IDEAS home Printed from https://ideas.repec.org/a/oup/apecpp/v39y2017i2p242-258..html
   My bibliography  Save this article

Climate Policy and Border Measures: The Case of the U.S. Aluminum Industry

Author

Listed:
  • Ian Sheldon
  • Steve McCorriston

Abstract

This article analyzes the impact of border measures for climate policy on carbon leakage and the competitiveness of U.S. aluminum producers. An appropriate border measure is shown to depend on competition in aluminum production, as well as the basis for assessing trade neutrality of a border measure. If neutrality is based on market volume, carbon leakage is prevented, but competitiveness cannot be maintained. If neutrality is based on market share, competitiveness can be maintained and there is negative carbon leakage. In either case, users of aluminum incur deadweight losses from the combination of climate policy and border measures. The key policy implication of the analysis is that appropriately designed border measures for climate policy may break the link between competitiveness and carbon leakage, but their design is important in ensuring that they are not protectionist.

Suggested Citation

  • Ian Sheldon & Steve McCorriston, 2017. "Climate Policy and Border Measures: The Case of the U.S. Aluminum Industry," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(2), pages 242-258.
  • Handle: RePEc:oup:apecpp:v:39:y:2017:i:2:p:242-258.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/aepp/ppw019
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    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. Mrs. Mai Farid & Mr. Michael Keen & Mr. Michael G. Papaioannou & Ian W.H. Parry & Ms. Catherine A Pattillo & Anna Ter-Martirosyan, 2016. "After Paris: Fiscal, Macroeconomic and Financial Implications of Global Climate Change," IMF Staff Discussion Notes 2016/001, International Monetary Fund.
    2. Robert A. Ritz, 2009. "Carbon leakage under incomplete environmental regulation: An industry-level approach," Economics Series Working Papers 461, University of Oxford, Department of Economics.
    3. Madison Condon & Ada Ignaciuk, 2013. "Border Carbon Adjustment and International Trade: A Literature Review," OECD Trade and Environment Working Papers 2013/6, OECD Publishing.
    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. repec:ags:aaea22:335697 is not listed on IDEAS

    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. Michael Keen & Ian Parry & James Roaf, 2022. "Border carbon adjustments: rationale, design and impact," Fiscal Studies, John Wiley & Sons, vol. 43(3), pages 209-234, September.
    2. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 29-70, February.
    3. 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.
    4. Elizabeth Baldwin, Yongyang Cai, Karlygash Kuralbayeva, 2018. "To build or not to build? Capital stocks and climate policy," GRI Working Papers 290, Grantham Research Institute on Climate Change and the Environment.
    5. Melanie Hecht & Wolfgang Peters, 2019. "Border Adjustments Supplementing Nationally Determined Carbon Pricing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 93-109, May.
    6. Dieter Helm & Cameron Hepburn & Giovanni Ruta, 2012. "Trade, climate change, and the political game theory of border carbon adjustments," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(2), pages 368-394, SUMMER.
    7. Thomas Grebel, 2019. "What a difference carbon leakage correction makes!," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 939-971, July.
    8. 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.
    9. Robert Hahn & Robert Ritz, 2014. "Optimal Altruism in Public Good Provision," Cambridge Working Papers in Economics 1403, Faculty of Economics, University of Cambridge.
    10. Apostolou, Apostolos & Papaioannou, Michael, 2021. "Towards Greening Finance: Integration of Environmental Factors in Risk Management & Impact of Climate Risks on Asset Portfolios," MPRA Paper 106779, University Library of Munich, Germany.
    11. Mehling, M. & Ritz, R., 2020. "Going beyond default intensities in an EU carbon border adjustment mechanism," Cambridge Working Papers in Economics 2087, Faculty of Economics, University of Cambridge.
    12. Distefano, Tiziano & D’Alessandro, Simone, 2023. "Introduction of the carbon tax in Italy: Is there room for a quadruple-dividend effect?," Energy Economics, Elsevier, vol. 120(C).
    13. Alexander Krenek & Margit Schratzenstaller, 2017. "Sustainability-oriented tax-based own resources for the European Union: a European carbon-based flight ticket tax," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(4), pages 665-686, November.
    14. Zhang, Zengkai & Zhu, Kunfu, 2017. "Border carbon adjustments for exports of the United States and the European Union: Taking border-crossing frequency into account," Applied Energy, Elsevier, vol. 201(C), pages 188-199.
    15. Garbarino, Nicola & Guin, Benjamin, 2021. "High water, no marks? Biased lending after extreme weather," Journal of Financial Stability, Elsevier, vol. 54(C).
    16. David F. Drake, 2018. "Carbon Tariffs: Effects in Settings with Technology Choice and Foreign Production Cost Advantage," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 667-686, October.
    17. Svetlana Batrakova, 2012. "Does industry concentration matter for pollution haven effects?," GRI Working Papers 90, Grantham Research Institute on Climate Change and the Environment.
    18. Hana Nielsen & Astrid Kander, 2020. "Trade in the Carbon-Constrained Future: Exploiting the Comparative Carbon Advantage of Swedish Trade," Energies, MDPI, vol. 13(14), pages 1-25, July.
    19. Fang, Yuan & Yu, Yugang & Shi, Ye & Liu, Jie, 2020. "The effect of carbon tariffs on global emission control: A global supply chain model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    20. Bolognesi, Enrica & Burchi, Alberto, 2023. "The impact of the ESG disclosure on sell-side analysts’ target prices: The new era post Paris agreements," Research in International Business and Finance, Elsevier, vol. 64(C).

    More about this item

    Keywords

    Climate policy; carbon leakage; border measures; aluminum;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

    Statistics

    Access and download statistics

    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:oup:apecpp:v:39:y:2017:i:2:p:242-258.. 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: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    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.