Showing posts with label Trade. Show all posts
Showing posts with label Trade. Show all posts

October 24, 2011

What Role for Trade in a Post 2012 Global Climate Policy Regime

by John Whalley

- This paper discusses the role that trade can potentially play in both negotiating and operating a post Kyoto/post 2012 global climate policy regime. As an addition to the bargaining set for a global climate negotiation, trade in principle widens the range of jointly beneficial potential outcomes and can in this sense be a potential facilitator of an agreed global climate regime. In short, trade added to the emerging post 2012 climate regime can both expand the bargaining set for both (effectively linked) negotiations, and additionally provide an instrument for the implementation of an agreed outcome.

John Whalley (2011). "What Role for Trade in a Post 2012 Global Climate Policy Regime." NBER Working Paper No. 17498, Oct 2011.

September 25, 2011

Who Should Bear the Cost of China’s Carbon Emissions Embodied in Goods for Exports_

by ZhongXiang Zhang

- While estimates of the embedded CO2 emissions in China’s trade differ, both single country studies for China and global studies show a hefty chunk of China’s CO2 emissions embedded in trade. This portion of CO2 emissions had helped to turn China into the world’s largest carbon emitter, and is further widening its gap with the second largest emitter. This raises the issue of who should be responsible for this portion of emissions and bearing the carbon cost of exports. China certainly wants importers to cover some, if not all, of those costs. While China’s stance is understandable, this paper has argued from a broad and balanced perspective that if this is pushed too far, it will not help to find solutions to this issue.

ZhongXiang, Zhang (2011). "Who Should Bear the Cost of China’s Carbon Emissions Embodied in Goods for Exports?" FEEM Note di lavoro No. 71.2011, Sept 2011.

Embodied Carbon Tariffs

by Christoph Böhringer, Jared C. Carbone and Thomas F. Rutherford

- In a world where the prospects of a global agreement to control greenhouse gas emissions are bleak, the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies. Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in imported goods. The appeal seems obvious: as OECD countries are, on average, large net importers of embodied emissions from non-OECD countries, carbon tariffs could substantially extend the reach of OECD climate policies. We investigate this claim by simulating the effects of embodied carbon tariffs with a computable general equilibrium model of global trade and energy use. We find that embodied carbon tariffs do effectively reduce carbon leakage. However, the scope for improvements in the global cost-effectiveness of unilateral climate policy is limited. The main welfare effect of the tariffs is to shift the burden of OECD climate policy to the developing world.

Böhringer, C., J.C. Carbone and T.F. Rutherford (2011). "Embodied Carbon Tariffs." NBER Working Paper No. 17376, Aug 2011.

April 25, 2011

Negative Leakage

by Don Fullerton, Dan Karney and Kathy Baylis

- We build a simple analytical general equilibrium model and linearize it, to find a closed-from expression for the effect of a small change in carbon tax on leakage - the increase in emissions elsewhere. The model has two goods produced in two sectors or regions. Many identical consumers buy both goods using income from a fixed stock of capital that is mobile between sectors. An increase in one sector’s carbon tax raises the price of its output, so consumption shifts to the other good, causing positive carbon leakage. However, the taxed sector substitutes away from carbon into capital. It thus absorbs capital, which shrinks the other sector, causing negative leakage. This latter effect could swamp the former, reducing carbon emissions in both sectors.

Fullerton, D., D. Karney and K. Baylis (2011). "Negative Leakage." CESifo Working Paper No. 3379, Mar 2011.

March 6, 2011

The Impact of Border Carbon Adjustments under Alternative Producer Responses

by N. Winchester

- Border carbon adjustments (BCAs) have been proposed to address leakage and competitiveness concerns. In traditional assessments, firms regard BCAs as output taxes rather than implicit emissions taxes. Using a stylized energy-economic model, we analyze the impact of BCAs for alternative producer responses. When firms view BCAs as an implicit emissions tax, the outcome depends on whether or not firms can differentiate production across destination markets. If firms are able to produce a low-emissions variety for regions imposing BCAs, results are similar to when firms regard BCAs as an output tax. If firms produce a single variety for all markets, BCAs result in larger leakage reductions than in standard approaches. We also find that BCAs are less effective at addressing competitive concerns in scenarios that result in larger leakage reductions.

