Leakage from Sub-national Climate Policy: The Case of California’s Cap-and-Trade Program
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Date
2015-04
Publication Type
Journal Article
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yes
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Abstract
With federal policies to curb carbon emissions stagnating in the U.S., California is taking action alone. Sub-national policies can lead to high rates of emissions leakage to other regions as state-level economies are closely connected, including integration of electricity markets. Using a calibrated general equilibrium model, we estimate that California’s cap-and-trade program without restrictions on imported electricity increases out-of-state emissions by 45% of the domestic reduction. When imported electricity is included in the cap and “resource shuffling” is banned, as set out in California’s legislation, emissions reductions in electricity exporting states partially offset leakage elsewhere and overall leakage is 9%.
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Publication status
published
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Book title
Journal / series
Volume
36 (2)
Pages / Article No.
167 - 190
Publisher
International Association for Energy Economics
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Edition / version
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Subject
Climate policy; Cap-and-trade; California; Electricity imports; Resource shuffling; Computable general equilibrium; State-level climate policy; Border effect
Organisational unit
03981 - Rausch, Sebastian (ehemalig) / Rausch, Sebastian (former)