2012年-CEPS欧洲政策研究中心_Global_Welfare_Implications_of_Carbon_Border_Taxes_23页_324kb

Summary of "Global Welfare Implications of Carbon Border Taxes"

Core Content

This working paper by Daniel Gros explores the global welfare implications of introducing carbon border taxes (CBTs) in a country that already imposes a domestic carbon tax. The focus is on understanding how such border measures affect both domestic and international production, consumption, and overall global welfare.

Main Findings

• A carbon import tariff can increase global welfare, not just the welfare of the importing country, if there is no or insufficient carbon pricing abroad.
• A higher domestic carbon price justifies a higher import tariff.
• A higher relative carbon intensity abroad makes a carbon import tariff more desirable, as it shifts production to the importing country, thereby reducing environmental costs.
• When both instruments (domestic carbon tax and import tariff) are used to maximise global welfare, the optimal domestic carbon price should be higher than the external effect, and the optimal tariff rate is somewhat lower than the domestic carbon price.
• If the importing country uses a fixed emissions ceiling (as in the EU Emissions Trading System or ETS), an import tariff is always beneficial for global welfare and lowers the price of domestic allowances, though not proportionally.

Key Points

1. Model Overview

• The paper presents a partial equilibrium two-country model to assess the welfare effects of a carbon import tariff combined with a domestic carbon tax.
• The world is divided into:
  • An importing country (home country)
  • The rest of the world (RoW)
• The model assumes:
  • Linear demand and supply curves for simplicity.
  • Different technologies and cost functions in the home and RoW.
  • Externalities from CO₂ emissions are considered in the calculation of social welfare.

2. Welfare Implications

• Global welfare is defined as the sum of:
  • Household utility from consumption
  • Minus production costs
  • Plus the negative external effect of CO₂ emissions
• The impact of a carbon import tariff on global welfare is derived using a total differential approach, taking into account:
  • Changes in domestic and foreign consumption and production
  • The effect of the tariff on international prices

3. Mathematical Formulation

• The welfare impact of a carbon import tariff is given by:
  $$
  \frac{dWW}{d\beta} = \left{ \left[ \varepsilon - (1 + \alpha)\sigma \right] c \left( \frac{u^* + c^}{u + c} \right) - \left[ \varepsilon^ - \gamma (1 + \alpha)\sigma \right] c^* \right} \left{ \frac{u + c}{\Sigma} \right}
  $$
• This result shows that:
  • Higher domestic carbon prices increase the positive impact of an import tariff.
  • Higher carbon intensity abroad (γ > 1) makes the import tariff more desirable.
  • In the symmetric case, the sign of the welfare impact depends on:
    • The difference in domestic carbon prices
    • The difference in relative carbon intensity

4. Quantitative Ceilings (ETS)

• When the importing country has a fixed emissions ceiling (as in the EU ETS), an import tariff is always beneficial for global welfare.
• The impact of an import tariff on the world price is:
  $$
  \frac{dp}{d\beta}_{ETS} = \frac{-u}{u + u^* + c^*} < 0
  $$
• The optimal tariff in this context is not directly dependent on the size of the emissions ceiling.

5. Empirical Considerations

• Empirical studies suggest that carbon leakage is a concern, as domestic carbon taxes can lead to increased production abroad.
• However, the introduction of a carbon import tariff can mitigate this leakage by shifting production to the importing country.
• The paper highlights that while some studies suggest that BTAs are not effective, others support their use in preventing carbon leakage in energy-intensive sectors such as cement and steel.

Conclusion

• The paper concludes that a carbon import tariff can be an effective policy instrument to improve global welfare when carbon is not priced abroad.
• The optimal combination of domestic carbon tax and import tariff should be determined with a focus on global welfare, not just domestic competitiveness.
• The import tariff acts as a corrective mechanism for distortions caused by domestic carbon pricing, helping to shift production to lower-emission locations and improve environmental outcomes.

Key Information

• Import tariffs on carbon content of goods can improve global welfare.
• Domestic carbon prices and carbon intensity abroad are crucial variables in determining the effectiveness of such tariffs.
• The ETS and carbon import tariffs can be combined to reduce emissions while maintaining competitiveness.
• Empirical studies show mixed results, but the paper argues for a global welfare perspective when evaluating the impact of border measures.