پیشنهاد برای تنظیم موجودی ملی برای تجارت در کنار تنظیم کربن مرزی: بررسی سیاست مالیات بر کربن در ژاپن

In this paper we pointed out a hidden inequality in accounting for trade-related emissions in the presence of border carbon adjustment. Under a domestic carbon pricing policy, producers pay for the carbon costs in exchange for the right to emit. Under border carbon adjustment, however, the exporting country pays for the carbon costs of their exports to the importing country but not be given any emission credits. As a result, export-related emissions will be remained in the national inventory of the exporting country based on the UNFCCC inventory approach. This hidden inequality is important to climate policy but has not yet been pointed out. To address this issue we propose a method of National Inventory Adjustment for Trade, by which export-related emissions will be deducted from the national inventory of the exporting country and added to the national inventory of the importing country which implements border carbon adjustment. To assess the policy impacts, we simulated a carbon tax policy with border tax adjustment for Japan using a multi-region computable general equilibrium model. The results indicate that with the National Inventory Adjustment for Trade, both Japan′s national inventory and the carbon leakage effects of Japan′s climate policy will be greatly different.

Border carbon adjustment (BCA) measures have been discussed intensively in domestic climate policy debates in the EU, the US, Australia and Japan to address the protection of domestic industrial competitiveness and the prevention of carbon leakage (Houser et al., 2008, Persson, 2010, Reinaud, 2005 and van Asselt and Brewer, 2010). Depending on the nature of domestic carbon pricing policy, BCA measures can take two different forms. One is border tax adjustment (BTA), under which a carbon tariff will be levied on imported products. Another form is to require importers to surrender allowances under a cap-and-trade system. Under BCA, imported commodities are required to pay for the carbon costs, usually at the same rate as domestically produced commodities. In essence, a BCA measure can be regarded as an extension of domestic climate policy to imports. Domestically, under a carbon tax system, emitters pay the carbon tax for their emissions. Under an emissions trading system, emitters pay to buy the emission permits. In both cases, emitters pay for the carbon costs in exchange for the right to emit (see the two-directional arrows within the boundary of Country A in Fig. 1). If the same rationale is applied to BCA, the exporting country should pay for the carbon costs of their exports to the importing country and in return receive the emission credits issued by the importing country, similarly to the mechanism of CDM projects. By receiving the emission credits, the exporting country can deduct export-related emissions from its national inventory. The deducted emissions will then be added to the national inventory of the importing country. However, none of the existing BCA proposals provide such a mechanism. Full-size image (35 K) Fig. 1. Current national inventory approach in the presence of border carbon adjustment. Figure options Current national inventory approach of the Kyoto Protocol requires that countries report “emissions and removals taking place within national (including administered) territories and offshore areas over which the country has jurisdiction” (UNFCCC, 1998). Based on this territorial emissions approach, emissions corresponding to the exports are included in the national inventory of the exporting country. If the BCA-implementing country does not issue emission credits to the target countries, export-related emissions will remain in the national inventory of the exporting country though they paid for the carbon costs (see the one-directional arrow cross border of Country A and B in Fig. 1). Since national inventories reported to the UNFCCC are used as reference for ranking national emissions, setting national binding targets and assessing historical and accumulated contributions to global climate change, they can be considered as intangible costs to countries. Following current national inventory approach and the policy arrangement under BCA, the exporting country has to bear two kinds of carbon costs. One is the tangible carbon costs that the producers of the exporting country pay for entering into the market of the BCA-implementing country. The other one is the intangible costs of national inventory which includes the emissions accountable for producing the goods that are exported to the BCA-implementing country (see Fig. 1). This is a hidden but real inequality between the exporting country and the importing country. BCA on the one hand can level up the playing field for foreign producers to the same level of domestic producers; but on the other hand it will cause a new inequity for the exporting country because the BCA-implementing country charges on the carbon costs of imports but does not issue any emission credits to offset the emissions from the exporting country. Two ways can help address this issue. First, if the exporting country also implements a comparable domestic climate policy, the exporting country should be exempted from BCA (see Fig. 2). Therefore, the producers in both countries will pay for their carbon costs to their respective countries. The playing field for producers in Country A and B therefore can be considered equivalent. When Country B exports to A, Producer b of Country B does not need to pay for the carbon costs to A. The emissions related to the exports from B to A will be included in the national inventory of Country B (i.e. 20 Kt-CO2). Given all countries implement a comparable domestic climate policy, there is no need for border adjustment. This argument has been addressed intensively by other literature (Droege, 2012 and Müller and Sharma, 2005). Full-size image (36 K) Fig. 2. Exemptions from border carbon adjustment. Figure options Second, if the exporting country does not implement a climate policy or a comparable climate policy, producers of Country B (an exporting country) pay for the carbon costs of their exports to A but at the same time Country B will receive the emission credits from A (see the two-directional arrows for cross-border transactions in Fig. 3). As a result, the national GHG inventories of both countries should be adjusted based on the emissions related to bilateral trade. The emissions related to trade should be added to the national inventory of the importing country and deducted from the inventory of the exporting country, by which the global GHG emissions keep the same (see Fig. 3). We call this National Inventory Adjustment for Trade (NIAfT). Following the NIAfT, producers from both countries are placed at the same-level playing field on the one hand, and on the other hand, both countries have an equitable transaction on trade-related emission credits. Full-size image (38 K) Fig. 3. National inventory adjustment for trade. Figure options Different from existing literature (for a review, please see Zhou et al., 2010), the novelty and policy insights of this paper is to address the hidden inequality issue in accounting for trade-related emissions using current national inventory approach in the presence of border carbon adjustment. To address this issue, we propose to make corresponding adjustments to the national GHG inventories of both importing and exporting countries based on the emissions related to bilateral trade (Fig. 3). To examine the differences between current situation and our proposal, we applied a multi-region computable general equilibrium (CGE) model to assess the competitiveness and carbon leakage effects of carbon tax policy and border tax adjustment (BTA). Our focus country is Japan. To achieve her Kyoto target of 6% reductions in GHG emissions from the 1990 level, Japan promulgated the Law Concerning the Promotion of the Measures to Cope with Global Warming in 1998 Ministry of the Environment of Japan, (1998). In 2005, the Kyoto Protocol Target Achievement Plan was formulated (Government of Japan, 2005). Recently in October 2012, Japan started a carbon tax on fossil fuels to help achieve its domestic targets of 25% reductions in GHGs from the 1990 level by 2020 and 80% reductions by 2050 (Ministry of the Environment of Japan, 2012). There have been great concerns on industrial competitiveness in Japan′s domestic policy debates, in particular over energy-intensive and trade-exposed (EITE) industries, and BCA measures have been discussed in this regard (Council on the Global Warming Issue, 2008 and Research Group on Environment and Tariff Policy, 2010). The structure of this paper is as follows. Section 2 introduces the methodology. Section 3 presents the results. Discussions on policy implications and conclusions are provided in Section 4 and 5.

