Carbon leakage in a small open economy: The importance of international climate policies
In:
Contributors (3)
Kruse-Andersen, Peter Kjær (
0000-0002-0378-9321)
(Corresponding author)
[2]
Affiliations
- [1] Kraka, Denmark
- [2] University of Copenhagen [NORA names: KU University of Copenhagen; University; Denmark; Europe, EU; Nordic; OECD]
- [3] Danish Research institute for Economic Analysis and Modelling (DREAM), Denmark
Abstract
A substantial literature investigates carbon leakage effects for large countries and climate coalitions. However, little is known about leakage effects for a small open economy within a climate coalition. To fill this gap in the literature, we incorporate international climate policies relevant for a small open EU economy into the general equilibrium model GTAP-E. We focus our analysis on Denmark, but we show that our framework can be applied to any EU economy. We find substantial leakage associated with an economy-wide CO 2 e tax. This result is strongly affected by EU climate policies. We also present sector-specific leakage rates and find large sectoral differences.
Keywords
Denmark,
EU climate policy,
EU economies,
GTAP,
analysis,
carbon leakage,
carbon leakage effects,
climate coalitions,
climate policy,
coalition,
countries,
differences,
e-tax,
economy,
effect,
framework,
gap,
importance,
international climate policy,
largest country,
leakage,
leakage effects,
leakage rate,
literature,
open economy,
policy,
rate,
results,
sectoral differences,
small open economy,
substantial leakage,
substantial literature,
tax
