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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Carbon and International Trade Location: B133 Session Chair: France d'Agrain, Mines Paris - PSL | |
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Leakage and welfare under the EU Methane Regulation: an asset-level evaluation for crude oil imports CEDP, Mines Paris - PSL, France Unilateral environmental policy on a tradable commodity raises the classic concern that emissions are displaced rather than eliminated. From 2030, EU Regulation 2024/1787 will exclude crude oil imports above a maximum methane-intensity threshold, a binary, partial-coverage standard imposed on a globally fungible commodity. Using an assetlevel model of global oil trade calibrated to over 14,000 deposits, with endogenous abatement and route-specific transport, I find that the standard cleans the EU import basket but has little effect on the atmosphere, because the methane it could remove leaks back almost entirely, at a rate near 0.98. A Shapley decomposition splits this leakage into two channels of similar size: crude rerouted to unregulated buyers, and high-methane crude refined abroad and returned to the EU as product. The abatement the policy could induce is cheap and welfare-improving on its own, but the reshuffling it sets off turns the net effect negative. The import standard is equivalent to a methane price of barely a dollar a tonne. At that same level of abatement, an explicit content price raises EU welfare where the standard lowers it; the gap is partly the deadweight cost of forcing barrels to either comply or leave, and partly a terms-of-trade transfer the border charge collects from foreign suppliers. Stringency is not the margin that matters. The binding constraint is the unilateral scope of the instrument. | |