Second-best carbon taxation in the global economy: The Green Paradox and carbon leakage revisited

The article critically examines domestic political concerns about the competitive disadvantages and possible carbon leakage arising from the introduction of domestic emission trading legislation and the fairness of applying carbon equalization measures at the border as a response to these concerns. I argue that the border adjustment measures proposed in the emissions trading bills that have been presented to Congress amount to an evasion of the U.S.'s leadership responsibilities under the United Nations Framework Convention on Climate Change (UNFCCC). I also show how the “level commercial playing field” justification for border measures that has dominated U.S. domestic debates is narrow and lopsided because it focuses only on the competitive disadvantages and direct carbon leakage that may flow from climate regulation while ignoring general shifts in the production and consumption of emissions in the global economy, which have enabled the outsourcing of emission to developing countries. The UNFCC production-based method of emissions accounting enables Northern consumers to enjoy the benefit of cheaper imports from Southern producers and to attribute the emissions associated with this consumption to the South. I argue that it is possible to design fair border measures that address carbon leakage, are consistent with the leadership responsibilities of developed countries, do not penalize developing countries, and ensure that consumers take some responsibility for the emissions outsourced to developing countries.

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Carbon Leakage Along with the Green Paradox Against Carbon Abatement? A Review Based on Carbon Tax

Folia Oeconomica Stetinensia ◽

10.2478/foli-2020-0002 ◽

2020 ◽

Vol 20 (1) ◽

pp. 25-44

Author(s):

Sahin Akkaya ◽

Ufuk Bakkal

Keyword(s):

Interest Rates ◽

Carbon Emissions ◽

Fossil Fuels ◽

Fossil Fuel ◽

Carbon Tax ◽

Relevant Literature ◽

Carbon Leakage ◽

Carbon Abatement ◽

Green Paradox ◽

Global Carbon

AbstractResearch background: Insufficient global cooperation in carbon pricing against global warming has the risk of global carbon emissions rise because of carbon leakage. The effect of a carbon tax on the present supply of fossil fuels is also valuable in regard to global carbon emissions.Purpose: The purpose of this study is to gain more insights into the effects of carbon leakage along with the green paradox on global carbon emissions by reviewing the relevant literature.Research methodology: We provide the problem linked to carbon leakage and the green paradox in the introduction. Then, the effects of carbon leakage and the green paradox on global carbon emissions are elaborated separately. Finally the mutual effects of carbon leakage and the green paradox are reviewed comprehensively.Results: It is seen that various factors like interest rates, fossil fuel extraction costs, the fossil fuel reserves to be discovered in the future and carbon tax incidence are equally important determinants in regard to global carbon emissions.Novelty: This study provides an insight into the mutual effects of carbon leakage and the green paradox on global carbon emissions by reviewing the primary literature in the field.

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Second-Best Renewable Subsidies to De-Carbonize the Economy: Commitment and the Green Paradox

SSRN Electronic Journal ◽

10.2139/ssrn.2743112 ◽

2016 ◽

Author(s):

Armon Rezai ◽

Frederick van der Ploeg

Keyword(s):

Second Best ◽

Green Paradox

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Carbon Leakage, the Green Paradox and Perfect Future Markets

SSRN Electronic Journal ◽

10.2139/ssrn.1340394 ◽

2009 ◽

Author(s):

Thomas Eichner ◽

Rudiger Pethig

Keyword(s):

Carbon Leakage ◽

Green Paradox

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Unilateral Policies, Competitiveness and the ‘Green Paradox’ in a Dynamic North–South Model

Arthaniti-Journal of Economic Theory and Practice ◽

10.1177/0976747918796878 ◽

2018 ◽

Vol 17 (2) ◽

pp. 113-139 ◽

Cited By ~ 1

Author(s):

Partha Sen

Keyword(s):

Marginal Cost ◽

Fossil Fuel ◽

Carbon Leakage ◽

Fuel Use ◽

Green Paradox ◽

Over Time

The effects of a unilateral cut in emissions (e.g., by Annexure 1 countries in Kyoto) are analysed in a dynamic two-country two-commodity model. If the fossil fuel is priced at marginal cost, then a unilateral cut reduces total emissions (the carbon leakage is less than 100%). But if the fuel is priced above marginal cost, then a ‘green paradox’ appears, that is, the price of the fuel will fall until its use (over time) exhausts the entire stock. Here, a unilateral policy is self-defeating and it is necessary to get binding commitments on fossil fuel use from all the countries. The production and trade implications for the participant and non-participant countries are analysed. JEL: Q4, Q50, Q54, Q56

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Regional Integration as “Second-Best” Alernative in Post-Financial Crisis World: Lessons from the European Monetary Union to the Mercosur and Unasur

Conjuntura Internacional ◽

10.5752/p.1809-6182.2018v15.n2.p61 ◽

2019 ◽

Vol 15 (2) ◽

pp. 61-68

Author(s):

Renato Saraiva ◽

Thaís Dutra Fernández

Keyword(s):

Financial Crisis ◽

Economic Integration ◽

Monetary Union ◽

Regional Integration ◽

European Monetary Union ◽

Global Economy ◽

International Monetary System ◽

European Monetary ◽

Second Best ◽

Monetary System

The International Monetary System does not reflect transformations in the global economy. Being impossible to reform it, economic integration processes may be a “second-best” alternative. By analyzing the European Monetary Union we conclude that MERCOSUR and UNASUR should conceive regimes in less restrictive forms and develop fiscal and political integration.

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