Unilateral CO2 Reduction Policy with More Than One Carbon Energy Source

@article{Daubanes2021UnilateralCR,
  title={Unilateral CO2 Reduction Policy with More Than One Carbon Energy Source},
  author={Julien Daubanes and Fanny Henriet and Katheline Schubert},
  journal={Journal of the Association of Environmental and Resource Economists},
  year={2021},
  volume={8},
  pages={543 - 575}
}
We examine an open economy’s strategy to reduce its carbon emissions by replacing its consumption of coal—very carbon intensive—with gas—less so. Unlike the standard theoretical approach to carbon leakage, we show that unilateral CO2 reduction policies generate a higher leakage rate in the presence of more than one carbon energy source and may turn counterproductive, ultimately increasing world emissions. We establish testable conditions as to whether a unilateral tax on domestic CO2 emissions… Expand
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