Leveling the Carbon Playing Field: International Competition and US Climate Policy Design

Leveling the Carbon Playing Field: International Competition and US Climate Policy Design

by Trevor Houser
     
 

ISBN-10: 0881324205

ISBN-13: 9780881324204

Pub. Date: 05/01/2008

Publisher: Peterson Institute for International Economics

As the US Congress takes up domestic climate legislation and the administration reengages in multilateral climate negotiations, policymakers are particularly concerned about the effect of climate policy on US carbon-intensive manufacturing industries such as iron and steel, cement, paper, and chemicals. Many of these industries are already under pressure from

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Overview

As the US Congress takes up domestic climate legislation and the administration reengages in multilateral climate negotiations, policymakers are particularly concerned about the effect of climate policy on US carbon-intensive manufacturing industries such as iron and steel, cement, paper, and chemicals. Many of these industries are already under pressure from foreign competition, particularly large emerging economies like China, India, and Brazil that are not bound to reduce emissions under the current international climate framework. US policymakers are looking for ways to avoid putting US industry at a competitive disadvantage lest a decline in industrial emissions at home is simply replaced by increases in emissions abroad. While this would be best achieved through harmonized international climate policy, the differences between countries in levels of economic development, historic emissions, and responsibilities arising from future emissions mean harmonization is still a long way off. How can we level the playing field for US carbon-intensive industries during a period of transition, where trading partners are moving at different speeds and adopting a variety of policies to reduce emissions? Can this be done in a way that does not threaten the prospects of broader international agreement down the road? This book evaluates a wide range of policy options, including trade measures on foreign-produced goods (currently included in draft US legislation and under consideration in the European Union).

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Product Details

ISBN-13:
9780881324204
Publisher:
Peterson Institute for International Economics
Publication date:
05/01/2008
Edition description:
New Edition
Pages:
112
Product dimensions:
5.90(w) x 8.80(h) x 0.40(d)

Table of Contents


Preface     ix
Executive Summary     xv
Acknowledgments     xxi
Introduction: How Climate and Competitiveness Fit Together     1
Background     3
Identifying Vulnerable Industries     5
A Broader View of Competitiveness?     10
Options for US Policy Design     12
Cost Containment Mechanisms     15
Price Caps     16
Borrowing and Banking Allowances     18
Free Allocation of Allowances     20
Tax Credits     22
Offsets     23
Exemptions     24
Containing Noncarbon Costs     25
Trade Measures     29
Designing a Trade Measure     30
Scenarios for Implementation     38
Effects on US Producers     42
Implications for International Engagement     55
Coordinated International Action     59
Prospects for International Engagement: The Case of China     62
Models for Cooperation on Industrial Emissions     64
Need for US Leadership     71
Scope for International Agreement     71
Conclusion     73
Cost Containment Mechanisms     74
Trade Measures     75
Coordinated International Action     77
Looking Forward     78
References     79
Glossary     83
About the Authors     87
Index     89
Tables
Manufacturing-sector energy demand by industry, 2002     7
US carbon-intensive industries and key products, 2005     11
Cost containment mechanisms     17
Natural gas and electricity dependence in US industry (share of total energy demand), 2002     19
US imports by origin, 2005     44
US role in global production, trade, and carbon emissions, 2005     61
Figures
Manufacturing's declining role in the United States, 1948-2005     3
US trade deficit and China's share, 1976-2006     4
US industry exposure to climate costs based on energy intensity and imports as a share of consumption     9
Manufacturing share of total CO[subscript 2] emissions, 2005     25
Net imports as share of US demand, 2005     43
Share of US imports from Annex I countries, 2005     45
Share of US imports from non-Annex I countries, 1986-2006     46
Carbon intensity of steel, 2005     47
Energy and carbon intensity index for chemicals, 2005     49
Pulp used in paper production, 2005     50
Cement kiln type and fuel source, 2005     51
Demand growth by country grouping, 1991-2005     53
Chinese production and exports as shares of global supply, 2005     54
Chinese exports as share of domestic production, 2005     54
Annual CO[subscript 2] emissions, historic and projected, 1974-2029     65
Per capita CO[subscript 2] emissions, current and projected     66
Boxes
Carbon tax versus cap and trade     6
Measuring carbon at the border     33
Defining "comparable"     39
US antidumping law: A questionable precedent     41
Porous borders     56
The sanctions track record     57
Lessons from WTO accession     67

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