Journal Article

The Consequences of Unilateral Withdrawals from the Paris Agreement


  • Larch
  • M.
  • Wanner
  • J.
Publication Date

International cooperation is at the core of multilateral climate policy. How is its effectiveness harmed by individual countries dropping out of the global mitigation effort? We develop a multisector structural trade model with emissions from production and a constant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we őnd that a US withdrawal would eliminate more than a third of the world emissions reduction (31.8% direct effect and 6.4% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 24.1% (11.9% direct effect and 12.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.

Kiel Institute Expert


JEL Classification
F14; F18; Q56

Key Words

  • carbon leakage
  • climate change
  • fossil fuel supply
  • international trade