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Alternative Designs for Tariffs on Embodied Carbon: A Global Cost-Effectiveness Analysis

Author

Listed:
  • Christoph Böhringer

    (University of Oldenburg, Department of Economics, Germany)

  • Brita Bye

    (Statistics Norway, Oslo, Norway)

  • Taran Fæhn

    (Statistics Norway, Oslo, Norway)

  • Knut Einar Rosendahl

    (Statistics Norway, Oslo, Norway)

Abstract
In the absence of effective world-wide cooperation to curb global warming, import tariffs on embodied carbon have been proposed as a potential supplement to unilateral emissions pricing. We consider alternative designs for such tariffs, and analyze their effects on global welfare within a multi-region, multi-sector computable general equilibrium (CGE) model of global trade and energy. Our analysis suggests that the most cost-efficient policy could be region-specific tariffs on all products, based on direct plus electricity emissions. In the end, however, the potential cost savings through carbon tariffs must be weighed against the administrative costs as well as legal issues and political considerations.

Suggested Citation

  • Christoph Böhringer & Brita Bye & Taran Fæhn & Knut Einar Rosendahl, 2012. "Alternative Designs for Tariffs on Embodied Carbon: A Global Cost-Effectiveness Analysis," Working Papers V-345-12, University of Oldenburg, Department of Economics, revised Jun 2012.
    • Handle: RePEc:old:dpaper:345
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    References listed on IDEAS

    as
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    2. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
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    6. Böhringer, Christoph & Fischer, Carolyn & Rosendahl, Knut Einar, 2014. "Cost-effective unilateral climate policy design: Size matters," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 318-339.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    carbon leakage; embodied carbon; border tariffs;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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