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Designing a globally acceptable carbon tax scheme to address competitiveness and leakage concerns

 
: Zhu, L.E.I.; Cui, L.; Schleich, J.

:

Climate change economics 11 (2020), Nr.2, Art. 2050008
ISSN: 2010-0078
ISSN: 2010-0086
Englisch
Zeitschriftenaufsatz
Fraunhofer ISI ()

Abstract
To address competitiveness and leakage concerns in international climate policy, this paper proposes a differentiated carbon tax scheme (DCT), which largely preserves the relative competitive positions of developed and developing countries. The paper first presents a theoretical model from which to derive the DCT. Then, employing a global trade analysis model, competitiveness and leakage effects under a DCT are simulated and contrasted to those of a unilateral carbon tax, a carbon tariff, and a uniform carbon tax. The results of our analysis suggest that: (1) under the proposed DCT, emission reductions in developed and developing countries are higher and leakage is lower than under a carbon tariff; (2) the DCT has weaker competitiveness effects than a carbon tariff; and (3) the DCT is more favorable to developing countries' output and welfare than a carbon tariff or a uniform global carbon tax. Developing countries may therefore embrace a DCT as an intermediate step towards the implementation of a global carbon tax.

: http://publica.fraunhofer.de/dokumente/N-602908.html