Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/233025
Authors: 
Mörsdorf, George
Year of Publication: 
2021
Series/Report no.: 
ifo Working Paper No. 350
Abstract: 
As part of its ambitious European Green Deal package, at the heart of which stands the commitment to become carbon-neutral by 2050, the European Commission announced that it would propose a "carbon border adjustment mechanism" to address the risk of carbon leakage. This study models the measure in a Computable General Equilibrium framework and analyses how effective it would be in reducing the incidence of carbon leakage. The analysis suggests that even a sectorally limited EU carbon border adjustment would reduce the carbon leakage rate by up to two thirds, making it more effective than the current system of free allocation. Besides environmental benefits, it would also offset competitiveness losses of European energy-intensive industries incurred by a higher EU carbon price and generate additional income for public budgets. At the same time, the analysis shows that around a third of the overall incidence of carbon leakage is driven not by competitiveness but by energy price effects, making it impossible to offset by border measures.
Subjects: 
carbon border adjustment
carbon leakage
Computable General Equilibrium
EU climate policy
energy-intensive industries
JEL: 
Q58
Q54
C68
Document Type: 
Working Paper

Files in This Item:
File
Size
337.97 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.