Unilateral Carbon Taxes, Border Tax Adjustments and Carbon Leakage
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Joshua Elliott
We examine the impact of a unilateral carbon tax in developed countries, focusing on the expected size of carbon leakage (an increase in emissions in non-taxing regions as a result of the tax) and the effects on leakage of border tax adjustments. We start by analyzing the problem using a simple two-country, three-good general equilibrium model to develop intuitions. We then simulate the expected size of the effects using a new, open-source, computable general equilibrium (CGE) model. We analyze the extent of emissions reductions from a carbon tax in countries that made commitments under the Kyoto Protocol (Annex B countries), the expected carbon leakage, and the effects of border tax adjustments on carbon leakage, all relative to our baseline projections for emissions. We also perform extensive sensitivity tests on the parameters of the CGE model. Finally, we consider the effects of imperfect border tax adjustments on leakage, such as global or regional schedules of border taxes.
© 2013 by Walter de Gruyter GmbH & Co.
Articles in the same Issue
- Masthead
- Introduction
- Mitigation, Adaptation or Climate Engineering?
- The Montreal Protocol Protection of Ozone and Climate
- Two Stories About E.U. Climate Change Law and Policy
- Orchestrating a Low-Carbon Energy Revolution Without Nuclear: Germany’s Response to the Fukushima Nuclear Crisis
- Transformations in Brazilian Deforestation and Climate Policy Since 2005
- An Analytical Comparison of Various Influential Models of China’s Future Greenhouse Gas Emissions and Global Role
- Differentiation in the Emerging Climate Regime
- In-Country Disparities in Greenhouse Gas Emissions and Their Significance for Politicizing a Future Global Climate Pact
- Close Examination of the Principle of Global Per-Capita Allocation of the Earth’s Ability to Absorb Greenhouse Gas
- Unilateral Carbon Taxes, Border Tax Adjustments and Carbon Leakage
- Where There’s a Will There’s a Way – A Theoretical Analysis of the Connection Between Social Policy and Environmental Performance
- Building a More Effective Global Climate Regime Through a Bottom-Up Approach
- International Governance of Climate Engineering
Articles in the same Issue
- Masthead
- Introduction
- Mitigation, Adaptation or Climate Engineering?
- The Montreal Protocol Protection of Ozone and Climate
- Two Stories About E.U. Climate Change Law and Policy
- Orchestrating a Low-Carbon Energy Revolution Without Nuclear: Germany’s Response to the Fukushima Nuclear Crisis
- Transformations in Brazilian Deforestation and Climate Policy Since 2005
- An Analytical Comparison of Various Influential Models of China’s Future Greenhouse Gas Emissions and Global Role
- Differentiation in the Emerging Climate Regime
- In-Country Disparities in Greenhouse Gas Emissions and Their Significance for Politicizing a Future Global Climate Pact
- Close Examination of the Principle of Global Per-Capita Allocation of the Earth’s Ability to Absorb Greenhouse Gas
- Unilateral Carbon Taxes, Border Tax Adjustments and Carbon Leakage
- Where There’s a Will There’s a Way – A Theoretical Analysis of the Connection Between Social Policy and Environmental Performance
- Building a More Effective Global Climate Regime Through a Bottom-Up Approach
- International Governance of Climate Engineering
