The Impact of Border Carbon Adjustments under Alternative Producer Responses
Name
MITJPSPGC_Rpt192.pdf
Size
544.37 KB
Format
Adobe PDF
Checksum (MD5)
3e091e07c8ba2ac704f94eff3304176f
Author(s)
Winchester, Niven
Date Issued
February 2011
Publisher
MIT Joint Program on the Science and Policy of Global Change
Citation
Report no. 192
Series/Report no.
;Report no. 192
Abstract
Border carbon adjustments (BCAs) have been proposed to address leakage and competitiveness concerns. In traditional assessments, firms regard BCAs as output taxes rather than implicit emissions taxes. Using a stylized energy-economic model, we analyze the impact of BCAs for alternative producer responses. When firms view BCAs as an implicit emissions tax, the outcome depends on whether or not firms can differentiate production across destination markets. If firms are able to produce a low-emissions variety for regions imposing BCAs, results are similar to when firms regard BCAs as an output tax. If firms produce a single variety for all markets, BCAs result in larger leakage reductions than in standard approaches. We also find that BCAs are less effective at addressing competitive concerns in scenarios that result in larger leakage reductions.
Description
Abstract and PDF report are also available on the MIT Joint Program on the Science and Policy of Global Change website (http://globalchange.mit.edu/)
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