Winchester, N. (2011). "The Impact of Border Carbon Adjustments under Alternative Producer Responses." MIT Joint Program Report Series, Report No. 192, Feb 2011.

February 6, 2011

Path Dependence: Biofuels Policy Under Uncertainty About Greenhouse Gas Emissions

by Johanna Jussila Hammes

- We study the effect of uncertainty about the greenhouse gas emissions arising from the production of biofuels on trade policy, in the presence of lobby groups and two policy instruments, trade policy and biofuels mandates. We show how policy may be path dependent, i.e., that earlier tariff rates in part determine future tariff rates if the government is susceptible to lobbying and given that the domestic price of biofuels does not fall. The model can, e.g., shed light on why the EU does not lower the tariffs on Brazilian ethanol in the face of new information.

Hammes, J.J. (2011). "Path Dependence: Biofuels Policy Under Uncertainty About Greenhouse Gas Emissions." Swedish National Road & Transport Research Institute (VTI) Working Paper No. 2001.1, Jan 2011.

The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?

by Stefan Ambec, Mark A Cohen, Stewart Elgie and Paul Lanoie

- Over the past 20 years, much has been written about what has since become known simply as the Porter Hypothesis (PH). Yet even today, we find conflicting evidence and alternative theories that might explain the PH, and oftentimes a misunderstanding of what the PH does and does not say. This paper provides an overview of the key theoretical and empirical insights into the PH to date, draws policy implications from these insights, and sketches out major research themes going forward.

Ambec, S., M.A. Cohen, S. Elgie and P. Lanoie (2011). "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?" RFF Discussion Paper 11-01, Jan 2011.

January 30, 2011

Energy Abundance, Trade and Industry Location

by Reyer Gerlagh and Nicole A. Mathys

- We study the effect of countries’ energy abundance on trade and sector activity, conditional on sector’s energy intensity, using an unbalanced panel with 14 high-income countries from Europe, America and Asia, 10 broad sectors, and years 1970-1997. We find that energy is a major driver for sector location through specialisation. We show that capital and energy are complements in the production function and use various controls in our analysis. The results give insights into delocalisation effects that may take place among rich countries with heterogeneous energy policy.

Gerlagh, R. and N.A. Mathys (2011). "Energy Abundance, Trade and Industry Location." FEEM Note di lavoro No. 2011.003, Jan 2011.

December 5, 2010

The Global Effects of Subglobal Climate Policies

by Christoph Böhringer, Carolyn Fischer and Knut Einar Rosendahl

- Missing from much of the debate on trade-related measures is a broader understanding of how climate policies implemented unilaterally (or subglobally) affect all countries in the global trading system. Arguably, the largest impacts are from the targeted carbon pricing itself, which generates macroeconomic effects, terms-of-trade changes, and shifts in global energy demand and prices; it also changes the relative prices of certain energy-intensive goods. This paper studies how climate policies implemented in certain major economies (the European Union and the United States) affect the global distribution of economic and environmental outcomes, and how these outcomes may be altered by complementary policies aimed at addressing carbon leakage.

Böhringer, C., C. Fischer and K.E. Rosendahl (2010). "The Global Effects of Subglobal Climate Policies." Discussion Papers 634 - Statistics Norway, Nov 2010.

Accounting for CO2 Emissions from International Shipping: Burden Sharing under Different UNFCCC Allocation Options and Regime Scenarios

by Nadine Heitmann and Setareh Khalilian

- In this paper we investigate the various options suggested by the Subsidiary Body for Scientific and Technological Advice (SBSTA) of the UNFCCC for allocating CO2 emissions from international shipping to individual countries. We discuss economic and regulatory issues related to these options and the consequences of applying them. We evaluate the various options on the basis of environmental effectiveness, possibility of legal implementation, and fairness of burden sharing. We conclude that an allocation of international shipping emissions should be conducted on the basis of the operating company.

