Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade

51 Pages Posted: 6 Dec 2011

See all articles by Rahel Aichele

Rahel Aichele

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim

Date Written: November 30, 2011

Abstract

Has the Kyoto Protocol induced carbon leakage? We conduct the first empirical ex-post evaluation of the Protocol. We derive a theoretical gravity equation for the CO2 content of trade, which accounts for intermediate inputs, both domestic and imported. The structure of our new panel database of the carbon content of sectoral bilateral trade flows allows controlling for the endogenous selection of countries into the Kyoto Protocol. Binding commitments under Kyoto have increased committed countries’ embodied carbon imports from non-committed countries by around 8% and the emission intensity of their imports by about 3%. Hence, Kyoto has indeed led to leakage.

Keywords: carbon leakage, CO2 content of trade, gravity equation, Kyoto protocol

JEL Classification: F180, Q540, Q560

Suggested Citation

Aichele, Rahel and Felbermayr, Gabriel J., Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade (November 30, 2011). CESifo Working Paper Series No. 3661, Available at SSRN: https://ssrn.com/abstract=1968868

Rahel Aichele (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Gabriel J. Felbermayr

University of Stuttgart-Hohenheim ( email )

Keplerstraße 17
D-70174 Stuttgart
Germany

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