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Proposal for a national inventory adjustment for trade in the presence of border carbon adjustment: Assessing carbon tax policy in Japan

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  • Zhou, Xin
  • Yano, Takashi
  • Kojima, Satoshi

Abstract

In this paper we pointed out a hidden inequality in accounting for trade-related emissions in the presence of border carbon adjustment. Under a domestic carbon pricing policy, producers pay for the carbon costs in exchange for the right to emit. Under border carbon adjustment, however, the exporting country pays for the carbon costs of their exports to the importing country but not be given any emission credits. As a result, export-related emissions will be remained in the national inventory of the exporting country based on the UNFCCC inventory approach. This hidden inequality is important to climate policy but has not yet been pointed out. To address this issue we propose a method of National Inventory Adjustment for Trade, by which export-related emissions will be deducted from the national inventory of the exporting country and added to the national inventory of the importing country which implements border carbon adjustment. To assess the policy impacts, we simulated a carbon tax policy with border tax adjustment for Japan using a multi-region computable general equilibrium model. The results indicate that with the National Inventory Adjustment for Trade, both Japan′s national inventory and the carbon leakage effects of Japan′s climate policy will be greatly different.

Suggested Citation

  • Zhou, Xin & Yano, Takashi & Kojima, Satoshi, 2013. "Proposal for a national inventory adjustment for trade in the presence of border carbon adjustment: Assessing carbon tax policy in Japan," Energy Policy, Elsevier, vol. 63(C), pages 1098-1110.
    • Handle: RePEc:eee:enepol:v:63:y:2013:i:c:p:1098-1110
    DOI: 10.1016/j.enpol.2013.09.016
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    References listed on IDEAS

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    Cited by:

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    2. Lian-Biao Cui & Ma-Lin Song, 2017. "Designing and Forecasting the Differentiated Carbon Tax Scheme Based on the Principle of Ability to Pay," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(01), pages 1-25, February.
    3. Ma, Xuejiao & Wang, Yong & Wang, Chen, 2017. "Low-carbon development of China's thermal power industry based on an international comparison: Review, analysis and forecast," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 942-970.
    4. Banerjee, Suvajit, 2020. "Border vis-à-vis Domestic Carbon Adjustment: Implications of Alternative System Boundary for India to Reduce Carbon Emissions," Conference papers 333129, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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