Heitmann, N. and S. Khalilian (2010). "Accounting for CO2 Emissions from International Shipping: Burden Sharing under Different UNFCCC Allocation Options and Regime Scenarios." Kiel Working Paper No. 1655, Oct 2010.

October 17, 2010

Endogenous Growth, Asymmetric Trade and Resource Taxation

by Lucas Bretschger and Simone Valente

- Since 1980, the aggregate income of oil-exporting countries relative to that of oil-poor countries has been remarkably constant despite structural gaps in productivity growth rates. This stylized fact is analyzed in a two-country model where resource-poor (Home) and resource-rich (Foreign) economies display productivity differences but stable income shares due to terms-of-trade dynamics.

Bretschger, L. and S. Valente (2010). "Endogenous Growth, Asymmetric Trade and Resource Taxation." CER-ETH, Center of Economic Research, ETH Zürich, Economics Working Paper Series, Working Paper No. 10/132, Aug 2010.

October 10, 2010

Trade and Climate Change: The Challenges Ahead

by Jaime de Melo and Nicole Andréa Mathys

- The outcome of the 15th conference of the Parties to the UNFCC showed a shift from a top-down approach with a collective target favoring environmental objectives to a bottom-up accord favoring political feasibility with no meaningful binding agreement in sight as the global climate regime and the global trade policy regime represented by the WTO appear to be on a collision course. Following a review of the alternative architectures for the next Climate Change Agreement, the paper outlines four areas in which trade will play a role: as a purveyor of technological transfer; as a mechanism to separate where abatement takes place from who bears the cots of abatement; as a participation mechanism; and as a way to address the pressures for border adjustments.

de Melo, J. and N.A. Mathys (2010). "Trade and Climate Change: The Challenges Ahead." CEPR Discussion Paper No. DP8032, Sept 2010.

October 4, 2010

A Numerical Analysis of Optimal Extraction and Trade of Oil under Climate Policy

by Emanuele Massetti and Fabio Sferra

- We introduce endogenous investments for increasing conventional and non-conventional oil extraction capacity in the integrated assessment model WITCH. The international price of oil emerges as the Nash equilibrium of a non-cooperative game. When carbon emissions are not constrained, oil is used throughout the century, with unconventional oil taking over conventional oil from mid-century onward. When carbon emissions are constrained, oil consumption drops dramatically and the oil price is lower than in the BaU. Unconventional oil is not extracted. Regional imbalances in the distribution of stabilisation costs are magnified and the oil-exporting countries bear, on average, costs three times larger than in previous estimates.

Massetti, E. and F. Sferra (2010). "A Numerical Analysis of Optimal Extraction and Trade of Oil under Climate Policy." FEEM Nota di Lavoro No 2010.113, Sept 2010.

September 12, 2010

Limiting Emissions and Trade: Some Basic Ideas

by Kala Krishna

- The computable general equilibrium models used in the literature tend to be a bit of a black box. This paper provides some intuition behind what goes on in these black boxes by laying out a simple general equilibrium model and intuitively explaining what lies behind the demand for emissions. It traces out how a reduction in total emissions allowed in one country aspects the general equilibrium and the determinants of the extent of leakage in the model as well as more generally. It concludes with some implications for policy.

Krishna, K. (2010). "Limiting Emissions and Trade: Some Basic Ideas." NBER Working Paper No. 16147, Jul 2010.

September 5, 2010

Liberalizing Climate-Friendly Goods and Technologies in the WTO: Product Coverage, Modalities, Challenges and the Way Forward

by ZhongXiang Zhang

- The Doha Round Agenda (paragraph 31(3)) mandates to liberalize environmental goods and services. This mandate offers a good opportunity to put climate-friendly goods and services on a fast track to liberalization. Agreement on this paragraph should represent one immediate contribution that the WTO can make to fight against climate change. This paper presents the key issues surrounding liberalized trade in climate-friendly goods and technologies in WTO environmental goods negotiations. It begins with what products to liberalize and how.

