Conference Agenda
Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).
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Daily Overview |
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Climate Change Mitigation 6: Carbon Border Adjustments Location: B011 Session Chair: Robin Sogalla, University of Mannheim and Kiel Institute for the World Economy | |
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The Global Trade and Environmental Effects of Carbon Border Tariffs 1: Environmental Defense Fund; 2: Tsinghua University; 3: Harvard University The European Union just added a carbon border adjustment mechanism (CBAM) to its carbon emission trading system (EU ETS) to protect industries covered by the ETS from imports lacking equivalent carbon prices and mitigate carbon leakage. Other developed countries are also contemplating carbon border adjustments, and thus their impacts on global trade and economic growth become a critical concern for many countries. We develop a dynamic recursive global model with 10 world regions and 29 sectors to simulate the impacts of the EU CBAM on trade and output. We find that the EU ETS without a CBAM causes significant carbon leakage due to increased fuel consumption and energy-intensive manufacturing activities outside the EU. Adding CBAM tariffs only marginally reduces this leakage, from 59.4% to 54.6%, due to a shift to imports from cleaner regions. The carbon tariffs adversely affect China and India, as they reduce exports covered by the CBAM, while countries like the US and other countries with lower carbon intensities, experience minimal aggregate economic impacts. However, the CBAM hurts non-CBAM sectors within the EU, leading to a lower EU GDP. | |