Intermediate input linkage and carbon leakage

Zhang, Zengkai; Zhang, ZhongXiang

doi:10.1017/s1355770x17000250

Cited by 8 publications

(1 citation statement)

References 51 publications

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“…All jurisdictions that implement a tax or GHG ETS include provisions to protect EITE firms against adverse economic impacts from competitors in jurisdictions with no, or less costly, GHG emission regulations. Failure to protect EITE firms may lead to lower output and loss of employment in the jurisdiction with the tax or ETS and higher emissions elsewherea problem known as leakage (Branger & Quirion, 2014;Zhang & Zhang, 2016). In the case of a tax, protection takes the form of tax exemption, a lower tax rate or rebates.…”

Section: Practical Designsmentioning

confidence: 99%

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

Haites

2018

Climate Policy

250

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Systematic evidence relating to the performance of carbon pricingcarbon taxes and greenhouse gas (GHG) emissions trading systems (ETSs)is sparse. In 2015, 17 ETSs were operational in 55 jurisdictions while 18 jurisdictions collected a carbon tax. The papers in this special thematic section review the performance of many of these instruments over the 2005-2015 period. The performance of existing carbon taxes and GHG ETSs can help policy makers make informed choices about whether to introduce these instruments and to improve their design. The purpose of carbon pricing instruments is to reduce GHG emissions cost effectively. Assessing their performance is difficult because emissions are also affected by other policies and exogenous factors such as economic conditions. Carbon taxes in Europe prior to 2008 and in British Columbia reduced emissions from business-as-usual but actual emissions continued to rise. Since 2008 emissions subject to European carbon taxes have declined, but in most countries, other mitigation policies have probably contributed more to the reductions than the carbon taxes. Emissions subject to ETSs, with the exception of four systems without emissions caps, have declined. The ETSs contributed to the emissions reductions, but their share of the overall reduction is not known. Most tax rates are low relative to levels thought to be needed to achieve climate change objectives. Few jurisdictions regularly adjust their tax rates. All ETSs have accumulated surplus allowances and implemented measures to reduce these surpluses. The largest ETSs now specify annual reductions in their emissions cap several years into the future. Emissions trading system allowance prices are generally lower than the tax rates.Key policy insights . Theoretical discussions usually portray carbon taxes and GHG ETSs as alternatives.In practice, a jurisdiction often implements both instruments to address emissions by different sources. . Designs of ETSs have evolved based on experience shared bilaterally and via dedicated institutions. . Carbon tax designs, in contrast, have hardly evolved and there are no institutions dedicated to sharing experience. . Every jurisdiction with an ETS and/or carbon tax also has other policies that affect its GHG emissions. ARTICLE HISTORYCarbon pricing can be implemented using either of two instrumentsa carbon tax or a GHG emissions trading system (ETS). With a tax, the government sets the tax rate and specifies the sources subject to the tax. The emission reduction achieved depends upon the response of the affected sources to the imposition of the tax. With an ETS the government sets a limit on GHG emissions by specified sources and distributes allowances approximately equal to the limit. 2 Allowances are tradable. Each source must surrender allowances equal to its actual emissions to the government. Emissions cannot exceed the limit, but the compliance cost depends on the market price of allowances.There is an extensive literature on the relative merits of these two instruments (e.g. Partnersh...

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Section: Practical Designsmentioning

confidence: 99%

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

Haites

2018

Climate Policy

250

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The effects of the Kyoto Protocol on the carbon trade balance

Hartl

2019

Rev World Econ

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This study presents estimates of the magnitude of carbon leakage as a consequence of emission reduction commitments under the Kyoto Protocol using gravity modelstyle regression analysis on data from the WIOD project. The carbon trade balance between 2002 and 2009 was reduced by 705 megatons of carbon dioxide due to Kyoto and carbon leakage amounts to slightly above 4% of traded carbon dioxide emissions. We highlight four previously neglected issues: First, we control for multilateral trade resistance in the estimation of a unilateral policy by using a two-stage procedure. Second, we control explicitly for the effect of Eastern European countries on leakage estimates. We show that this country group strongly affects the baseline estimates in the framework introduced by Aichele and Felbermayr (Rev Econ Stat 97(1):104-115, 2015). Third, we introduce an alternative specification of the Kyoto variable. Fourth, this is the first study to present econometric evidence for the magnitude of carbon leakage from services sectors. While service elasticities are estimated to be sizable, strong leakage is limited to transport sectors as well as renting of machinery. The manufacturing sectors of metals, machinery and transport equipment are responsible for three quarters of observed leakage.

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Analyzing the carbon pricing-leakage nexus through structural gravity estimation

Habibi

2025

Energy Policy

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Intermediate input linkage and carbon leakage

Cited by 8 publications

References 51 publications

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

The effects of the Kyoto Protocol on the carbon trade balance

Analyzing the carbon pricing-leakage nexus through structural gravity estimation

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