Carbon Leakage

Di Maria, C. ORCID:, Michielsen, T. O. and van der Werf, E. (2013) Carbon Leakage. In: Resources. Elsevier, pp. 255-259. ISBN 9780080964522

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Because of the difficulties in forming international climate agreements, most climate policies have been the result of unilateral action. There is widespread concern that unilateral policies are ineffective because emission reductions in abating countries are offset by increases in nonabating countries. The authors summarize the channels through which such carbon leakage can occur, review estimates of the magnitude of the problem, and list policies that have been suggested to mitigate carbon leakage. The most prominent cause of carbon leakage is the 'energy market channel': unilateral policies to reduce emissions from fossil fuels decrease the world market price of fossil fuels, encouraging their use in nonabating countries. Terms of trade effects, indicating a loss of competitiveness in energy-intensive sectors in abating countries, are less important. Numerical estimates of the carbon leakage rate - the fraction of emission reductions in abating countries that is undone by increases elsewhere - are mostly between 2% and 40%; however, outliers exist in both directions. Policies to mitigate carbon leakage, such as border tax adjustments, are likely ineffective.

Item Type: Book Section
Additional Information: Publisher Copyright: © 2013 Elsevier Inc. All rights reserved.
Uncontrolled Keywords: border tax adjustment,climate change,competitiveness,computable general equilibrium,fossil fuels,international trade,unilateral climate policy,economics, econometrics and finance(all),business, management and accounting(all),sdg 13 - climate action ,/dk/atira/pure/subjectarea/asjc/2000
Faculty \ School: Faculty of Social Sciences > School of Economics
University of East Anglia Research Groups/Centres > Theme - ClimateUEA
UEA Research Groups: Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict
Faculty of Social Sciences > Research Groups > Economic Theory
Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance
University of East Anglia Schools > Faculty of Science > Tyndall Centre for Climate Change Research
Faculty of Science > Research Centres > Tyndall Centre for Climate Change Research
Faculty of Science > Research Centres > Centre for Social and Economic Research on the Global Environment (CSERGE)
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Depositing User: LivePure Connector
Date Deposited: 12 Sep 2022 10:32
Last Modified: 20 Mar 2023 09:42
DOI: 10.1016/B978-0-12-375067-9.00166-2

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