Trade and Climate Policies: Do Emissions from International Transport Matter?

Abstract

AbstractThis paper provides orders of magnitude of the importance of CO2 emissions from international freight transport activities under a variety of scenarios regarding trade and climate policies. It is based on a stylised multiregion, multisector CGE model that includes the four modes of international transport (air, water, road and rail) and where choices regarding the energy mix and transport modes have been endogeneised. A separate decomposition of emission changes into the well‐known scale, composition and technique effects is provided. Scale effects turn out to be roughly double in international transport than in exports, while technique effects are weaker due to less substitutability between energy inputs. As a result, international transport represents half of the world increase in global emissions when trade liberalisation is considered in isolation. When trade liberalisation is coupled with a carbon tax limited to rich countries, the change in international transport emissions represents roughly one‐eighth of the carbon leakage effect.