Discussion Papers no. 664

Size matters

Cost-effective unilateral climate policy design

Given the bleak prospects for a global agreement on mitigating climate change, pressure for unilateral abatement is increasing. A major challenge is emissions leakage. Border carbon adjustments and output-based allocation of emissions allowances can increase effectiveness of unilateral action but introduce distortions of their own. We assess antileakage measures as a function of abatement coalition size. We first develop a partial equilibrium analytical framework to see how these instruments affect emissions within and outside the coalition. We then employ a computable general equilibrium model of international trade and energy use to assess the strategies as the coalition grows. We find that full border adjustments rank first in global cost-effectiveness, followed by import tariffs and output-based rebates. The differences across measures and their overall appeal decline as the abatement coalition grows. In terms of cost, the coalition countries prefer border carbon adjustments; countries outside the coalition prefer output-based rebates.

Om publikasjonen

Tittel

Cost-effective unilateral climate policy design. Size matters

Ansvarlige

Christoph Böhringer, Carolyn Fischer, Knut Einar Rosendahl

Serie og -nummer

Discussion Papers no. 664

Utgiver

Statistics Norway

Emne

Discussion Papers

ISSN

1892-753X

Antall sider

43

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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