The European carbon border adjustment mechanism : a small step in the right direction

DOI zum Zitieren der Version auf EPub Bayreuth: https://doi.org/10.15495/EPub_UBT_00006982
URN to cite this document: urn:nbn:de:bvb:703-epub-6982-1

Title data

Korpar, Niko ; Larch, Mario ; Stöllinger, Roman:
The European carbon border adjustment mechanism : a small step in the right direction.
In: International Economics and Economic Policy. Vol. 20 (2023) Issue 1 . - pp. 95-138.
ISSN 1612-4812
DOI der Verlagsversion: https://doi.org/10.1007/s10368-022-00550-9

	Format: PDF Name: s10368-022-00550-9.pdf Version: Published Version Available under License Creative Commons BY 4.0: Attribution
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Abstract

We estimate the effects of a European Carbon Border Adjustment (CBA) mechanism on exports, real GDP, welfare and emissions using the multi-region, multi-sector structural gravity model of Larch and Wanner (2017). Incorporating the main industries covered in the proposal of the European Commission from mid-2021, as well as its other design features, and assuming prevailing CO2 prices, we find only small effects of the European CBA mechanism. EU exports are estimated to decline by 0.04%, while CO2 emissions in EU countries increase by 0.24%. These negligible results mask larger adjustments at the sectoral level. The structural changes will shift the EU economy towards more emission-intensive industries, which will make achieving its climate goals harder. On the positive side, the European CBA mechanism will reduce global emissions by 0.08%. Given the minute economic costs in terms of GDP and welfare losses, the CBA mechanism seems an appropriate policy tool, though its proposed design will not be able to make a significant contribution to mitigating global climate change.

Further data

Item Type:	Article in a journal
Keywords:	Carbon border taxes; Carbon tariffs; Carbon leakage; Climate change
DDC Subjects:	300 Social sciences > 330 Economics
Institutions of the University:	Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VI - Empirical Economic Research > Chair Economics VI - Empirical Economic Research - Univ.-Prof. Dr. Mario Larch Faculties Faculties > Faculty of Law, Business and Economics Faculties > Faculty of Law, Business and Economics > Department of Economics Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VI - Empirical Economic Research
Language:	English
Originates at UBT:	Yes
URN:	urn:nbn:de:bvb:703-epub-6982-1
Date Deposited:	09 May 2023 09:03
Last Modified:	09 May 2023 09:04
URI:	https://epub.uni-bayreuth.de/id/eprint/6982

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