GTAP Resources: Resource Display
| GTAP Resource #7172 |
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"Fertilizers in the EU Carbon Border Adjustment Mechanism: Implications for Trade and the Environment" by Fraysse, Elizabeth Abstract The Carbon Border Adjustment Mechanism (CBAM) announced by the European Union (EU) will require importers of selected carbon-intensive goods to pay for carbon emissions embodied in imported commodities (“Carbon Border Adjustment Mechanism - European Commission,” n.d.). This policy aims to limit carbon leakage, reduce global greenhouse gas emissions, and create an incentive for EU consumers to buy goods from countries with more sustainable production practices or domestically. Without a global carbon policy, those countries without stringent climate policies hold an economic advantage over countries with stringent climate policies, such as a carbon tax. This advantage comes from the theoretically lower production cost in the country with less stringent climate policies. Therefore, such countries maintain the ability to out-compete firms facing higher production costs from climate policies. In previous literature, the chemical sector was identified as the most impacted sector. However, this research was done using an aggregation of the chemical sector to include fertilizer, rubber, and plastics. Fertilizer is an important commodity to agriculture, but its production and use cause high levels of greenhouse gas emissions. Ammonia production (an input for fertilizer) is estimated to emit 1-2% of all greenhouse gas emissions and it is estimated that about half of all fertilizer applied becomes an environmental pollutant resulting in nitrous oxide emissions, which warm the plant 300 times more than carbon (“Fertilizer and Climate Change | MIT Climate Portal,” n.d.). This paper investigates takes a deeper analysis at a previously aggregated sector, fertilizers, to analyze the impact of CBAM on global fertilizer production and trade patterns through a series of trade scenarios using the GTAP model. |
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- Climate change policy - Trade and the environment - GTAP Data Base and extensions |
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Public Access  Paper (63.7 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
