Transnational Transfer of Carbon emissions embodied and Carbon Tax in Trade: Characteristics and Determinants from a Spatial Perspective

Mercredi | 2021-06-17
11h00 – C202

Sahar AMIDI – Thais NUNEZ-ROCHA – Isabelle RABAUD – Rezgar FEIZI

Finding the best way to reduce pollution in a world with growing environmental concerns is important for decisions makers. Some scholars hold that a global carbon tax is the bestpolicy for reduced pollution. With the rising role of globalization, assessing the impacts of carbon taxation on carbon emissions embodied in the trade becomes a key question, however,this question has been overlooked. This is the first paper to bridge this gap. More specifically, our contribution consists in examining an emission tax system of trade, in the framework ofthe input-output table. We exploit variation in the economic sector of each country to first, identify the most and fewer contaminated categories and second, investigate the spillovereffects due to carbon taxes in an emission embodied in trade analysis. Based on the SDA (structural decomposition analysis), MRIO (multi-regional input-output model), and spatialeconometric models, we estimate the spillover effect of emissions embedded in trade before and after a carbon tax is in place, this for 5 categories, 56 sectors, 43 countries from 2000 to 2014. Our findings prove the Electricity and Heat Production » as the highest emitter category and reveal a spillover effect of polluting production in their intermediate sectors. When countries impose a carbon tax, which is different in size by country, the effect of emissions embedded in exports and in imports will decrease 0.25 percent (from 0.0823 to 0.0798) and 0.36 percent (from 0.0579 to 0.0543) respectively, to and from neighboring countries (with the geographicaldistance matrix). When studying the trade comparative advantage matrix, the results are smaller but still positive 0.011 percent (from 0.00307 to 0.00318) for exports and -0.059percent (from 0.00301 to 0.00242) for imports. Our results show that carbon tax could displace pollution to neighboring countries, when taking into account the trade matrix (comparative advantage). This should be taken into account by policy makers. Establishing regional or neighboring taxes might be a solution to avoid pollution leaks and to obtained better results reducing pollution.