Unilateral Carbon Taxes, Border Tax Adjustments, and Carbon Leakage

Border adjustments under unilateral carbon pricing: the case of Australian carbon tax

In the absence of a global agreement to reduce emissions, Australia has adopted a carbon tax unilaterally to curb its own emissions. During the debate prior to passing the carbon tax legislation, there were concerns about the challenge that Australia’s emissions intensive and trade exposed (EITE) industries may face in terms of decreasing international competitiveness due to the unilateral natu...

“Competitiveness, Carbon Leakage, and Border Tax Adjustments: Might Imperfect Competition Matter?”

In this paper, analysis is presented relating to the impact of border tax adjustments for climate policy on the international competitiveness of energy-intensive industries, and the related problem of carbon leakage. While many of the economic and legal issues are not particularly new, climate policy does present some possible twists to the analysis of border tax adjustments when vertically-rel...

Emission Taxes and Border Tax Adjustments for Oligopolistic Industries

We examine the welfare consequence of emissions tax with and without a Border Tax Adjustment for an imperfectly competitive industry, where intraindustry trade arises between countries. BTA allows a government to impose a pollution-content tari¤ on imports and refund an emission tax for export sales. We analyze the structure of an optimal emission tax with BTA when a government chooses its emis...

Can Border Carbon Taxes Fit into the Global Trade Regime?

If BCAs are to gain international acceptance, they must be motivated by clear, economically-sound arguments, but the reasons normally put forward do not seem to persuade critics. For instance, the European Union still needs to convince the world about the appropriateness of the extraterritorial features of the extension of its emissions trading system to aviation. To gain international acceptan...

Trade and Carbon Taxes