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The Global Effects of Sub-Optimal Climate Policies

Presenter:  Carolyn Fischer, Resources For the Future
Time:   Thursday, Feb 25, 2010  from 12:30 to 2:00 PM

Location:  MC4-401

Paper (PDF 153kb)

Individual OECD countries are in the process of legislating responses to the challenges posted by climate change. The prospect of rising carbon prices raises concerns in these nations about the impacts on the competitiveness of their own energy intensive industries and the potential for carbon leakage, particularly to emerging economies that lack comparable regulation. As a response, controversial trade-related measures and allowance allocation designs are being proposed to complement their climate policies. Missing from much of the debate on trade-related measure is a broader understanding of how climate policies implemented unilaterally affect all countries in the global trading system. Arguably, the largest impacts are from the targeted carbon pricing itself, which generates macroeconomic effects, terms-of-trade changes, and shifts in global energy demand and prices, in addition to changing the relative prices of certain energy-intensive goods. This paper studies how climate policies implemented in certain major economies (the EU and US) affect the global distribution of economic and environmental outcomes, and how these outcomes may  be altered by a variety of complementary policies aimed at addressing carbon leakage.
The paper is co-authored with Christoph Boehringer (Department of Economics, University of Oldenburg, Germany) and Knut Einar Rosendahl (Research Department, Statistics Norway).

Carolyn Fischer is Senior Fellow at Resources For the Future, in Washington DC. Her research focuses on policy mechanisms and modeling tools that cut across environmental issues, including environmental policy design and technological change, international trade and environmental policies, and resource economics. In the areas of climate change and energy policy, she has investigated the implications of different designs for emissions trading programs, particularly with respect to allocation schemes, and has also conducted research on CAFE standards, renewable portfolio standards, and energy efficiency programs. In areas of natural resource management, her research addresses issues of wildlife conservation, invasive species, and biotechnology, with particular emphasis on the opportunities and challenges posed by international trade.
Jon Strand,, 202-458-5122.

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