IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v115y2020ics1389934119305064.html
   My bibliography  Save this article

Carbon leakage in energy/forest sectors and climate policy implications using meta-analysis

Author

Listed:
  • Pan, Wenqi
  • Kim, Man-Keun
  • Ning, Zhuo
  • Yang, Hongqiang

Abstract

Carbon leakage, a shift of carbon emissions from a region with emission constraint to unregulated areas, has been a great concern in energy-related industries and the forest sector. Carbon leakage may weaken the effectiveness of regional climate policies. This study aims to identify the drivers of carbon leakage and provide policy implications to mitigate carbon leakage using meta-regression. A total of 46 studies are collected, which provide 230 estimates of carbon leakage. Results show that (i) the forest sector has larger carbon leakage of 39.6%; (ii) substitution degree increases carbon leakage, but it is not statistically significant; (iii) contrary to popular belief, coalition size is not always negatively related to carbon leakage; (iv) local economic conditions are key drivers of carbon leakage; and (v) carbon leakage is overestimated in the forest sector by 41.42% when ignoring agricultural expansion through the land use change. Results also support the following policy implications: (i) the global agreement, which requires the participation of poorer regions and countries, may effectively reduce carbon leakage; (ii) a mature worldwide carbon trading market with relatively high carbon prices can attract more participants; and (iii) a long-term and integrated land-use planning will be an effective way to reduce carbon leakage caused by agricultural expansion.

