Dirty little secrets: Inferring fossil-fuel subsidies from patterns in emission intensities
Radek Stefanski 30 May 2014
No comprehensive database of directly measured fossil-fuel subsidies exists at the international or the sub-national level, yet subsidies may be crucial drivers of global carbon emissions. This column describes a novel method for inferring carbon subsidies by examining country-specific patterns in carbon emission-to-output ratios, known as emission intensities. Calculations for 155 nations from 1980-2005 reveal that fossil-fuel price distortions are enormous, increasing, and often hidden. These subsidies contributed importantly to increasing emissions and lower growth.
An astonishing feature of international energy and climate policy is that fossil fuels – often seen as the primary contributor to climate change – receive enormous government support (IMF 2013, IEA 2012). Surprisingly, no comprehensive database of directly measured, comparable fossil-fuel subsidies exists at the international level. This is both because of political pressure from the direct beneficiaries of subsidies and because of the immense complexity of the task given the profusion and diversity of subsidy programmes across countries (Koplow 2009, OECD 2012).
energy, emissions, pollution, subsidies, fossil fuels, energy subsidy, carbon
Climate policy targets revisited
Richard S J Tol 25 April 2014
The IPCC’s Fifth Assessment Report estimates lower costs of climate change and higher costs of abatement than the Stern Review. However, current UN negotiations focus on stabilising atmospheric concentrations of greenhouse gases at even lower levels than recommended by Stern. This column argues that, given realistic estimates of the rate at which people discount the future, the UN’s target is probably too stringent. Moreover, since real-world climate policy is far from the ideal of a uniform carbon price, the costs of emission reduction are likely to be much higher than the IPCC’s estimates.
The Stern Review of the Economics of Climate Change is the most famous economic assessment of climate policy (Stern et al. 2006). The Stern Review puts the costs of unmitigated climate change at 5–20% of GDP (now and forever), it estimates that the cost of stabilising atmospheric concentrations around 525 ppm CO2e are 1% of GDP (in 2050), and recommends that concentrations be stabilised around 500 ppm CO2e.1
climate change, emissions, externalities, greenhouse gases, pollution, carbon, cost-benefit analysis
Breaking the climate stalemate?
Carlo Carraro, Valentina Bosetti, Massimo Tavoni, Thomas F. Rutherford, Richard Richels, Geoffrey Blanford 07 December 2009
China and other key developing countries must participate for any global carbon deal to succeed, but they make a strong case for a free pass. What can be done? This column says that they could commit now to accept pre-specified future emission reduction targets in order to effectively address these concerns.
On the eve of the UN’s highly-anticipated Copenhagen meeting, international climate policy negotiations remain in gridlock. Many OECD countries insist on binding emissions limits for their economic competitors in the developing world, while countries such as China and India are unwilling to accept such responsibility. They argue that because they are poor, low per-capita emitters and have contributed relatively little to cumulative emissions, they should not be asked to forgo the use of cheap fossil fuels to drive their own industrialisation.
climate change, emissions, Copenhagen Summit
Trade, pollution, and the environment: New international evidence
Jaime de Melo, Nicole A. Mathys, Jean-Marie Grether 28 November 2009
The “pollution haven” view asserts that globalisation draws industries to countries with lax environmental regulation. This column presents evidence that that the major polluting industries are not very footloose and that changes in emissions through the relocation of activities are relatively small. The growth of trade itself, however, is likely to contribute to growing emissions associated with transport.
Much concern has been raised that globalisation and trade liberalisation will lead to competition for investment and jobs, resulting in a worldwide degradation of environmental standards (the `race to the bottom´ effect) and /or in a delocalisation of heavy polluting industries in countries with lower standards (the `pollution havens´ effect – see Copeland and Taylor 2004).
Environment International trade
emissions, race-to-the-bottom, pollution haven
How fast are CO2 emissions moving to Asia?
Jean-Marie Grether, Nicole A. Mathys 21 November 2009
What is the geographical distribution of CO2 emissions? This column identifies the Earth’s “polluting centre of gravity” since 1970. It is heading east faster than GDP, which suggests that Asian production is getting more carbon-intensive.
