Carbon pricing of international transport fuels: Impacts on carbon emissions and trade activity

G Mundaca; J Strand; IR Young

Journal article

Carbon pricing of international transport fuels: Impacts on carbon emissions and trade activity

G Mundaca, J Strand, IR Young

Journal of Environmental Economics and Management | ACADEMIC PRESS INC ELSEVIER SCIENCE | Published : 2021

DOI: 10.1016/j.jeem.2021.102517

Abstract

We study the impacts of carbon taxation of international transport fuels on CO2 emissions and trade activity, focusing on maritime transport, which constitutes the most important international trade transport activity. Our estimated bunker price elasticities range from −0.03 to −0.42. For the current level of international trade, a global tax of US$ 40 per ton of CO2 will reduce CO2 emissions by 7.65% for the heaviest traded products (at the 6-digit HS level of aggregation) transported by sea. The greatest CO2 emission reductions are for products with relatively low value-to-weight ratios such as fossil fuels and ores. Using our estimates, we present a plan with a gradual increase in the..

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University of Melbourne Researchers

Ian Young Author

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Funding Acknowledgements

We are grateful for the comments received during the Carbon Pricing Leadership Coalition (CPLC) Research Conference in New Delhi, India, February 14-15, 2019; the January 2020 American Economic Association meetings in San Diego, CA, USA; the University of Rochester's Virtual International Trade & Macro Seminar; and March 4-5, 2021 CESifo Energy and Climate Economics Conference. We are also very thankful for suggestions and comments from Jonas Teusch and Kurt Van Dender, and to Manuel Arellano for his advice on the econometrics. This paper has been greatly improved thanks to the comments and suggestions of the editor and two referees. Ian Young thanks the Integrated Marine Observing System and the Australian Research Council (ARC grant no. DP160100738) for funding. We are the only authors responsible for the contents of this paper. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the World Bank Group. All errors are our own.