Suggested Citation

  • Pan, Wenqi & Kim, Man-Keun & Ning, Zhuo & Yang, Hongqiang, 2020. "Carbon leakage in energy/forest sectors and climate policy implications using meta-analysis," Forest Policy and Economics, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:forpol:v:115:y:2020:i:c:s1389934119305064
    DOI: 10.1016/j.forpol.2020.102161
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934119305064
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.forpol.2020.102161?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Weitzel, Matthias & Hübler, Michael & Peterson, Sonja, 2012. "Fair, optimal or detrimental? Environmental vs. strategic use of border carbon adjustment," Energy Economics, Elsevier, vol. 34(S2), pages 198-207.
    2. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2012. "Efficiency and Equity Implications of Alternative Instruments to Reduce Carbon Leakage," Working Papers V-346-12, University of Oldenburg, Department of Economics, revised Jun 2012.
    3. Sergey V. Paltsev, 2001. "The Kyoto Protocol: Regional and Sectoral Contributions to the Carbon Leakage," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 53-80.
    4. Boeters, Stefan & Bollen, Johannes, 2012. "Fossil fuel supply, leakage and the effectiveness of border measures in climate policy," Energy Economics, Elsevier, vol. 34(S2), pages 181-189.
    5. Zhang, Zengkai & Zhang, Zhongxiang, 2017. "Intermediate input linkage and carbon leakage," Environment and Development Economics, Cambridge University Press, vol. 22(6), pages 725-746, December.
    6. Jean-Marc Burniaux & Joaquim Oliveira Martins, 2016. "Carbon Leakages: A General Equilibrium View," Studies in Economic Theory, in: Graciela Chichilnisky & Armon Rezai (ed.), The Economics of the Global Environment, pages 341-363, Springer.
    7. Bruno Lanz & Thomas F. Rutherford & John E. Tilton, 2013. "Subglobal Climate Agreements and Energy-intensive Activities: An Evaluation of Carbon Leakage in the Copper Industry," The World Economy, Wiley Blackwell, vol. 36(3), pages 254-279, March.
    8. Ghosh, Madanmohan & Luo, Deming & Siddiqui, Muhammad Shahid & Zhu, Yunfa, 2012. "Border tax adjustments in the climate policy context: CO2 versus broad-based GHG emission targeting," Energy Economics, Elsevier, vol. 34(S2), pages 154-167.
    9. Böhringer, Christoph & Balistreri, Edward J. & Rutherford, Thomas F., 2012. "The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)," Energy Economics, Elsevier, vol. 34(S2), pages 97-110.
    10. Henders, Sabine & Ostwald, Madelene, 2014. "Accounting methods for international land-related leakage and distant deforestation drivers," Ecological Economics, Elsevier, vol. 99(C), pages 21-28.
    11. Felder Stefan & Rutherford Thomas F., 1993. "Unilateral CO2 Reductions and Carbon Leakage: The Consequences of International Trade in Oil and Basic Materials," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 162-176, September.
    12. Paroussos, Leonidas & Fragkos, Panagiotis & Capros, Pantelis & Fragkiadakis, Kostas, 2015. "Assessment of carbon leakage through the industry channel: The EU perspective," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 204-219.
    13. Springmann, Marco, 2012. "A look inwards: Carbon tariffs versus internal improvements in emissions-trading systems," Energy Economics, Elsevier, vol. 34(S2), pages 228-239.
    14. Onno Kuik, 2014. "REDD+ and international leakage via food and timber markets: a CGE analysis," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 19(6), pages 641-655, August.
    15. Alexeeva-Talebi, Victoria & Böhringer, Christoph & Löschel, Andreas & Voigt, Sebastian, 2012. "The value-added of sectoral disaggregation: Implications on competitive consequences of climate change policies," Energy Economics, Elsevier, vol. 34(S2), pages 127-142.
    16. Philippe Delacote & Arild Angelsen, 2015. "Reducing Deforestation and Forest Degradation: Leakage or Synergy?," Land Economics, University of Wisconsin Press, vol. 91(3), pages 501-515.
    17. Gan, Jianbang & McCarl, Bruce A., 2007. "Measuring transnational leakage of forest conservation," Ecological Economics, Elsevier, vol. 64(2), pages 423-432, December.
    18. Gabriela Michalek & Reimund Schwarze, 2015. "Carbon leakage: pollution, trade or politics?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 17(6), pages 1471-1492, December.
    19. Böhringer, Christoph & Rosendahl, Knut Einar & Storrøsten, Halvor Briseid, 2017. "Robust policies to mitigate carbon leakage," Journal of Public Economics, Elsevier, vol. 149(C), pages 35-46.
    20. Jennifer M. Alix-Garcia & Elizabeth N. Shapiro & Katharine R. E. Sims, 2012. "Forest Conservation and Slippage: Evidence from Mexico’s National Payments for Ecosystem Services Program," Land Economics, University of Wisconsin Press, vol. 88(4), pages 613-638.
    21. Brian C. Murray & Bruce A. McCarl & Heng-Chi Lee, 2004. "Estimating Leakage from Forest Carbon Sequestration Programs," Land Economics, University of Wisconsin Press, vol. 80(1), pages 109-124.
    22. repec:dau:papers:123456789/7970 is not listed on IDEAS
    23. Balistreri, Edward J. & Rutherford, Thomas F., 2012. "Subglobal carbon policy and the competitive selection of heterogeneous firms," Energy Economics, Elsevier, vol. 34(S2), pages 190-197.
    24. Tan, Xiujie & Liu, Yu & Cui, Jingbo & Su, Bin, 2018. "Assessment of carbon leakage by channels: An approach combining CGE model and decomposition analysis," Energy Economics, Elsevier, vol. 74(C), pages 535-545.
