Will Border Carbon Adjustments Work?
Name
MITJPSPGC_Rpt184.pdf
Size
603.28 KB
Format
Adobe PDF
Checksum (MD5)
1bd81d682f708337dca1e0abb9524dc1
Author(s)
Reilly, John
Paltsev, Sergey
Winchester, Niven
Date Issued
February 2010
Publisher
MIT Joint Program on the Science and Policy of Global Change
Citation
Report No. 184
Series/Report no.
;Report No. 184
Abstract
The potential for greenhouse gas (GHG) restrictions in some nations to drive emission increases in other nations, or leakage, is a contentious issue in climate change negotiations. We evaluate the potential for border carbon adjustments (BCAs) to address leakage concerns using an economy-wide model. For 2025, we find that BCAs reduce leakage by up to two-thirds, but result in only modest reductions in global emissions and significantly reduce welfare. In contrast, BCA-equivalent leakage reductions can be achieved by very small emission charges or efficiency improvements in nations targeted by BCAs, which have negligible welfare effects. We conclude that BCAs are a costly method to reduce leakage but such policies may be effective coercion strategies. We also investigate the impact of BCAs on sectoral output and evaluate the leakage contributions of trade and changes in the price of crude oil.
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/).
