IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v36y2015i2p167-190.html
   My bibliography  Save this article

Leakage from Sub-national Climate Policy: The Case of California’s Cap-and-Trade Program

Author

Listed:
  • Justin Caron
  • Sebastian Rausch
  • Niven Winchester

Abstract

With federal policies to curb carbon emissions stagnating in the U.S., California is taking action alone. Sub-national policies can lead to high rates of emissions leakage to other regions as state-level economies are closely connected, including integration of electricity markets. Using a calibrated general equilibrium model, we estimate that California’s cap-and-trade program without restrictions on imported electricity increases out-of-state emissions by 45% of the domestic reduction. When imported electricity is included in the cap and “resource shuffling†is banned, as set out in California’s legislation, emissions reductions in electricity exporting states partially offset leakage elsewhere and overall leakage is 9%.

Suggested Citation

  • Justin Caron & Sebastian Rausch & Niven Winchester, 2015. "Leakage from Sub-national Climate Policy: The Case of California’s Cap-and-Trade Program," The Energy Journal, , vol. 36(2), pages 167-190, April.
    • Handle: RePEc:sae:enejou:v:36:y:2015:i:2:p:167-190
    DOI: 10.5547/01956574.36.2.8
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.36.2.8
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.36.2.8?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
    ---><---

    References listed on IDEAS

    as
    1. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
    2. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    3. Cassey, Andrew, 2006. "State export data: origin of movement vs. origin of production," MPRA Paper 3352, University Library of Munich, Germany.
    4. Burniaux, Jean-Marc, 2001. "International Trade and Investment Leakage Associated with Climate Change Mitigation," Conference papers 330902, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    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. Fell, Harrison & Manilo, Peter, 2015. "Benecial Leakage: The Eect of the Regional Greenhouse Gas Initiative on Aggregate Emissions," CEnREP Working Papers 340064, North Carolina State University, Department of Agricultural and Resource Economics.

    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. Justin Caron, Sebastian Rausch, and Niven Winchester, 2015. "Leakage from sub-national climate policy: The case of Californias capandtrade program," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Kathryn Daenzer & Ian Wing & Karen Fisher-Vanden, 2014. "Coal’s medium-run future under atmospheric greenhouse gas stabilization," Climatic Change, Springer, vol. 123(3), pages 763-783, April.
    3. Pratt, Stephen & Blake, Adam & Swann, Peter, 2013. "Dynamic general equilibrium model with uncertainty: Uncertainty regarding the future path of the economy," Economic Modelling, Elsevier, vol. 32(C), pages 429-439.
    4. Winchester, Niven & White, Dominic, 2022. "The Climate PoLicy ANalysis (C-PLAN) Model, Version 1.0," Energy Economics, Elsevier, vol. 108(C).
    5. Hermeling, Claudia & Klement, Jan Henrik & Koesler, Simon & Köhler, Jonathan & Klement, Dorothee, 2015. "Sailing into a dilemma," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 34-53.
    6. Oliver Schenker & Simon Koesler & Andreas Löschel, 2018. "On the effects of unilateral environmental policy on offshoring in multi‐stage production processes," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1221-1256, November.
    7. Koesler, Simon, 2014. "Specifying parameters in computable general equilibrium models using optimal fingerprint detection methods," ZEW Discussion Papers 14-092, ZEW - Leibniz Centre for European Economic Research.
    8. Shojaeddini, Ensieh & Schreiber, Andrew & Wolverton, Ann & Marten, Alex, 2024. "Consumer demand and the economy-wide costs of regulation: Modeling households with empirically estimated flexible functional forms," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    9. Hertel, Thomas W. & Keeney, Roman & Valenzuela, Ernesto, 2004. "Global Analysis of Agricultural Trade Liberalization: Assessing Model Validity," Conference papers 331270, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Arief Anshory Yusuf, 2008. "INDONESIA-E3: An Indonesian Applied General Equilibrium Model for Analyzing the Economy, Equity, and the Environment," Working Papers in Economics and Development Studies (WoPEDS) 200804, Department of Economics, Padjadjaran University, revised Sep 2008.
    11. Hafner, Marco & Yerushalmi, Erez & Andersson, Fredrik L. & Burtea, Teodor, 2020. "Quantifying the macroeconomic cost of night-time bathroom visits: an application to the UK," CAFE Working Papers 5, Centre for Accountancy, Finance and Economics (CAFE), Birmingham City Business School, Birmingham City University.
    12. Yoonkyo Cho & Taehwan Kim & Jaewhak Roh, 2021. "An analysis of the effects of electronic commerce on the Korean economy using the CGE model," Electronic Commerce Research, Springer, vol. 21(3), pages 831-854, September.
    13. Dai, Hancheng & Mischke, Peggy & Xie, Xuxuan & Xie, Yang & Masui, Toshihiko, 2016. "Closing the gap? Top-down versus bottom-up projections of China’s regional energy use and CO2 emissions," Applied Energy, Elsevier, vol. 162(C), pages 1355-1373.
    14. Monge, Juan J. & Bryant, Henry L. & Gan, Jianbang & Richardson, James W., 2016. "Land use and general equilibrium implications of a forest-based carbon sequestration policy in the United States," Ecological Economics, Elsevier, vol. 127(C), pages 102-120.
    15. Yu, Jisang & Villoria, Nelson B. & Hendricks, Nathan P., 2019. "The Incidence of Foreign Market Accessibility on Farmland Rental Rates," 2019: Recent Advances in Applied General Equilibrium Modeling: Relevance and Application to Agricultural Trade Analysis, December 8-10, 2019, Washington, DC 339333, International Agricultural Trade Research Consortium.
    16. Kym Anderson & Ernesto Valenzuela & Lee Ann Jackson, 2008. "Recent and Prospective Adoption of Genetically Modified Cotton: A Global Computable General Equilibrium Analysis of Economic Impacts," Economic Development and Cultural Change, University of Chicago Press, vol. 56(2), pages 265-296, January.
    17. Diniz Oliveira, Thais & Gurgel, Angelo & Tonry, Steve, 2018. "The Effects for Brazil of Linking Emissions Trading Schemes in the context of the Heterogeneity of Trading Partners," Conference papers 332951, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Russell Hillberry & David Hummels, 2021. "Tom Hertel’s Influence and Its Lessons about Academic Inquiry," World Scientific Book Chapters, in: Peter Dixon & Joseph Francois & Dominique van der Mensbrugghe (ed.), POLICY ANALYSIS AND MODELING OF THE GLOBAL ECONOMY A Festschrift Celebrating Thomas Hertel, chapter 2, pages 9-39, World Scientific Publishing Co. Pte. Ltd..
    19. Dai, Jiangyu & Wu, Shiqiang & Han, Guoyi & Weinberg, Josh & Xie, Xinghua & Wu, Xiufeng & Song, Xingqiang & Jia, Benyou & Xue, Wanyun & Yang, Qianqian, 2018. "Water-energy nexus: A review of methods and tools for macro-assessment," Applied Energy, Elsevier, vol. 210(C), pages 393-408.
    20. Salaheddine Soummane & Frédéric Ghersi & Franck Lecocq, 2022. "Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices," The Energy Journal, , vol. 43(3), pages 185-204, May.

    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:sae:enejou:v:36:y:2015:i:2:p:167-190. 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: SAGE Publications (email available below). General contact details of provider: .

    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.