Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/192646
Authors: 
Böhringer, Christoph
Fischer, Carolyn
Rosendahl, Knut Einar
Year of Publication: 
2011
Series/Report no.: 
Discussion Papers 664
Abstract: 
Given the bleak prospects for a global agreement on mitigating climate change, pressure for unilateral abatement is increasing. A major challenge is emissions leakage. Border carbon adjustments and output-based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own. We assess antileakage measures as a function of abatement coalition size. We first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition. We then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows. We find that full border adjustments rank first in global cost-effectiveness, followed by import tariffs and output-based rebates. The differences across measures and their overall appeal decline as the abatement coalition grows. In terms of cost, the coalition countries prefer border carbon adjustments; countries outside the coalition prefer output-based rebates.
Subjects: 
emissions leakage
border carbon adjustments
output-based allocation
JEL: 
Q2
Q43
H2
D61
Document Type: 
Working Paper
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