Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266191 
Year of Publication: 
2022
Series/Report no.: 
Kiel Working Paper No. 2236
Publisher: 
Kiel Institute for the World Economy (IfW Kiel), Kiel
Abstract: 
International cooperation is at the core of multilateral climate policy. How is its effectiveness harmed by individual countries dropping out of the global mitigation effort? We develop a multisector structural trade model with emissions from production and a constant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we îond that a US withdrawal would eliminate more than a third of the world emissions reduction (31.8% direct effect and 6.4% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 24.1% (11.9% direct effect and 12.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.
Subjects: 
Climate change
International trade
Carbon leakage
Fossil fuel supply
JEL: 
F14
F18
Q56
Document Type: 
Working Paper

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