Climate cooperation with technology investments and border carbon adjustment

A central question in climate policy is whether early investments in low-carbon technologies are a useful first step towards a more effective climate agreement in the future. We introduce a climate cooperation model with endogenous R&D investments where countries protect their international comp...

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Bibliographic Details
Published inEuropean economic review Vol. 75; pp. 112 - 130
Main Authors Helm, Carsten, Schmidt, Robert C.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.04.2015
Elsevier Sequoia S.A
Subjects
Border carbon adjustment
Border tax adjustment
Carbon
Carbon emissions
Clean technology
Climate change
Climate treaty
Coalitions
Cooperation
Environmental policy
Investment
Pollution control
R&D
Research & development expenditures
Research and development
Studies
Technology
Q55
Border tax adjustment
D62
Climate treaty
R&D
F53
Coalitions
H23
Border carbon adjustment
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Summary:A central question in climate policy is whether early investments in low-carbon technologies are a useful first step towards a more effective climate agreement in the future. We introduce a climate cooperation model with endogenous R&D investments where countries protect their international competitiveness via border carbon adjustments (BCA). BCA raises the scope for cooperation and leads to a non-trivial relation between countries׳ prior R&D investments and participation in the coalition. We find that early investments in R&D render free-riding more attractive. Therefore, with delayed cooperation on emission abatement and ex-ante R&D investments, the outcome is often characterized by high participation but inefficiently low technology investments and abatement.
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content type line 23
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2015.01.007