Skip to main content Accessibility help
×
Home
Hostname: page-component-99c86f546-5rzhg Total loading time: 0.258 Render date: 2021-11-28T10:57:40.588Z Has data issue: true Feature Flags: { "shouldUseShareProductTool": true, "shouldUseHypothesis": true, "isUnsiloEnabled": true, "metricsAbstractViews": false, "figures": true, "newCiteModal": false, "newCitedByModal": true, "newEcommerce": true, "newUsageEvents": true }

6 - A world of different carbon prices

Published online by Cambridge University Press:  05 June 2012

Karsten Neuhoff
Affiliation:
Deutsches Institut für Wirtschaftsforschung, Berlin
Get access

Summary

The previous chapter argued that countries and regions might pursue climate policies at different levels of ambition. This would probably include different carbon prices for a transition period, perhaps up to 2020. Now we will assess the implications of different carbon prices in countries connected by international trade. There are important opportunities and difficulties to consider. The opportunities lie in the first-mover advantages afforded to countries that support the development of low-carbon products and technologies. Just as Denmark's wind technologies have been established in world markets, new market leaders will emerge for other products.

But there is also some concern, that regions with high carbon price levels could risk inducing industry to alter investment, production and closure-decisions about plants, and thus move carbon-intensive production towards countries with lower or no carbon prices. This would have three implications that might have to be addressed by the design of the policy instrument and complementary measures.

  • Shifting of production in response to a more-stringent emissions cap and associated policy to a country without a stringent cap creates carbon leakage. The freed-up allowances in the first country will be used by other sectors that reduce their efforts in emissions reduction. Whenever some of the shifted production is not covered by a stringent national cap it will increase emissions in the new country and thus contribute to a global emissions increase.

  • Companies may limit passing through carbon prices to product prices either to protect current market shares, and hence delay relocation, or in response to output-based allocation of allowances. This dampens carbon-price signals for carbon-intensive commodities and services, reducing the economic incentive to substitute towards lower-carbon alternatives.

  • […]

Type
Chapter
Information
Climate Policy after Copenhagen
The Role of Carbon Pricing
, pp. 162 - 202
Publisher: Cambridge University Press
Print publication year: 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Send book to Kindle

To send this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle.

Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Send book to Dropbox

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Dropbox.

Available formats
×

Send book to Google Drive

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Google Drive.

Available formats
×