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International Trade and Climate Change by World Bank download in iPad, pdf, ePub

Developed countries have implemented various policies and measures to achieve their targets and showed some progress in mitigating climate change. This could be due to the offsetting measures applied by importing countries to mitigate and nullify the impact of such taxes on domestic industries. The Report aims to improve understanding about the linkages between trade and climate change. Conversely, a carbon tax levied by an importing country would increase exports of the exporting country, thereby making it more competitive.

Developed countries have implemented

This article is published under. However, in a number of cases economic considerations far outweighed climate considerations. This could be a reflection of some relocation of energy-intensive industries to developing economies, that did not impose any additional constraints on these industries on account of climate change. For example, governments may introduce a variety of policies, such as regulatory measures and economic incentives, to address climate change. Many of the incentives, especially for energy-intensive industries to reduce their emissions, have been nullified through special tax concessions, rebates, exemptions, and other such measures.

On the other hand, when a carbon tax is imposed by exporting countries, or by both importing and exporting countries, then the overall trade between countries increases. This complex web of measures may have an impact on international trade and the multilateral trading system. This suggests that subsidies and other exemptions for the energy-intensive industries may be overcompensating for the disadvantages arising from the imposition of the carbon tax. Consequently, these industries would either become less competitive internationally and lose some of their market share or, in order to avoid this loss, migrate to countries with no such taxes.

Similarly, the cost and time needed to comply with different energy efficiency programme requirements could add to the cost of internationally traded products. The Report begins with a summary of the current state of scientific knowledge on climate change and on the options available for responding to the challenge of climate change.

This could be due to

While both carbon taxes and energy efficiency standards aim at reducing energy consumption, they use very different mechanisms to do so. In each case, exports of energy-intensive commodities hit with the carbon tax would decrease, while their imports would be expected to increase. The results emerging from our analysis suggest that carbon taxation policies do not impact on the competitiveness of energy-intensive industries. It shows that trade intersects with climate change in a multitude of ways.