    25. Mikel González-Eguino & Iñigo Capellán-Pérez & Iñaki Arto & Alberto Ansuategi & Anil Markandya, 2017. "Industrial and terrestrial carbon leakage under climate policy fragmentation," Climate Policy, Taylor & Francis Journals, vol. 17(0), pages 148-169, June.
    26. Christoph Bohringer, Knut Einar Rosendahl, and Jan Schneider, 2014. "Unilateral Climate Policy: Can OPEC Resolve the Leakage Problem?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    27. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
    28. Caron, Justin, 2012. "Estimating carbon leakage and the efficiency of border adjustments in general equilibrium — Does sectoral aggregation matter?," Energy Economics, Elsevier, vol. 34(S2), pages 111-126.
    29. Branger, Frédéric & Quirion, Philippe, 2014. "Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," Ecological Economics, Elsevier, vol. 99(C), pages 29-39.
    30. Nepal, Prakash & Ince, Peter J. & Skog, Kenneth E. & Chang, Sun J., 2013. "Forest carbon benefits, costs and leakage effects of carbon reserve scenarios in the United States," Journal of Forest Economics, Elsevier, vol. 19(3), pages 286-306.
    31. T.D. Stanley & Hristos Doucouliagos & Margaret Giles & Jost Heckemeyer & Robert Johnston & Patrice Laroche & Jon Nelson & Martin Paldam & Jacques Poot & Geoff Pugh & Randall Rosenberger & Katja Rost, 2013. "Meta-analysis of economics research reporting guidelines," Post-Print hal-02137661, HAL.
    32. Böhringer, Christoph & Carbone, Jared C. & Rutherford, Thomas F., 2012. "Unilateral climate policy design: Efficiency and equity implications of alternative instruments to reduce carbon leakage," Energy Economics, Elsevier, vol. 34(S2), pages 208-217.
    33. Stibniati Atmadja & Louis Verchot, 2012. "A review of the state of research, policies and strategies in addressing leakage from reducing emissions from deforestation and forest degradation (REDD+)," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(3), pages 311-336, March.
    34. Martin, Ralf & Muûls, Mirabelle & de Preux, Laure B. & Wagner, Ulrich J., 2014. "On the empirical content of carbon leakage criteria in the EU Emissions Trading Scheme," Ecological Economics, Elsevier, vol. 105(C), pages 78-88.
    35. Višković, Verena & Chen, Yihsu & Siddiqui, Afzal S., 2017. "Implications of the EU Emissions Trading System for the South-East Europe Regional Electricity Market," Energy Economics, Elsevier, vol. 65(C), pages 251-261.
    36. repec:zbw:hohpro:346 is not listed on IDEAS
    37. Kallio, A. Maarit I. & Solberg, Birger & Käär, Liisa & Päivinen, Risto, 2018. "Economic impacts of setting reference levels for the forest carbon sinks in the EU on the European forest sector," Forest Policy and Economics, Elsevier, vol. 92(C), pages 193-201.
    38. Bednar-Friedl, Birgit & Schinko, Thomas & Steininger, Karl W., 2012. "The relevance of process emissions for carbon leakage: A comparison of unilateral climate policy options with and without border carbon adjustment," Energy Economics, Elsevier, vol. 34(S2), pages 168-180.
    39. Antimiani, Alessandro & Costantini, Valeria & Martini, Chiara & Salvatici, Luca & Tommasino, Maria Cristina, 2013. "Assessing alternative solutions to carbon leakage," Energy Economics, Elsevier, vol. 36(C), pages 299-311.
    40. Fischer, Carolyn & Fox, Alan K., 2012. "Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 199-216.
    41. T.D. Stanley & Hristos Doucouliagos & Margaret Giles & Jost H. Heckemeyer & Robert J. Johnston & Patrice Laroche & Jon P. Nelson & Martin Paldam & Jacques Poot & Geoff Pugh & Randall S. Rosenberger & , 2013. "Meta-Analysis Of Economics Research Reporting Guidelines," Journal of Economic Surveys, Wiley Blackwell, vol. 27(2), pages 390-394, April.
    42. Arroyo-Currás, Tabaré & Bauer, Nico & Kriegler, Elmar & Schwanitz, Valeria Jana & Luderer, Gunnar & Aboumahboub, Tino & Giannousakis, Anastasis & Hilaire, Jérôme, 2015. "Carbon leakage in a fragmented climate regime: The dynamic response of global energy markets," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 192-203.
    43. Lea Fortmann & Brent Sohngen & Douglas Southgate, 2017. "Assessing the Role of Group Heterogeneity in Community Forest Concessions in Guatemala’s Maya Biosphere Reserve," Land Economics, University of Wisconsin Press, vol. 93(3), pages 503-526.
    44. N. Wear, David & Murray, Brian C., 2004. "Federal timber restrictions, interregional spillovers, and the impact on US softwood markets," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 307-330, March.
    45. Kim, Man-Keun & Peralta, Denis & McCarl, Bruce A., 2014. "Land-based greenhouse gas emission offset and leakage discounting," Ecological Economics, Elsevier, vol. 105(C), pages 265-273.
    46. Gerlagh, Reyer & Kuik, Onno, 2014. "Spill or leak? Carbon leakage with international technology spillovers: A CGE analysis," Energy Economics, Elsevier, vol. 45(C), pages 381-388.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daigneault, Adam & Simons-Legaard, Erin & Weiskittel, Aaron, 2024. "Tradeoffs and synergies of optimized management for maximizing carbon sequestration across complex landscapes and diverse ecosystem services," Forest Policy and Economics, Elsevier, vol. 161(C).
    2. Veli Yilanci & Recep Ulucak & Yaoqi Zhang & Valeria Andreoni, 2023. "The role of affluence, urbanization, and human capital for sustainable forest management in China: Robust findings from a new method of Fourier cointegration," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 812-824, April.