In the run-up to a post-Kyoto agreement on greenhouse gas emissions, a major concern is the inclusion of the most important sources of global CO2 emissions. As these sources are linked to economic activity, it is largely suspected that their distribution across the Earth’s surface has shifted over recent decades. But in the absence of an indicator that takes the geographical dimension into account, it is difficult to come up with orders of magnitude regarding the direction and the speed of this process.
emissions, CO2, centre of gravity
Border measures in US climate policy options
Jisun Kim, Gary Clyde Hufbauer 17 October 2008
US climate change policy seems likely to include border measures to address competitiveness concerns. This column warns against such measures, arguing that they will do little to protect US industries, expose the US to retaliatory trade restrictions, and significantly burden the global trading system. The US would be better served by addressing its competitiveness concerns in international negotiations.
Due to rising domestic and international pressures, several greenhouse gas (GHG) control bills have been introduced in the 110th Congress. Some states and regional groups have already enacted controls. Whether US climate policy takes the form of a carbon tax, a cap-and-trade system, performance standards, or some other method, serious greenhouse gas controls are likely to impose heavy costs on the US economy, concentrated in a small number of GHG-intensive industries and activities.
Energy International trade
WTO, climate change, emissions
Climate policy uncertainty: Shall we hedge against it?
Valentina Bosetti, Carlo Carraro, Alessandra Sgobbi, Massimo Tavoni 14 October 2008
The future of climate change policy is very uncertain due to economic, environmental, and political complexities. This column quantifies the economic cost of delaying action to reduce carbon emissions and argues that the best strategy is to hedge our bets by adopting a mild emissions reduction policy now rather than naïvely waiting for the uncertainties to be resolved.
Despite growing concerns about climate change, there is little consensus about the scale and timing of actions needed to respond to it. International negotiations on an effective climate policy have been stalling for almost a decade now, and those currently underway might fail to reach a comprehensive agreement in the near future. One reason for this slow progress is the global nature of the problem, whose solution requires a coordinated action.
climate change, emissions, global warming
What accounts for the clean-up of US manufacturing: technology or international trade?
Arik Levinson 02 January 2008
Since the 1970s, US manufacturing output has risen by 70% but air pollution has fallen by 58%. Was this due to improved abatement technology or shifting dirty production abroad?
Antiglobalisation protesters display signs denouncing international trade's role in polluting the environment.1 Pundits write Op-Ed pieces cautioning that increased trade has environmental costs.2 And a majority of Americans agree that "freer trade puts the United States at a disadvantage because of our high ... environmental standards".3
Environment International trade Productivity and Innovation
US, emissions, manufacturing, pollution
Climate Change, ethics and the economics of the global deal
Sir Nicholas Stern 30 November 2007
Targets and trading must be at the heart of a global agreement to reduce greenhouse gas emissions, according to Sir Nicholas Stern delivering the Royal Economic Society’s 2007 annual public lecture today, ahead of next week’s world summit on climate change in Bali.
The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay. Climate change is a result of the greatest market failure the world has seen. The evidence on the seriousness of the risks from inaction or delayed action is now overwhelming. We risk damages on a scale larger than the two world wars of the last century. The problem is global and the response must be a collaboration on a global scale.
climate change, emissions, greenhouse gases
Next steps after the Kyoto Protocol: formulas for quantitative emission targets
Jeffrey Frankel 25 June 2007
Quantitative emission targets for the 21st century must be set sequentially, a decade at a time, within a long-term framework. A good analogy is the GATT, which produced 50 years of trade liberalisation, the specifics of which the original signers could only have guessed.
It is a sign of how resigned the world has become to an absence of enlightened leadership from the United States that some were prepared to receive positively President Bush’s new position on Global Climate Change at the recent G8 meeting in Germany. The President conceded that it is a problem that is worth addressing. It will take more than this, however, to begin genuine progress on the problem.
Kyoto Protocol, climate change, emissions