Political Economy Aspects of Climate Change Mitigation Efforts

Regardless of the policies used to mitigate climate change, a positive and relatively high price of carbon will have to be established, with slow convergence across regions, leading to huge rents up to capture, way beyond those that have been fought over in the General Agreement on Tariffs and Trade...

Full description

Saved in:
Bibliographic Details
Published in:World economy 2011-11, Vol.34 (11), p.1938-1954
Main Authors: Mathys, Nicole A., de Melo, Jaime
Format: Article
Language:English
Subjects:
Allocation
Carbon
Climate Change
Economic relations
Emissions control
Emissions trading
Environmental policy
European Union
GATT
General agreement on tariffs and trade
Global warming
International Economic Organizations
International trade
Political Economy
Prices
Pricing
Quotas
Rents
Studies
Sustainable development
Trade liberalization
United States of America
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Regardless of the policies used to mitigate climate change, a positive and relatively high price of carbon will have to be established, with slow convergence across regions, leading to huge rents up to capture, way beyond those that have been fought over in the General Agreement on Tariffs and Trade (GATT)‐based international trading system. The paper explores the political‐economy, feasibility and desirability implications of the two main alternatives, a carbon tax and a cap‐and‐trade (CAT) system. Having the same concerns, CAT systems in the EU and the US have accounted for different outcomes in each case. Likely leakages under foreseeable carbon prices are estimated to be small and not of an order of magnitude justifying the special allowances sought across a wide spectrum of industries. The experience of the EU and US reviewed here suggests that mitigation is likely to continue to be carried out under a CAT, provided permits are distributed for free to the lobbies whose support is necessary to get adoption of mitigation policies. This quota mechanism, long‐used to allocate scarcity in the international trading system both nationally and internationally, would end up with the most powerful receiving the quotas rents, giving them the leverage and resources to maintain allocation schemes favourable to them.
ISSN:0378-5920
1467-9701
DOI:10.1111/j.1467-9701.2011.01417.x