Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96914
Authors: 
Böhringer, Christoph
Müller, André
Schneider, Jan
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4720
Abstract: 
Concerns about adverse impacts on domestic energy-intensive and trade-exposed (EITE) industries are at the fore of the political debate about unilateral climate policies. Tariffs on the carbon embodied in imported goods from countries without emission pricing appeal as a measure to reduce carbon leakage and protect domestic EITE industries. We show that the introduction of carbon tariffs can do more harm than good to domestic EITE industries. Two determinants drive the sign and magnitude of EITE impacts. Firstly, the composition of embodied emissions in goods: if a large share of embodied carbon is imported in intermediate inputs, industries might suffer from carbon tariffs. Secondly, the share of domestic output that is supplied to the export market: while carbon tariffs level the playing field on domestic markets, they increase the cost-disadvantage vis-à-vis competitors from abroad in foreign markets.
Subjects: 
carbon tariffs
unilateral climate policy
multi-region input-output analysis
CGE
JEL: 
D57
D58
Q58
Document Type: 
Working Paper

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