Carbon Leakage Revisited: Unilateral Climate Policy with Directed Technical Change
In: CentER Discussion Paper Series No. 2005-68
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In: CentER Discussion Paper Series No. 2005-68
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In: The Energy Journal 39(;4);:;127-151, 2018. https:;/;/;doi.org/;10.5547/;01956574.39.4.chaa
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In: CESifo Working Paper Series No. 2875
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In: Environmental and resource economics, Band 66, Heft 3, S. 457-480
ISSN: 1573-1502
In: NBER Working Paper No. w18794
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In: Journal of political economy, Band 129, Heft 11, S. 3039-3072
ISSN: 1537-534X
In: Oxford review of economic policy, Band 30, Heft 3, S. 513-530
ISSN: 1460-2121
In: Environmental and resource economics, Band 39, Heft 2, S. 55-74
ISSN: 1573-1502
In: EGY-D-22-00826
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We determine the core characteristics of a climate coalition's optimal policies in a dynamic two country directed technical change framework. Unilateral policies alter the structure of production and thereby innovation incentives across countries. Whenever feasible, optimal policies implement sustainable growth by directing global innovation to the nonpolluting sector. If nonparticipants drive global innovation, this requires policies relocating clean production to nonparticipants. A calibration exercise suggests that the US or EU alone are too small to implement sustainable growth. A coalition of Annex I countries that signed the Kyoto protocol can implement sustainable growth, yet required tax rates are very high.
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Códigos JEL: J24, O33, O44, Q43 ; What happens to workers of the fossil fuels industry if an energy transition takes place? Even though an energy transition is one of the main objectives in the flght against climate change, it carries several economic and social costs, especially as it has heterogeneous effects on different groups of individuals. This paper introduces a directed technical change model where innovation is focused on the energy sector that demands both skilled and low-skilled labor. In this context, I show how an environmental catastrophe is inevitable if there is not a policy to carry out an energy transition. Once this policy is implemented, there is directed technical change toward the clean sector and workers in the dirty sector bear an extra cost to adapt their abilities to the skills' demand in the new sector. Consequently, the existing income gap is amplified following i) changes in relative labor supply favoring workers in the clean sector and ii) a reduction in disposable income for human capital investment. Government intervention is needed to compensate households and guarantee that economic and environmental gains from the energy transition outweigh its welfare losses.
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In: FEEM Working Paper No. 11.2015
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