Carbon Tariffs Revisited

31 Pages Posted: 7 Feb 2014 Last revised: 26 May 2014

See all articles by Christoph Böhringer

Christoph Böhringer

University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW)

Andre Müller

ECOPLAN

Jan Schneider

University of Oldenburg; ZenTra - Center for Transnational Studies

Date Written: February 7, 2014

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.

Keywords: carbon tariffs, unilateral climate policy, multi-region input-output analysis, CGE

JEL Classification: Q58, D57, D58

Suggested Citation

Bohringer, Christoph and Müller, Andre and Schneider, Jan, Carbon Tariffs Revisited (February 7, 2014). ZenTra Working Paper in Transnational Studies No. 33/2014, Available at SSRN: https://ssrn.com/abstract=2392280 or http://dx.doi.org/10.2139/ssrn.2392280

Christoph Bohringer (Contact Author)

University of Oldenburg - Economic Policy ( email )

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany
+49 6211235200 (Phone)
+49 6211235226 (Fax)

Andre Müller

ECOPLAN ( email )

Thunstrasse 22
3005 Bern
Switzerland

HOME PAGE: http://www.ecoplan.ch/Privat/AndreMueller_Ecoplan.jpg

Jan Schneider

University of Oldenburg ( email )

Ammerländer Heerstraße 114-118
Oldenburg, D-26111
Germany

ZenTra - Center for Transnational Studies ( email )

Ammerländer Heerstraße 138
Oldenburg, 26131
Germany

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