It is widely acknowledged that the transition towards a zero-emissions economy requires electrification of energy-related processes across all sectors of the economy – so-called sector coupling. In our analysis we consider countries whose electricity sectors are regulated by a multilateral...

The Nationally Determined Contributions (NDCs) under the Paris Agreement fall short of the abatement needed to reach the 2°C target. Emissions trading could be a "costless" means to reduce the ambition gap if countries used their gains from trade for additional abatement. However, this requires...

Countries with ambitious climate targets are concerned about carbon leakage to countries with more lenient or no carbon pricing. A common policy measure against leakage is output-based allocation of emissions allowances, whose effectiveness could be further enhanced by consumption taxes levied...

Tradable black (CO2) and green (renewables) quotas gain in popularity and stringency within climate policies of many OECD countries. The overlapping regulation through both instruments, however, may have important adverse economic implications. Based on stylized theoretical analysis and...

Unilateral carbon policies are inefficient due to the fact that they generally involve emission reductions in countries with high marginal abatement costs and because they are subject to carbon leakage. In this paper, we ask whether the use of carbon tariffs - tariffs on the carbon embodied in...

Feed-in tariffs under the Renewable Energy Sources Act, the so-called Erneuerbare-Energien-Gesetz (EEG), have triggered a massive expansion of electricity from renewable energy sources in Germany over the last decade. The increase in non-competitive renewable power generation though went hand in...

Concerns about adverse impacts on domestic energy-intensive and trade-exposed (EITE) industries are at the fore of the political debate about unilateral climate policies. Tariffs on the carbon embodied in imported goods from countries without emission pricing appeal as a measure to reduce carbon...

We show that imposition of a state-level environmental tax in a federation crowds out preexisting federal taxes. We explain how this vertical fiscal externality can lead unilateral state-level environmental policy to generate a welfare gain in the implementing state, at the expense of other...

Unilateral climate policy induces carbon leakage through the relocation of emission-intensive and trade-exposed industries to regions with no or more lenient emission regulation. Both analytical and numerical studies suggest that emission pricing combined with border carbon adjustments may be a...

Mainstream economic wisdom favoring cooperative free trade is challenged by a wave of disruptive trade policies. In this paper, we provide quantitative evidence concerning the economic impacts of tariffs implemented by the United States in 2018 and the subsequent retaliations by partner...