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Towards a more effective climate policy on international trade

Economics

Towards a more effective climate policy on international trade

E. Dietzenbacher, I. Cazcarro, et al.

Discover the innovative Emission Responsibility Allotment (ERA) framework that revolutionizes how we assign responsibilities for greenhouse gas emissions in global trade. This research, conducted by Erik Dietzenbacher, Ignacio Cazcarro, and Iñaki Arto, highlights ERA's advantages over traditional methods, providing a deeper assessment of emission impacts in line with the Paris Agreement.

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~3 min • Beginner • English
Abstract
In the literature on the attribution of responsibilities for greenhouse gas emissions, two accounting methods have been widely discussed: production-based accounting (PBA) and consumption-based accounting (CBA). It has been argued that an accounting framework for attributing responsibilities should credit actions contributing to reduce global emissions and penalize actions increasing them. Neither PBA nor CBA satisfy this principle. Adapting classical Ricardian trade theory, we consider ex post measurement and propose a scheme for assigning credits and penalties whose size is determined by how much CO₂ emissions are saved globally due to trade. This leads to the emission responsibility allotment (ERA) for assigning responsibilities. We illustrate the differences between ERA and PBA and CBA by comparing their results for 41 countries and regions between 1995–2009 using WIOD. We argue that ERA is well suited to measure and evaluate the overall mitigation impact of new market mechanisms under the Paris Agreement (COP21).
Publisher
Nature Communications
Published On
Feb 28, 2020
Authors
Erik Dietzenbacher, Ignacio Cazcarro, Iñaki Arto
Tags
Emission Responsibility Allotment
greenhouse gas emissions
international trade
Production-Based Accounting
Consumption-Based Accounting
Paris Agreement
market mechanisms
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