How Trade Sensitive Are Energy-Intensive Sectors?

We estimate parameters related to trade sensitivity to help identify sectors at risk for carbon leakage and to calibrate the models used to evaluate policy alternatives for addressing these problems.

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Date

May 31, 2018

Authors

Carolyn Fischer and Alan K. Fox

Publication

Journal Article

Reading time

1 minute

Abstract

For most governments looking to implement climate policy—and for interest groups looking to influence it—the effect of unilateral greenhouse gas regulation on employment, production, and emissions represents an overarching concern. Critical to improving analysis of climate policy, implications for energy-intensive, trade-exposed sectors are better empirical estimates of trade sensitivities. Ex ante analysis of climate policy and carbon leakage relies heavily on economic simulations of global trade. We estimate parameters related to trade sensitivity to help identify sectors at risk for carbon leakage and to calibrate the models used to evaluate policy alternatives for addressing these problems.

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