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Discussion or working paper
Michael Hübler

Can Carbon Based Import Tariffs Effectively Reduce Carbon Emissions?

  • Abstract

    We estimate CO2 implicitly contained in traded commodities based on the GTAP 7 data: While net carbon imports into the industrialized countries amount to 15% of their total emissions, net carbon exports of the developing countries amount to 12% of their total emissions, and net carbon exports of China amount to 24% of China's total emissions. We also analyze policies under a global per capita emissions based contraction and convergence regime with emission trading: When China joins the regime, the developing countries will benefit, while the industrialized countries will be almost unaffected. When China does not join the regime and instead a carbon content based border tax is imposed, the industrialized countries will significantly benefit, while China will be significantly worse off. The effect of the border tax adjustment on the global carbon price and on global emissions seems negligible.
  • Keywords

    carbon content of trade
    border tax adjustment
    climate policy
    contraction and convergence
    China
  • JEL classification

    F13, F18, Q54
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