Sectoral targets as a means to reduce global carbon emissions

This paper explores the effects of sectoral targets in international climate policy in a macroeconomic framework, their interaction with the EU emissions Trading System (EU ETS), and to which extent sectoral targets can address the concerns of competitiveness. We assume that a global binding agreement exists between the steel sector and governments. The steel sector seems particularly suited for a sectoral targets approach because it is relatively CO2-intensive (3-5% of global CO2-emissions) and also trade intensive (approximately 20% of the value of steel output is traded).