The sun also rises: Policy instruments to mitigate the adverse effects on competitiveness and leakage

This report uses a dynamic CGE model, to assess the rate of carbon leakage and the adverse impacts on competitiveness in a number of scenarios over the period 2010‐2050. The report is structured as follows: Chapter 3 reviews the economic modelling literature on anti‐leakage policy instruments. Chapter 4 presents the CGE model and describes the main assumptions and data. Chapter 5 describes the baseline and the policy scenarios. Chapter 6 reports the simulation results. Chapter 7 presents the assessment of the anti‐leakage policy options in terms of the CECILIA2050’s optimality criteria. Chapter 8 presents the econometric assessment of the effect of renewable energy support policies on first mover advantages of renewable energy manufacturers on the global market place. Chapter 9 concludes. The results of the analysis show that the absence of international cooperation will trigger high levels of international carbon leakage and will have serious adverse effects on competitiveness. The report concludes that an international agreement with broad cooperation is the best policy option to prevent these negative effects. Investments in energy efficiency and renewables constitute a second-best solution to mitigate carbon leakage and the adverse effects on competitiveness.

Attachment: 

PDF icon Antimiani et al. (2015) Policy instruments to mitigate the adverse effects on competitiveness and leakage.pdf

Citation: 

Antimiani, Alessandro; Costantini, Valeria; Paglialunga, Elena; Kuik, Onno; Branger, Frédéric; Quirion, Philippe 2015. The sun also rises: Policy instruments to mitigate the adverse effects on competitiveness and leakage. CECILIA2050 WP5 Deliverable 5.3. Amsterdam, Institute for Environmental Studies, VU University Amsterdam.

Funding: 

European Commission

Authors: 

Alessandro Antimiani, INEA, Valeria Costantini, Department of Economics, Roma Tre University, Elena Paglialunga, Department of Economics, Roma Tre University, Onno Kuik, Institute for Environmental Studies, VU University Amsterdam, Frédéric Branger, SMASH‐CIRED, Philippe Quirion, SMASH‐CIRED, CNRS

Year of publication: 

2015

Number of pages: 

62

Table of contents: 

1

Executive summary

1

2

Introduction

3

2.1

Background

3

2.2

Statement of purpose and contents of the report

5

3

Review of economic (modelling) literature

6

4

Methodology

10

4.1

An overview of the GDynE model

10

4.2

Model improvements

11

5

Baseline and policy scenarios

14

6

Results

17

7

Optimality assessment

26

8

First Mover Advantage in the Renewable Energy Industry: Evidence from a Gravity Model

29

8.1

Introduction

29

8.2

Empirical Model

31

8.2.1

Gravity Model

31

8.2.2

Model specification

32

8.3

Trade data in renewable energy technologies

34

8.4

Results

37

8.5

Discussion

40

9

Conclusion

41

10

References

42