The effects of border-crossing frequencies associated with carbon footprints on border carbon adjustments

• Published in: Energy economics Vol. 65; pp. 105 - 114
• Main Authors: Zhang, Zengkai, Zhu, Kunfu, Hewings, Geoffrey J.D.
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier B.V 01.06.2017; Elsevier Science Ltd
• Subjects: Adjustment; Border carbon adjustment; Border-crossing frequency; Borders; Boundaries; Burden sharing; Carbon; Carbon footprint; Carbon offsets; Economic activity; Economic conditions; Economic crisis; Economics; Emissions; Emissions trading; Energy economics; Environmental economics; Environmental impact; Global economy; Impact analysis; Imports; Input–output analysis; International trade; Inverse matrices; Multiple taxation; Production; Segmentation; Supply; Supply chains; Tariffs; Taxation; Q56; Q58; Border-crossing frequency; F12; R15; H23; Multiple taxation; Input–output analysis; F18; Border carbon adjustment; Carbon footprint
• ISSN: 0140-9883; 1873-6181
• DOI: 10.1016/j.eneco.2017.04.017

The fragmentation of production across national boundaries has become an important feature of the world economy. This present paper adopts the viewpoint that not only the size and composition of carbon footprints are relevant but also the border-crossing frequency associated with these carbon footprints, which is defined as the number of borders a product crosses in a supply chain; this process will affect the spatial accounting of the carbon emissions produced to support the economic activity. The calculation of border-crossing frequencies of carbon footprint is accomplished by decomposing the Leontief inverse matrix derived from the world input–output database. We find that the aggregated average border crossing frequencies of carbon footprints show an increasing tendency, which is influenced by the economic crisis obviously. The policy application focuses on the United States, which we assume to levy carbon tariffs on foreign emissions embodied in imports. We find that the indirect carbon tariff on emissions embodied in international trade take a significant share. The border carbon adjustments are mainly targeted at emissions generated in China, which also pays the greatest share of the tariff burden. The implication of carbon tariffs faces the problem of multiple taxation. •Border-crossing frequencies impact the effectiveness of climate regulations.•Border-crossing frequencies of carbon footprints show an increasing tendency.•The border carbon tariffs of the USA are mainly targeted at China's emissions.•Indirect carbon tariffs on embodied emissions account for a significant share.•The implication of carbon tariffs faces the problem of multiple taxation.