March 21, 2010

Should Carbon-Exporting Countries Strive for Consumption-Based Accounting in a Global Cap-and-Trade Regime?

by Jan C. Steckel, Matthias Kalkuhl and Robert Marschinski

- In the context of the post-Kyoto policy debate, the question was raised whether the current practice of production-based emissions accounting should be replaced by a consumption-based approach. In this paper, we qualify the conditions under which the way of carbon accounting makes a difference, and show how this affects the incentive of countries to opt for one or the other alternative. For a net exporter of carbon such as China, the preference for one or the other turns out to be ambiguous.

Jan C. Steckel, Matthias Kalkuhl and Robert Marschinski (2010). "Should Carbon-Exporting Countries Strive for Consumption-Based Accounting in a Global Cap-and-Trade Regime?" PIK Working Paper, Mar 2010.