    3. O’Donoghue, Cathal & O’Fatharta, Eoin & Geoghegan, Cathal & Ryan, Mary, 2024. "Farmland afforestation: Forest optimal rotation ages across discrete optimisation objectives," Land Use Policy, Elsevier, vol. 139(C).
    4. Xinxin Liao & Zhuo Ning, 2022. "Welfare Implications of Border Carbon Adjustments on the Trade of Harvested Wood Products," IJERPH, MDPI, vol. 20(1), pages 1-16, December.
    5. Petri P. Karenlampi, 2023. "Microeconomics of nitrogen fertilization in boreal carbon forestry," Papers 2307.12362, arXiv.org.
    6. Szajkó, Gabriella & Rácz, Viktor József & Kis, András, 2024. "The role of price incentives in enhancing carbon sequestration in the forestry sector of Hungary," Forest Policy and Economics, Elsevier, vol. 158(C).
    7. Li, Lili & Zhang, Daowei, 2024. "Forest carbon offset protocols in compliance carbon markets," Forest Policy and Economics, Elsevier, vol. 165(C).
    8. Pan, Wenqi & Chang, Wei-Yew & Wu, Ting & Zhang, Han & Ning, Zhuo & Yang, Hongqiang, 2021. "Impacts of the China-US trade restrictions on the global forest sector: A bilateral trade flow analysis," Forest Policy and Economics, Elsevier, vol. 123(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Branger, Frédéric & Quirion, Philippe, 2014. "Would border carbon adjustments prevent carbon leakage and heavy industry competitiveness losses? Insights from a meta-analysis of recent economic studies," Ecological Economics, Elsevier, vol. 99(C), pages 29-39.
    2. Tan, Xiujie & Liu, Yu & Cui, Jingbo & Su, Bin, 2018. "Assessment of carbon leakage by channels: An approach combining CGE model and decomposition analysis," Energy Economics, Elsevier, vol. 74(C), pages 535-545.
    3. Antimiani, Alessandro & Costantini, Valeria & Kuik, Onno & Paglialunga, Elena, 2016. "Mitigation of adverse effects on competitiveness and leakage of unilateral EU climate policy: An assessment of policy instruments," Ecological Economics, Elsevier, vol. 128(C), pages 246-259.
    4. Böhringer, Christoph & Balistreri, Edward J. & Rutherford, Thomas F., 2012. "The role of border carbon adjustment in unilateral climate policy: Overview of an Energy Modeling Forum study (EMF 29)," Energy Economics, Elsevier, vol. 34(S2), pages 97-110.
    5. Bellora, Cecilia, 2020. "Carbon Border Adjustment and Alternatives," Conference papers 333210, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Filewod, Ben & McCarney, Geoff, 2023. "Avoiding leakage from nature-based offsets by design," LSE Research Online Documents on Economics 117927, London School of Economics and Political Science, LSE Library.
    7. Clora, Francesco & Yu, Wusheng, 2022. "GHG emissions, trade balance, and carbon leakage: Insights from modeling thirty-one European decarbonization pathways towards 2050," Energy Economics, Elsevier, vol. 113(C).
    8. Filewod, Ben & McCarney, Geoff, 2023. "Avoiding leakage from nature-based offsets by design," LSE Research Online Documents on Economics 117928, London School of Economics and Political Science, LSE Library.
    9. Wu, Libo & Zhou, Ying & Qian, Haoqi, 2022. "Global actions under the Paris agreement: Tracing the carbon leakage flow and pursuing countermeasures," Energy Economics, Elsevier, vol. 106(C).
    10. Jia, Zhijie & Wu, Rongxin & Liu, Yu & Wen, Shiyan & Lin, Boqiang, 2024. "Can carbon tariffs based on domestic embedded carbon emissions reduce more carbon leakages?," Ecological Economics, Elsevier, vol. 220(C).
    11. Li, Aijun & Du, Nan & Wei, Qian, 2014. "The cross-country implications of alternative climate policies," Energy Policy, Elsevier, vol. 72(C), pages 155-163.
    12. Wilman, Elizabeth A., 2019. "Market Redirection Leakage in the Palm Oil Market," Ecological Economics, Elsevier, vol. 159(C), pages 226-234.
    13. Beck, Ulrik R. & Kruse-Andersen, Peter K. & Stewart, Louis B., 2023. "Carbon leakage in a small open economy: The importance of international climate policies," Energy Economics, Elsevier, vol. 117(C).
    14. Jakob, Michael, 2021. "Climate policy and international trade – A critical appraisal of the literature," Energy Policy, Elsevier, vol. 156(C).
    15. Paroussos, Leonidas & Fragkos, Panagiotis & Capros, Pantelis & Fragkiadakis, Kostas, 2015. "Assessment of carbon leakage through the industry channel: The EU perspective," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 204-219.
    16. García, Jorge H. & Orlov, Anton & Aaheim, Asbjørn, 2018. "Negative leakage: The key role of forest management regimes," Journal of Forest Economics, Elsevier, vol. 33(C), pages 8-13.
    17. Christoph Böhringer & André Müller & Jan Schneider, 2015. "Carbon Tariffs Revisited," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 629-672.
    18. Perdana, Sigit & Vielle, Marc, 2022. "Making the EU Carbon Border Adjustment Mechanism acceptable and climate friendly for least developed countries," Energy Policy, Elsevier, vol. 170(C).
    19. Marc Baudry & Alienor Cameron, 2022. "The case for a Carbon Border Adjustment: Where do economists stand?," Working Papers hal-04159819, HAL.
    20. Huiying Ye & Qi Zhang & Xunzhang Pan & Arash Farnoosh, 2020. "Market-induced carbon leakage in China’s certified emission reduction projects," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 25(6), pages 987-1012, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:forpol:v:115:y:2020:i:c:s1389934119305064. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.