Carbon tax, cross-border carbon leakage, and border tax adjustments

Global warming is one of the greatest concerns in the world. Global average temperatures increased by 0.85°C between 1880 and 2012. Rising global temperatures have been accompanied by changes in the climate causing extensive damage all over the world. As a countermeasure against global warming, carbon pricing has been attracting considerable attention. In particular, carbon taxes and carbon emissions trading are in the spotlight.

However, it is problematic that the various countries involved are not coordinating these countermeasures. A serious concern is cross-border carbon leakage, which undermines a country's attempt to cope with changes in its climate. That is, carbon pricing in one country decreases carbon emissions in that location but may increase carbon emissions in other countries. It is possible for the latter to dominate the former and for global emissions to increase as a result. Another concern is that carbon pricing results in cost disadvantages for domestic firms in both domestic and foreign markets, which may lead to cross-border carbon leakage.

To read the full text
https://www.rieti.go.jp/en/columns/v01_0166.html

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"China Aims for Carbon Neutrality
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"EU-Japan Coopration toward Carbon Neutrality—Participating in the EU-Japan Centre/RIETI webinar"
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"Biden's Climate Change Options in a Divided Congress"
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"Distribution of Long-run Stock Returns: Evidence from Japan and the US"
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"Distant Lending for Regional Small Businesses Using Public Credit Guarantee Schemes: Evidence from Japan"
by TSURUTA Daisuke (Nihon University)
https://www.rieti.go.jp/en/publications/summary/21100006.html

"Invoice Currency Choice under Financial Constraints and Bargaining: Evidence from Japanese SMEs"
by GOTO Mizuki (Hitotsubashi University) / HAYAKAWA Kazunobu (IDE-JETRO) / KOIBUCHI Satoshi (Chuo University) / YOSHIMI Taiyo (Chuo University)
https://www.rieti.go.jp/en/publications/summary/21100002.html

[List of discussion papers]
https://www.rieti.go.jp/en/publications/act_dp.html

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