Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1470: Climate Policy and Trade in Polluting Technologies

Shon Ferguson () and Roweno J.R.K. Heijmans
Additional contact information
Shon Ferguson: Department of Economics, Swedish University of Agricultural Sciences (SLU), Postal: Uppsala, and Research Institute of Industrial Economics, Stockholm, Sweden
Roweno J.R.K. Heijmans: Department of Business and Management Science, NHH Norwegian School of Economics

Abstract: This study estimates the impact of carbon pricing on international trade in equipment used in the combustion of fossil fuels during the period 1995–2021. Using detailed data on bilateral trade combined with data on domestic carbon prices, we find that carbon pricing policies are associated with greater exports of this equipment. We provide a simple model of international trade in polluting technologies that can explain this outcome. Our results provide new evidence for this unexplored form of leakage due to more stringent climate policies.

Keywords: Emissions pricing; Cap and trade; Carbon leakage; International trade in technologies

JEL-codes: F14; F18; Q37; Q54; Q58

Language: English

24 pages, August 14, 2023

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