Spill or leak? Carbon leakage with international technology spillovers: A CGE analysis

R. Gerlagh, O. Kuik

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper studies the effect of endogenous technical change and international technology spillovers on carbon leakage. It is well known that a unilateral CO2 abatement policy in one region may cause CO2 emissions to increase in non-abating regions because of the relocation of CO2-intensive firms and because of energy market effects. If, however, the CO2 mitigation policy induces energy-saving technological innovation in the home region and this innovation can freely spill-over to energy users abroad, carbon leakage may be offset by induced efficiency gains in foreign firms. In this paper we develop a simple mathematical model of carbon leakage and technological spillovers and perform numerical simulations with an adjusted CGE model to illustrate the potential importance of international technology spillovers. We show that carbon leakage can become negative at moderate levels of technology spillover.
Original languageEnglish
Pages (from-to)381-388
JournalEnergy Economics
Volume45
DOIs
Publication statusPublished - Sep 2014

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Leakage (fluid)
Hazardous materials spills
Carbon
Innovation
Relocation
Energy conservation
Mathematical models
Spill
Technology spillovers
Carbon leakage
Computer simulation
Co2

Keywords

  • Carbon leakage
  • climate policy
  • endogenous technical change
  • trade and the environment

Cite this

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title = "Spill or leak? Carbon leakage with international technology spillovers: A CGE analysis",
abstract = "This paper studies the effect of endogenous technical change and international technology spillovers on carbon leakage. It is well known that a unilateral CO2 abatement policy in one region may cause CO2 emissions to increase in non-abating regions because of the relocation of CO2-intensive firms and because of energy market effects. If, however, the CO2 mitigation policy induces energy-saving technological innovation in the home region and this innovation can freely spill-over to energy users abroad, carbon leakage may be offset by induced efficiency gains in foreign firms. In this paper we develop a simple mathematical model of carbon leakage and technological spillovers and perform numerical simulations with an adjusted CGE model to illustrate the potential importance of international technology spillovers. We show that carbon leakage can become negative at moderate levels of technology spillover.",
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Spill or leak? Carbon leakage with international technology spillovers : A CGE analysis. / Gerlagh, R.; Kuik, O.

In: Energy Economics, Vol. 45, 09.2014, p. 381-388.

Research output: Contribution to journalArticleScientificpeer-review

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AB - This paper studies the effect of endogenous technical change and international technology spillovers on carbon leakage. It is well known that a unilateral CO2 abatement policy in one region may cause CO2 emissions to increase in non-abating regions because of the relocation of CO2-intensive firms and because of energy market effects. If, however, the CO2 mitigation policy induces energy-saving technological innovation in the home region and this innovation can freely spill-over to energy users abroad, carbon leakage may be offset by induced efficiency gains in foreign firms. In this paper we develop a simple mathematical model of carbon leakage and technological spillovers and perform numerical simulations with an adjusted CGE model to illustrate the potential importance of international technology spillovers. We show that carbon leakage can become negative at moderate levels of technology spillover.

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