IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/0409.html
   My bibliography  Save this paper

Border Tax Adjustments: A feasible way to address nonparticipation in Emission Trading

Author

Listed:
  • Ismer, R.
  • Neuhoff, K.

Abstract

CO2 emission certificates internalise effects of fossil fuel consumption on global climate and sea levels. If they are only implemented in some countries, then their effectiveness is limited; Consumption, production and investment decisions do not reach the optimal allocation, production with inefficient technologies in non-participating countries can even be increased. Furthermore industry lobbying might result in limited application of CO2 emission certificates or less ambitious reduction targets. Border tax adjustment at the level of additional costs incurred for procurement of CO2 emission permits during production of processed materials using best available technology limits the distortions. We show that it can be compatible with WTO constraints. Crucial features of a practicable implementation are simplicity achieved by a focus on the CO2 emissions caused by processed materials and a separate treatment of electric energy input to take account of regionally varying fuel mixes.

Suggested Citation

  • Ismer, R. & Neuhoff, K., 2004. "Border Tax Adjustments: A feasible way to address nonparticipation in Emission Trading," Cambridge Working Papers in Economics 0409, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0409
    Note: CMI36, IO
    as

    Download full text from publisher

    File URL: http://www.econ.cam.ac.uk/electricity/publications/wp/ep36.pdf
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. Balistreri, Edward J. & Hillberry, Russell H. & Rutherford, Thomas F., 2011. "Structural estimation and solution of international trade models with heterogeneous firms," Journal of International Economics, Elsevier, vol. 83(2), pages 95-108, March.
    2. Fischer, Carolyn & Fox, Alan K., 2009. "Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates," RFF Working Paper Series dp-09-02, Resources for the Future.
    3. Misato Sato & Karsten Neuhoff & Verena Graichen & Katja Schumacher & Felix Matthes, 2013. "Sectors under scrutiny � Evaluation of indicators to assess the risk of carbon leakage in the UK and Germany," GRI Working Papers 113, Grantham Research Institute on Climate Change and the Environment.
    4. Legge, Thomas & Scott, Susan, 2009. "Policy Options to Reduce Ireland's GHG Emissions [Instrument choice: the pros and cons of alternative policy instruments]," Papers WP284, Economic and Social Research Institute (ESRI).
    5. Angus Johnston, 2006. "Free allocation of allowances under the EU emissions trading scheme: legal issues," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 115-136, January.
    6. Li, Aijun & Zhang, Aizhen & Cai, Hongbo & Li, Xingfeng & Peng, Shishen, 2013. "How large are the impacts of carbon-motivated border tax adjustments on China and how to mitigate them?," Energy Policy, Elsevier, vol. 63(C), pages 927-934.
    7. Reyno Seymore & Margaret Mabugu & Jan van Heerden, 2010. "Border Tax Adjustments to Negate the Economic Impact of an Electricity Generation Tax," Working Papers 201003, University of Pretoria, Department of Economics.
    8. Löschel, Andreas & Alexeeva-Talebi, Victoria & Mennel, Tim, 2008. "Climate Policy and the Problem of Competitiveness: Border Tax Adjustments or Integrated Emission Trading?," ZEW Discussion Papers 08-061, ZEW - Leibniz Centre for European Economic Research.
    9. Stuart Evans & Michael A. Mehling & Robert A. Ritz & Paul Sammon, 2021. "Border carbon adjustments and industrial competitiveness in a European Green Deal," Climate Policy, Taylor & Francis Journals, vol. 21(3), pages 307-317, March.
    10. Demailly, Damien & Quirion, Philippe, 2008. "Changing the Allocation Rules in the EU ETS: Impact on Competitiveness and Economic Efficiency," Climate Change Modelling and Policy Working Papers 46623, Fondazione Eni Enrico Mattei (FEEM).
    11. Marques, Alexandra & Rodrigues, João & Lenzen, Manfred & Domingos, Tiago, 2012. "Income-based environmental responsibility," Ecological Economics, Elsevier, vol. 84(C), pages 57-65.
    12. Low, Patrick & Marceau, Gabrielle & Reinaud, Julia, 2011. "The interface between the trade and climate change regimes: Scoping the issues," WTO Staff Working Papers ERSD-2011-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    13. Biswajit Dhar & Kasturi Das, 2009. "The European Union’s Proposed Carbon Equalization System : Can it be WTO Compatible?," Development Economics Working Papers 22989, East Asian Bureau of Economic Research.
    14. R. Seymore & M. Mabugu & J. H. van Heerden, 2012. "The Welfare Effects of Reversed Border Tax Adjustments as a Remedy under Unilateral Environmental Taxation," Energy & Environment, , vol. 23(8), pages 1209-1220, December.
    15. Legge, Thomas & Scott, Susan, 2009. "Policy Options to Reduce Ireland's Greenhouse Gas Emissions," Research Series, Economic and Social Research Institute (ESRI), number RS9.
    16. Mehdi Abbas, 2007. "Taxe CO2 aux frontières, régime commercial multilatéral et lutte contre le changement climatique," Post-Print halshs-00168960, HAL.
    17. Peters, Glen P., 2008. "From production-based to consumption-based national emission inventories," Ecological Economics, Elsevier, vol. 65(1), pages 13-23, March.
    18. Flores, José Luis, 2014. "Políticas climáticas en países desarrollados: impacto en América Latina," Documentos de Proyectos 37611, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Weber, Christopher L. & Peters, Glen P., 2009. "Climate change policy and international trade: Policy considerations in the US," Energy Policy, Elsevier, vol. 37(2), pages 432-440, February.
    20. Lin, Boqiang & Li, Aijun, 2011. "Impacts of carbon motivated border tax adjustments on competitiveness across regions in China," Energy, Elsevier, vol. 36(8), pages 5111-5118.
    21. van Asselt, Harro & Biermann, Frank, 2007. "European emissions trading and the international competitiveness of energy-intensive industries: a legal and political evaluation of possible supporting measures," Energy Policy, Elsevier, vol. 35(1), pages 497-506, January.
    22. Jansson, Torbjorn & Kuiper, Marijke & Banse, Martin & Heckelei, Thomas & Adenäuer, Marcel, 2008. "Getting the best of both worlds? Linking CAPRI and GTAP for an economywide assessment of agriculture," Conference papers 331757, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Keywords

    Border Tax; Emission Trading; WTO law; International trade;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cam:camdae:0409. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

    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.