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URL:
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http://ub-madoc.bib.uni-mannheim.de/2093
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URN:
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urn:nbn:de:bsz:180-madoc-20931
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Document Type:
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Working paper
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Year of publication:
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2008
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Publication language:
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English
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Institution:
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Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
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MADOC publication series:
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Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
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Subject:
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330 Economics
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Classification:
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JEL:
F18 H23 Q48 D58 ,
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Subject headings (SWD):
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Klimaschutz , Internationaler Wettbewerb , Zoll , Umweltzertifikathandel , Zwei-Länder-Modell , Europäische Union
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Keywords (English):
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Border Tax Adjustments , Climate Policy , Competitiveness , Emission Trading
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Abstract:
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In the absence of an international agreement on climate policy, unilateral carbon abatement creates two problems: It tends to have a detrimental effect on domestic competitiveness, and it leads to an increase in carbon emissions abroad (leakage). This paper analyses two policies that have recently been proposed to mitigate these problems: Border tax adjustments (BTA) and integrated emission trading (IET). The former policy levies a quantity-based, the latter an emission based duty on imports from non-abating countries. In a stylised two-country model we demonstrate that the policies address both problems. However, BTA protects domestic competitiveness more effectively, while IET achieves a greater reduction in foreign emissions. A computational general equilibrium analysis of the unilateral abatement policy adopted by the European Union confirms our theoretical insights for the sectors covered by the offsetting measures. However, the implications for the competitiveness of noncovered sectors are negative. These two effects constitute the central trade-off in the implementation of both policies.
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Additional information:
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[Working paper]
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