Carbon pricing, border adjustment and climate clubs: Options for international cooperation

Ernst, Anne; Hinterlang, Natascha; Mahle, Alexander; Stähler, Nikolai

doi:10.1016/j.jinteco.2023.103772

Cited by 7 publications

(15 citation statements)

References 60 publications

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“…Our results can be summarized as follows. First, we confirm the general results of Ernst et al (2023). Specifically, the introduction of a carbon price has a long-lasting negative effect on output as it increases marginal production costs.…”

Section: Introductionsupporting

confidence: 81%

“…However, climate change may also affect welfare directly via utility damages, as shown in Barrage (2020). As checked by Ernst et al (2023), the latter does not change the results qualitatively.…”

Section: Productionmentioning

confidence: 66%

“…However, we also add new insights because of the different composition of regions. Ernst et al (2023) find that regions introducing carbon pricing always benefit by others joining them. While this holds true given their calibration for Europe, North America and the rest of the world, it might differ when modelling smaller subregions individually.…”

Section: Introductionmentioning

confidence: 92%

“…Ireland (2003) and Hinterlang et al (2023b). First-order conditions are standard (see Appendix A of Ernst et al (2023)).…”

Section: Representative Householdmentioning

confidence: 99%

“…This paper analyzes different climate policy scenarios and contrasts their consequences for Germany and Spain. More precisely, it mirrors the setup of Ernst et al (2023) to study the effects of carbon pricing and border adjustment on these economies. * E-mail: natascha.hinterlang@bundesbank.de.…”

Section: Introductionmentioning

confidence: 99%

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Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe

Hinterlang

2023

Documentos De Trabajo

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Using the dynamic, three-region environmental multi-sector general equilibrium model EMuSe, we find that pricing carbon in Germany or Spain only leads to a permanent negative effect on output in these economies. The induced emissions reduction is not large enough to overcompensate for the increase in marginal production costs. If the rest of Europe joins the carbon pricing scheme, long-run output effects are positive. However, in this case, transition costs are even larger due to close trade relations within Europe. We find evidence for carbon leakage, which can be reduced slightly by a border adjustment mechanism. Still, it is no game changer as it mainly protects dirty domestic sectors. While Germany benefits from border adjustment, Spain actually loses throughout the transition. In the long run, the Spanish energy sector benefits most because of its relatively low emission intensity. Finally, Europe has a strong incentive to get the rest of the world on board as then the downturn is shorter and long-run benefits are larger.

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Section: Introductionsupporting

confidence: 81%

Section: Productionmentioning

confidence: 66%

Section: Introductionmentioning

confidence: 92%

“…Ireland (2003) and Hinterlang et al (2023b). First-order conditions are standard (see Appendix A of Ernst et al (2023)).…”

Section: Representative Householdmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe

Hinterlang

2023

Documentos De Trabajo

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The role of border carbon adjustments and subsidies in incentivising investment: comparing equivalence in the context of steel recycling and decarbonisation

Rossetto

2024

Discov Sustain

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The need to decarbonise has accelerated the quest to find solutions for sectors considered emissions-intensive and trade-exposed. Steel production is one such sector. Policymakers are responding with market-pull and technology-push mechanisms. Risks of carbon leakage have prompted consideration and implementation of border carbon mechanisms. Measures have drawn both positive and negative attention in internationally traded markets. This research quantifies the equivalence of differing measures to promote decarbonisation. It simulates the annual cost-saving equivalent and net present values of different mechanisms in a theoretical conversion to steelmaking with Electric Arc Furnace (EAF) technology from traditional steel production. It demonstrates that, under certain assumptions including removal of free allocation of emissions certificates, incentives per tonne of direct and indirect greenhouse gas emissions for carbon pricing and border carbon adjustments lie in the range EUR 18–76 whereas for cost-of-capital support measures it was EUR 24–41 per tCO2e. Whether firms act upon these incentives will depend on appetite for risk, availability of technology, feedstocks, choice they have in making changes and perceived sustainability of the assumptions made in investment analysis. There are implications for regulators, policy makers and managers as they prepare strategies to be competitive in an increasingly carbon-constrained environment.

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Carbon border adjustment mechanism, carbon pricing, and within-sector shifts: A partial equilibrium approach to Vietnam's steel sector

Chu,

Do,

et al. 2024

Energy Policy

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Carbon pricing, border adjustment and climate clubs: Options for international cooperation

Cited by 7 publications

References 60 publications

Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe

Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe

The role of border carbon adjustments and subsidies in incentivising investment: comparing equivalence in the context of steel recycling and decarbonisation

Carbon border adjustment mechanism, carbon pricing, and within-sector shifts: A partial equilibrium approach to Vietnam's steel sector

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