Carbon Emission Leakages [E-Book]: A General Equilibrium View / Jean-Marc Burniaux and Joaquim Oliveira Martins
Burniaux, Jean-Marc.
Oliveira Martins, Joaquim.
Paris : OECD Publishing, 2000
35 p. ; 21 x 29.7cm.
OECD Economics Department Working Papers ; 242
Full Text
In December 1997, a number of countries - referred to as the Annex 1 countries - signed the Kyoto Protocol under which they agreed to ceilings on their emissions of greenhouse gases (GHGs). Such unilateral action by a group of countries has often been criticised on the grounds that it could be undermined by the existence of so-called "carbon leakages". Carbon leakage refers to the possible rise of GHG emissions in countries that do not participate in a carbon abatement coalition. This paper provides a discussion of the key mechanisms and factors underlying the size of carbon leakages. To this aim, we use a two-region, two-final goods simplified CGE framework, incorporating three types of fossil fuels (coal, oil and low-carbon energy), international trade and capital mobility. This framework was designed to make extensive, multidimensional sensitivity analysis tractable. Indeed, a wide range of alternative assumptions and parameterisations would have been difficult or even ...