Potential carbon leakage under the Paris agreement
King, Lewis Carl (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)
van den Bergh, Jeroen C. J. M. (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)

Data:	2021
Resum:	Carbon leakage is the effect of emissions transferring to certain countries due to others having a stricter climate policy. This phenomenon is shown to have undercut the effectiveness of the Kyoto Protocol. Considering the increasingly globalised nature of the world economy, carbon leakage may have an even greater potential under the Paris Agreement some fifteen years later. Although a more global approach to combatting climate change, the Paris Agreement is susceptible to leakage because of its lack of policy harmonization and enforcement mechanisms. Here we perform the first quantitative analysis of the potential for carbon leakage under Paris, using the GTAP-E general equilibrium model of the world economy with energy and carbon emissions to analyse leakage effects under six scenarios. Two of these scenarios analyse regions implementing climate policy in isolation, two greater participation, but still not harmonized, global Paris Agreement policy, and a further two analyse the effect of a US withdrawal from the agreement. Both cases are considered with and without the US withdrawal. Our analysis demonstrates that there is potential for significant carbon leakage effects, in line with the rates produced from studies on the Kyoto Protocol. Depending on model elasticities, we find medium carbon leakage in the range of 1-9% (with a central estimate of 3-4%) under co-ordinated Paris Agreement policy across countries, compared to high leakage of 8-31% when countries operate in isolation. However, scenarios where the US withdraws from the agreement result in roughly doubling of leakage rates, in the range of 3-16% (central estimate 7%), which demonstrates the vulnerability of the Paris Agreement in its current form. To limit leakage effects greater policy co-ordination to achieve consistent implicit carbon prices is needed across countries.
Ajuts:	Ministerio de Ciencia e Innovación MDM-2015-0552 European Commission 741087
Nota:	Unidad de excelencia María de Maeztu CEX2019-000940-M
Drets:	Tots els drets reservats.
Llengua:	Anglès
Document:	Article ; recerca ; Versió acceptada per publicar
Matèria:	Paris Agreement ; Carbon leakage ; Climate change mitigation
Publicat a:	Climatic Change, Vol. 165, Issue 3-4 (April 2021) , art. 52, ISSN 1573-1480

DOI: 10.1007/s10584-021-03082-4

Postprint 24 p, 510.4 KB

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