The impact of climate legislation on trade-related carbon emissions, 1997–2017

We present empirical evidence of the international emissions impact from climate change legislation in 98 countries between 1997 and 2017, using data from Climate Change Laws of the World. Unlike traditional measures of carbon leakage, we focus on net carbon imports, that is, the difference between consumption and production emissions. Using different estimation techniques, we estimate the impact on carbon intensity of two legislation variables, recent legislation (passed in the last 3 years) and older legislation (passed more than 3 years ago). We find that recent legislation reduces production emissions more than consumption emissions, while older laws have a bigger impact on consumption emissions. The combined effect of these changes on net carbon imports is very small. Overall, we find no evidence that domestic climate legislation has increased international carbon leakage over the past two decades. Indeed, in high-income countries the long-run leakage rate may even be negative.

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Research theme(s)
Policy, business & governance
Publication type
Report
Author(s)
Shaikh Eskander, Sam Fankhauser
Publication date
July 26, 2021
Publisher
Centre for Climate Change Economics and Policy; Grantham Research Institute on Climate Change and the Environment
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