By using a multi-region CGE model, we simulated the carbon tax policy introduced in Japan in 2012 and the scenarios of BTA with and without NIAfT. We also assumed that same climate policies are implemented in the US to test the impacts of expanding the coverage of participating countries in global mitigation efforts. Several findings are drawn up as follows. (i) The carbon tax policy implemented unilaterally in Japan can reduce domestic emissions but at the same time trigger the carbon leakage mechanisms which result in an increase in global emissions. However, both domestic mitigation effects and the carbon leakage effects are very small. Current carbon tax rate adopted in Japan is low (less than USD 3), which might be the reason accountable for small impacts generated by the policy. By increasing the carbon tax rate by ten times through a sensitivity analysis, we found that the impacts are still very small. Based on our assessment, we concluded that the carbon tax policy in Japan cannot be considered as effective to address domestic mitigation nor be considered as a real risk of carbon leakage. (ii) The carbon tax policy in Japan will impact the competitiveness of domestic industries adversely, including both EITE sectors and the economy as a whole. However, the impacts are trivial. Though by increasing the carbon tax rate by ten times, the impacts are still very small. Therefore the carbon tax policy implemented in Japan cannot be considered as a real threat to the competitiveness of domestic industries. (iii) By introducing a BTA measure, competitiveness loss of the EITE sectors can be prevented, however, economy-wide competitiveness impacts cannot be addressed effectively. Since the competitiveness effects of the carbon tax policy are very small, the effects of the BTA measure to protect industrial competitiveness are also very small, even for the case of a higher tax rate. (iv) Unexpectedly, imposing a carbon tariff at the border will increase Japan′s domestic emissions, contradicting to the carbon tax policy which aims to address domestic mitigation. The emissions from the rest of the world will decrease, indicating a phenomenon of negative carbon leakage. Based on our assessment, the BTA measure, as a company of the carbon tax policy in Japan, can be considered effective to address the mitigation out of the border but not inside the border. (v) To pass WTO examination, the proponent of a BCA measure, based on GATT Article XX1, must prove the necessity of the trade measure in achieving the environmental objective related to Article XX (b) and (g), and substantial link between the trade measure and the stated climate change policy objective. The carbon tax policy in Japan, which can generate only trivial impacts on domestic mitigation, global carbon leakage and industrial competitiveness, cannot be justified as necessary to require a trade measure in achieving its stated mitigation objectives. Moreover, the negative effects of the BTA measure on achieving domestic mitigation can hardly prove the substantial link between the BTA measure and the stated climate policy objectives. (vi) To address the inequality issue, we proposed the method of NIAfT. Based on the NIAfT, the assessment results indicate that the effects of the BTA measure to address mitigation out of the territory rather than within the territory can be greatly strengthened, indicating a strong negative carbon leakage phenomenon.