KCG Seminar by Joschka Wanner on International Trade, Climate Policy, and Carbon Leakage

The next KCG Research Seminar will be given by Joschka Wanner, Research Fellow at the University of Bayreuth, on March 12, 2018 (Monday) at the Kiel Institute for the World Economy. His presentation is based on one of his current papers “International Trade, Uni- and Multilateral Climate Policy, and Carbon Leakage”. This paper aims at investigating the international effects of different climate policies on trade, welfare and carbon emissions. A gravity model is developed for this purpose and is used as base for an empirical analysis. This paper deals with a topic related to the KCG project “Global Supply Chains, Environmental Regulation and Green Innovation.”

Abstract of the paper: Any subglobal climate policy potentially suffers from carbon leakage, i.e. the (partial) offset of the initial emission reduction by increases in other countries. To analyse the international effects of different climate policies in terms of trade, welfare, and carbon emissions, we develop a multi-sector, multi-factor structural gravity model that allows an analytical and quantitative decomposition of emission changes into scale, composition, and technique effects. We use this framework to investigate the effectiveness of carbon tariffs, the potential of degrowth to limit the extent of carbon leakage associated with unilateral action, and the implications of different countries withdrawing from the Paris Agreement. Besides others, we find that carbon tariffs are able to reduce world emissions (mainly via altering the production composition within and across countries), accompanying emission reduction targets with carbon tariffs can substantially lower the associated leakage effects, and unilateral degrowth reduces world emissions more strongly than pure unilateral emission targets due to smaller counteracting composition and technique effects in uncommitted countries.

The seminar will take place at 12pm on March 12, 2018 in the Common Room at the Kiel Institute for the World Economy (Kiellinie 66, 24105 Kiel).

More information about KCG Research Seminar can be found here.