Filed in Deliverables
A Review of Competitiveness, Carbon Leakage and EU Policy Options in the Post-Paris Landscape
The current bottom-up architecture implies that for many years to come, countries will face different carbon prices. The unprecedented commitment to address climate change with increasingly ambitious mitigation actions calls for a renewed assessment of climate policies and of measures to address carbon leakage.
In this review we summarized the main conclusions of recent studies that considered past evidence and future scenarios pondering different policy settings. We also reviewed the feasibility of several alternatives proposed to address carbon leakage and competitiveness concerns. Considering those alternatives, we highlight the directions that further research can take.
The report concludes that a priority for future research is to analyse carbon leakage under the emerging heterogeneous climate policy landscape, characterizing the current international policy context. In the wider, and more ambitious, climate action context, innovation and spillovers play an important role for enabling competitiveness improvements in low carbon industries, as well as increasing the chances of negative carbon leakage.
Regarding the options to address carbon leakage, more evidence is needed in order to evaluate the potential effectiveness of consumption-based pricing. The use of multidimensional indicators in future analysis, such as employment, import and export, will also be welcome for reconciling the ex-post and ex-ante analysis.