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Carbon pricing of international transport fuels: Impacts on carbon emissions and trade activity

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  • Mundaca, Gabriela
  • Strand, Jon
  • Young, Ian R.
Abstract
We study the impacts of carbon taxation of international transport fuels on CO2 emissions and trade activity, focusing on maritime transport, which constitutes the most important international trade transport activity. Our estimated bunker price elasticities range from −0.03 to −0.42. For the current level of international trade, a global tax of US$ 40 per ton of CO2 will reduce CO2 emissions by 7.65% for the heaviest traded products (at the 6-digit HS level of aggregation) transported by sea. The greatest CO2 emission reductions are for products with relatively low value-to-weight ratios such as fossil fuels and ores. Using our estimates, we present a plan with a gradual increase in the carbon tax, including some transition to zero emissions vessels, for reaching the emissions target of the International Maritime Organization by 2050. We compare the reduction in CO2 emissions with a carbon tax policy with CO2 reductions with a feebate policy.

Suggested Citation

  • Mundaca, Gabriela & Strand, Jon & Young, Ian R., 2021. "Carbon pricing of international transport fuels: Impacts on carbon emissions and trade activity," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:jeeman:v:110:y:2021:i:c:s009506962100084x
    DOI: 10.1016/j.jeem.2021.102517
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    Cited by:

    1. Klotz, Richard & Sharma, Rishi R., 2023. "Trade barriers and CO2," Journal of International Economics, Elsevier, vol. 141(C).
    2. Qiuyue Li & Hao Wang & Zhenshan Li & Shangwei Yuan, 2022. "A Comparative Study of the Effect of Different Carbon-Reduction Policies on Outsourcing Remanufacturing," IJERPH, MDPI, vol. 19(6), pages 1-22, March.
    3. Lee, Chien-Chiang & Hussain, Jafar & Mu, Xian, 2024. "Renewable energy and carbon-neutral gaming: A holistic approach to sustainable electricity," Energy, Elsevier, vol. 297(C).
    4. Paula Pereda & Andrea Lucchesi & Thais Diniz & Rayan Wolf, 2023. "Carbon Tax in the Shipping Sector: Assessing Economic and Environmental Impacts," Working Papers, Department of Economics 2023_04, University of São Paulo (FEA-USP), revised 17 Jun 2024.
    5. Zakari, Abdulrasheed & Tawiah, Vincent & Khan, Irfan & Alvarado, Rafael & Li, Guo, 2022. "Ensuring sustainable consumption and production pattern in Africa: Evidence from green energy perspectives," Energy Policy, Elsevier, vol. 169(C).
    6. Seyedvahid Vakili & Fabio Ballini & Alessandro Schönborn & Anastasia Christodoulou & Dimitrios Dalaklis & Aykut I. Ölçer, 2023. "Assessing the macroeconomic and social impacts of slow steaming in shipping: a literature review on small island developing states and least developed countries," Journal of Shipping and Trade, Springer, vol. 8(1), pages 1-25, December.
    7. Daniel Santabárbara & Marta Suárez-Varela, 2022. "Carbon pricing and inflation volatility," Working Papers 2231, Banco de España.
    8. Wang, Tingsong & Cheng, Peiyue & Zhen, Lu, 2023. "Green development of the maritime industry: Overview, perspectives, and future research opportunities," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    9. Cariou, Pierre & Halim, Ronald A. & Rickard, Bradley J., 2023. "Ship-owner response to carbon taxes: Industry and environmental implications," Ecological Economics, Elsevier, vol. 212(C).
    10. Hussain, Jafar & Lee, Chien-Chiang & Hu, Danting, 2023. "Maximizing load capacity factor through a carbon-neutral environment via a simulation of carbon peak," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 746-764.
    11. Shiva Sikdar, 2023. "Trade, Transport Emissions and Multimarket Collusion with Border Adjustments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 407-432, November.
    12. Ismat Nasim & Mohamed Boukhris & Umar Nawaz Kayani & Farrukh Bashir & Syed Arslan Haider, 2023. "Exploring the Links between Renewable Energy, FDI, Environmental Degradation, and International Trade in Selected Developing Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 418-429, November.
    13. Nooshin Karimi Alavijeh & Nasrin Salehnia & Narges Salehnia & Matheus Koengkan, 2023. "The effects of agricultural development on CO2 emissions: empirical evidence from the most populous developing countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 12011-12031, October.

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    More about this item

    Keywords

    CO2 emissions; Maritime trade; Carbon taxation; Feebate;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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