Journal Article

The Consequences of Unilateral Withdrawals from the Paris Agreement

Authors

  • Mario Larch
  • Joschka Wanner
Publication Date
forthcoming

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

Info

JEL Classification
F14; F18; Q56

Key Words

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