Zhang, Z. (2010). "Liberalizing Climate-Friendly Goods and Technologies in the WTO: Product Coverage, Modalities, Challenges and the Way Forward." FEEM Note di lavoro No. 2010.102, Jul 2010.

June 6, 2010

The Effects of Domestic Climate Change Measures on International Competitiveness

by Hiau Looi Kee, Hong Ma and Muthukumara Mani

- This paper examines the implications of climate change policies such as carbon tax and energy efficiency standards on competitiveness across industries, as well as issues related to leakage, if any, of carbon-intensive industries to developing countries. Although competitiveness issues have been much debated in the context of carbon taxation policies, the study finds no evidence that the energy intensive industries' competitiveness is affected by carbon taxes. In fact, the analysis suggests that exports of most energy-intensive industries increase when a carbon tax is imposed by the exporting countries, or by both importing and exporting countries.

Kee, H.L., H. Ma and M. Mani (2010). "The Effects of Domestic Climate Change Measures on International Competitiveness." World Bank Policy Research working paper No. WPS 5309, May 2010.

May 2, 2010

The Economics of Trade, Biofuel, and the Environment

by Gal Hochman, Steven Sexton and David D. Zilberman

- The introduction of renewable biofuels was associated with global food crisis and unintended environmental consequences. This paper incorporates energy environment and agricultural sector to the classic Hecksher-Ohlin model to address these issues. A household production function model was introduced to model consumer energy choices and concern about externalities related to climate change and open space. The conceptual model links energy and food markets and derives guidelines for the development of climate change and land-use policies.

Hochman, G., S. Sexton and D.D. Zilberman (2010). "The Economics of Trade, Biofuel, and the Environment." CUDARE Working Paper No. 1100, UC Berkeley, Mar 2010.

Kyoto and the Carbon Content of Trade

by Rahel Aichele, and Gabriel Felbermayrz

- A unilateral tax on CO2 emissions may drive up indirect carbon imports from non-committed countries, leading to carbon leakage. Using a gravity model of carbon trade, we analyze the effect of the Kyoto Protocol on the carbon content of bilateral trade. We construct a novel data set of CO2 emissions embodied in bilateral trade flows. Its panel structure allows dealing with endogenous selection of countries into the Protocol. We find strong statistical evidence for Kyoto commitments to affect carbon trade. On average, the Kyoto protocol led to substantial carbon leakage but its total e ect on carbon trade was only minor.

Aichele, R. and G. Felbermayrz (2010). "Kyoto and the Carbon Content of Trade." Hohenheim University, CC Economics Discussion Paper 10-2010, Jan 2010.

April 18, 2010

Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives

by Christoph Böhringer, Andreas Lange and Thomas F. Rutherford

- Carbon control policies in OECD countries commonly differentiate emission prices in favor of energy-intensive industries. While leakage provides a efficiency argument for differential emission pricing, the latter may be a disguised beggar-thy-neighbor policy to exploit terms of trade. Using an optimal tax framework, we propose a method to decompose the leakage motive and the terms-of-trade motive for emission price differentiation. We illustrate our method with a quantitative impact assessment of unilateral climate policies for the U.S. and EU economies.

Böhringer, C., A. Lange and T.F. Rutherford (2010). "Optimal Emission Pricing in the Presence of International Spillovers: Decomposing Leakage and Terms-of-Trade Motives." NBER Working Paper No. 15899, Apr 2010.

How to Design a Border Adjustment for the European Union Emissions Trading System?

by Stéphanie Monjon and Philippe Quirion

- Border adjustments are currently discussed to limit the possible adverse impact of climate policies on competitiveness and carbon leakage. We discuss the main choices that will have to be made if the European Union implements such a system alongside with the EU ETS. Although more analysis is required on some issues, on others some design options seem clearly preferable to others.

Monjon, S. and P. Quirion (2010). "How to Design a Border Adjustment for the European Union Emissions Trading System?" FEEM Note di Lavoro 2010.036, Apr 2010.