Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72946
Authors: 
Zhang, ZhongXiang
Year of Publication: 
2012
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 80.2012
Abstract: 
This paper provides a review of the literature on competitiveness and leakage concerns associated with differentiated climate abatement commitments among countries. The literature reviewed is not exhausted, but it is sufficient to provide a balanced view of both academics and policy circles. Section 2 discusses how to identify the sectors at a risk of carbon leakage. Section 3 examines ex ante estimates of potential carbon leakage rates, and explains why they differ from ex post results of environmental tax reforms and greenhouse gas emissions trading schemes that have been implemented in the European Union. Section 4 discusses broad policy options to address competitiveness and leakage concerns, and compares which anti-leakage policy, border adjustments or output-based allocation, is more effective to limiting carbon leakages or mitigating production loss in the sectors affected. Given that border carbon adjustment measures are incorporated in the U.S. proposed congressional climate bills to level the carbon playing field and could have potential conflicts with World Trade Organization (WTO) provisions and practical difficulties associated with their implementation, Section 5 discuses in great detail the WTO consistency, the effectiveness and methodological challenges of border carbon adjustment measures. The paper ends with some concluding remarks.
Subjects: 
Emission Trading
Competitiveness
Carbon Leakage
Emissions Allowance Requirements
Carbon Tariffs
Border Carbon Adjustments
Grandfathering
Output-Based Allocation
World Trade Organization
JEL: 
F18
F47
O13
O24
O31
O44
Q37
Q42
Q43
Q48
Q54
Q55
Q56
Q58
R13
R15
Document Type: 
Working Paper

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