matching measures of emissions of carbon dioxide with information on the introduction of carbon taxes and... mehr

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    This paper studies the impact of national carbon taxes on CO2 emissions. To do so, we run local projections on a cross-country panel dataset, matching measures of emissions of carbon dioxide with information on the introduction of carbon taxes and their implied price. Importantly, we consider both measures of territorial emissions - emissions emitted within a country's borders - and consumption emissions - emissions emitted anywhere in the world to satisfy domestic demand. We find that carbon taxes reduce territorial emissions over time, but have no significant effect on consumption emissions. Our estimates are robust to propensity-score weighting adjustments and are driven by countries which are more open to trade. Carbon taxes also lead to a modest increase in imports, suggesting that international trade may imply a negative carbon externality. Together, our findings highlight the limitations of national carbon taxes in isolation and the importance of international cooperation in reducing global emissions.

     

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    ISBN: 9789289962278
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    Schriftenreihe: Working paper series / European Central Bank ; no 2862
    Schlagworte: carbon taxes; emissions; carbon leakage
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  24. Climate policy and trade in polluting technologies
    Erschienen: [2024]
    Verlag:  Norwegian School of Economics, Bergen, Norway

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    Weitere Identifier:
    hdl: 11250/3114448
    Schriftenreihe: Discussion paper / Department of Business and Management Science ; FOR 2024, 3 (January 2024)
    Schlagworte: emissions pricing; cap-and-trade; carbon leakage; international trade in technologies
    Umfang: 1 Online-Ressource (circa 32 Seiten), Illustrationen
  25. Carbon pricing, compensation and competitiveness
    lessons from UK manufacturing
    Erschienen: February 2024
    Verlag:  London School of Economics and Political Science, London

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    Schriftenreihe: Centre for Climate Change Economics and Policy working paper ; no. 431
    Grantham Research Institute on Climate Change and the Environment working paper ; no. 406
    Schlagworte: carbon leakage; carbon pricing; compensation schemes; competitiveness; electricity consumption; emissions trading system; EU ETS; manufacturing; manufacturing industry; UK
    Umfang: 1 Online-Ressource (circa 73 Seiten)