GTAP Resources: Resource Display
| GTAP Resource #7321 |
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"Cross-border effects of climate policy packages in North America" by Fournier, Jean-Marc, Tannous Kass-Hanna, Liam Masterson, Anne-Charlotte Paret and Sneha Thube Abstract We quantify cross-border effects of the recent climate mitigation policies introduced in Canada and the US, using the global general equilibrium model IMF-ENV. Notably, with the substantial emission reductions from Canada’s carbon tax-led mitigation policies and the US’ Inflation Reduction Act, these two countries would bridge two-thirds of the gap toward their Nationally Determined Contribution (NDC) goals. While the broadly divergent policies are believed to elicit competitiveness concerns, we find the aggregate cross-border effects within North America to be very limited and restricted to the energy intensive and trade exposed industries. Potential carbon leakages are also found to be negligible. A more meaningful difference triggered by policy heterogeneity is rather domestic, especially with US subsidies increasing energy output while the Canada model with a carbon tax would marginally decrease it. This analysis is complemented by a stylized model illustrating how such divergence can affect the terms of trade, but also how these effects can be countered by exchange rate flexibility, border adjustments or domestic taxation. |
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- Climate change policy - Conventional energy - Renewable energy - Trade and the environment - Domestic policy analysis - North America |
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Public Access  Paper (961.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
