The Role of Trade and Competitivness Measures in U.S Climate Policy


We review the proposed measures for addressing competitiveness and carbon leakage concerns in recent U.S. climate policy legislation. For eligible energy-intensive, trade-exposed sectors, output-based rebates would initially dampen cost increases; later, border adjustments would ensure that imports face comparable cost burdens. Both measures can in theory enhance the economic efficiency of carbon reduction efforts, but both pose some interesting economic and practical trade-offs. This paper discusses our recent research into the welfare and carbon leakage effects of using output-based allocation and trade measures in conjunction with climate policies.

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Fischer, Carolyn
All authors:
Carolyn Fischer, Alan K. Fox
Work package(s):
Border Carbon Adjustments
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Publication year:
American Economic Review, May 2011. Vol. 101, No 3: pages 258-262
Updated: 2013-03-06