Unilateral Climate Policy: Can OPEC Resolve the Leakage Problem?

Böhringer, Christoph; Rosendahl, Knut Einar; Schneider, Jan

doi:10.5547/01956574.35.4.4

Cited by 17 publications

(9 citation statements)

References 33 publications

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“…Leakage through international energy markets are generally hard to avoid without having more countries implementing carbon policies (see Böhringer et al, 2014, for one exception though).…”

Section: Discussionmentioning

confidence: 99%

“…A second feedback mechanism is carbon leakage, i.e., reduced demand for oil in a specific sector or country may lead to lower oil prices and correspondingly higher oil consumption in other sectors or countries (e.g., Felder and Rutherford, 1993;Böhringer et al, 2014;Habermacher, 2015). Policy measures that reduce the demand for oil products may have particularly large leakage effects as oil is a globally traded good, and not mainly traded in national or regional markets such as natural gas or coal.…”

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confidence: 99%

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Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Aune

Bøeng

Kverndokk³

et al. 2017

Environ Resource Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We study the interactions between fuel efficiency improvements in the transport sector and the oil market, where the efficiency improvements are policy-induced in certain regions of the world. We are especially interested in feedback mechanisms of fuel efficiency such as the rebound effect, carbon leakages and the "green paradox", but also the distributional effects via oil price changes for different regions, sectors and oil producers. An intertemporal numerical model of the international oil market is introduced, where OPEC-Core producers have market power. We find that the rebound effect has a noticeable effect on the transport sector, but also on other sectors through lower oil prices in the regions that introduce the policy. There is a small green paradox effect in the sense that oil consumption increases initially when the fuel efficiency measures are gradually implemented. Finally, there will be significant carbon leakages if the policy is not implemented in all regions, with leakage rates of 35 per cent or higher. Non-OPEC producers will suffer more than OPEC producers by fuel efficiency policies due to high production costs. Terms of use: Documents inJEL-Code: D420, Q540, R480.

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“…Leakage through international energy markets are generally hard to avoid without having more countries implementing carbon policies (see Böhringer et al, 2014, for one exception though).…”

Section: Discussionmentioning

confidence: 99%

mentioning

confidence: 99%

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Aune

Bøeng

Kverndokk³

et al. 2017

Environ Resource Econ

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“…The latter sets a carbon tax including trade policy elements in order to extract rents from the supplying cartel. Böhringer et al (2014) show that carbon leakage rates depend on the market power of supply side cartels. In particular, if OPEC acts as a dominant player on the international crude oil market, carbon price may lead to negative carbon leakage within the oil market.…”

Section: Introductionmentioning

confidence: 99%

Market Power Rents and Climate Change Mitigation: A Rationale for Coal Taxes?

Richter

Mendelevitch²,

Jotzo

2015

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn this paper we investigate the introduction of an export tax on steam coal levied by an individual country (Australia), or a group of major exporting countries. The policy motivation would be twofold: generating tax revenues against the background of improved terms-of-trade, while CO 2 emissions are reduced. We construct and numerically apply a two-level game consisting of an optimal policy problem at the upper level, and an equilibrium model of the international steam coal market (based on COALMOD-World) at the lower level. We find that a unilaterally introduced Australian export tax on steam coal has little impact on global emissions and may be welfare reducing. On the contrary, a tax jointly levied by a "climate coalition" of major coal exporters may well leave these better off while significantly reducing global CO 2 emissions from steam coal by up to 200 Mt CO 2 per year. Comparable production-based tax scenarios consistently yield higher tax revenues but may be hard to implement against the opposition of disproportionally affected local stakeholders depending on low domestic coal prices.

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“…Böhringer et al (2014) are the exception; in their article, they compare several assumptions concerning OPEC market power in a CGE framework and discuss the implications on carbon leakage. However, they only treat oil as a homogeneously traded fuel, and thus (to some extent) omit carbon leakage via other fossil fuels.…”

Section: Strategic Behaviour and Market Powermentioning

confidence: 99%

Market Power, Fuel Substitution and Infrastructure: A Large-Scale Equilibrium Model of Global Energy Markets

Huppmann

Egging

2014

SSRN Journal

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Assessing and quantifying the impacts of technological, economic, and policy shifts in the global energy system requires large-scale numerical models. We propose a dynamic multi-fuel market equilibrium model that combines endogenous fuel substitution within demand sectors and in power generation, detailed infrastructure capacity constraints and investment, as well as strategic behaviour and market power aspects by suppliers in a unified framework. This model is the first of its kind in which market power is exerted across several fuels.Using a dataset based on the IEA World Energy Outlook 2013 (New Policies scenario, time horizon 2010-2050, 30 regions, 10 fuels), we illustrate the functionality of the model in two scenarios: a reduction of shale gas availability in the US relative to current projections leads to an even stronger increase of power generation from natural gas in the European Union relative to the base case; this is due to a shift in global fossil fuel trade. In the second scenario, a tightening of the EU ETS emission cap by 80 % in 2050 combined with a stronger biofuel mandate spawns a renaissance of nuclear power after 2030 and a strong electrification of the transportation sector. We observe carbon leakage rates from the unilateral mitigation effort of 60-70 %.

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Unilateral Climate Policy: Can OPEC Resolve the Leakage Problem?

Cited by 17 publications

References 33 publications

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Fuel Efficiency Improvements: Feedback Mechanisms and Distributional Effects in the Oil Market

Market Power Rents and Climate Change Mitigation: A Rationale for Coal Taxes?

Market Power, Fuel Substitution and Infrastructure: A Large-Scale Equilibrium Model of Global Energy Markets

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