Tariffs and CO2 emissions
Joseph S. Shapiro finds that in most countries, import tariffs and non-tariff barriers are substantially lower on dirty than on clean industries, where an industry’s “dirtiness” is defined as its carbon dioxide (CO2) emissions per dollar of output. This constitutes an implicit subsidy to CO2 emissions in internationally traded goods, and totals $210 to $580 billion per year.
He argues that if countries imposed similar tariffs and non-tariff barriers on clean and dirty industries, global CO2 emissions would fall by 1 to 5 percentage points, while global real income would largely not change.
The Environmental Bias of Trade Policy
Authors: Joseph S. Shapiro
From: UC Berkeley
Quantifying the effect of climate change on GDP
Using a panel data set of 174 countries over the years 1960 to 2014, Kahn and al. find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm. Their counterfactual analysis suggests that:
- A persistent increase in average global temperature by 0.04℃ per year, in the absence of mitigation policies, reduces world real GDP per capita by 7.22 percent by 2100;
- Abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01℃ per annum, reduces the loss to 1.07 percent.
Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis
Authors: Matthew E. Kahn, Kamiar Mohaddes, Ryan N. C. Ng, M. Hashem Pesaran, Mehdi Raissi, Jui-Chung Yang
From: University of Southern California, University of Cambridge, IMF, National Tsing Hua University
Effect of climate policy uncertainty
Fried and al. find that expectations of future climate policy reduce the return to dirty (carbon-emitting) energy capital, shifting the economy towards cleaner energy production. BUT, the output cost of reducing emissions through expectations of future policy are considerably higher than the output cost of the carbon tax policy itself as uncertainty about the timing and details of the future climate policy depresses savings lowering the aggregate capital stock.
The Macro Effects of Anticipating Climate Policy
Authors: Stephie Fried, Kevin Novan, William B. Peterman
From: Arizona State University, University of California, Davis, Federal Reserve Board of Governors