Climate Change Policy in the International Context: Solving the Carbon Leakage Problem

Under the Paris Agreement, nations set their own emissions goals and policies. As a result, climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. A key problem when carbon policies vary across countries is that energy-intensive industries can relocate to places with few or no emissions restriction. Relocated industries would continue to pollute but would be operating in a less desirable location. Moreover, the countries that imposed strict emissions reductions lose the benefit of having those industries located domestically. This problem, known as leakage, is one of the key reasons the United States has failed to enact substantial climate change policies. Without a solution to leakage, it may be much more difficult to prevent catastrophic climate change. The most commonly proposed response to leakage is to impose border adjustments—tariffs on imports based on the emissions from the production of the imported good, and rebates for exports of prior taxes or other prices imposed on emissions. Border adjustments ensure that the same price is paid regardless of the location of production. Border adjustments, however, are complex to impose and potentially incompatible with the WTO. Moreover, numerous studies show that border adjustments do not significantly improve the effectiveness of regional carbon policies. We propose a better solution to the leakage problem. Our solution, the extraction/production tax or the EPT, combines a tax on domestic extraction with a conventional tax on emissions from domestic production. The core intuition behind this hybrid tax is that shifts in location due to carbon prices arise because of their effects on the price of energy seen by foreign actors. By reducing demand for fossil fuels, taxes on emissions from domestic production lower the global price of energy. In response, foreign actors increase their energy use, generating leakage. Border adjustments do not change this effect: carbon taxes on production with border adjustments also reduce the price of energy and increase energy use abroad. A tax on domestic extraction, however, raises the global price of energy because it reduces supply. A higher price of energy causes foreign users of energy to reduce their energy use, reducing leakage. Foreign extractors of energy, however, increase their supply. By combining a tax on the supply of energy and a tax on the demand for energy, the EPT sets these two forces against each other. A tax on the supply side of the market allows a lower tax on the demand side, with the two taxes set to minimize distortions in non-taxing regions. The EPT not only better solves the economic problem of leakage than conventional approaches; it is also much simpler to implement. The EPT can be implemented by imposing a nominal tax on domestic extraction and border adjustments only on energy (but not goods in general) at a lower rate than the nominal extraction tax. Both an extraction tax and border adjustments on energy are easy to impose, which means that the EPT can greatly simplify the administration of carbon taxes. Finally, the EPT reduces concerns with WTO legality raised by traditional approaches. The EPT is a practical solution to the leakage problem and, therefore, can be a key piece to solving the global climate change problem

Climate Change Policy in the International Context: Solving the Carbon Leakage Problem

Under the Paris Agreement, nations set their own emissions goals and policies. As a result, climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. A key problem when carbon policies vary across countries is that energy intensive industries can relocate to places with few or no emissions restriction. Relocated industries would continue to pollute but would be operating in a less desirable location. Moreover, the countries that imposed strict emissions reductions lose the benefit of having those industries located domestically. This problem, known as leakage, is one of the key reasons the United States has failed to enact substantial climate change policies. Without a solution to leakage, it may be much more difficult to prevent catastrophic climate change. The most commonly proposed response to leakage is to impose border adjustments—tariffs on imports based on the emissions from the production of the imported good, and rebates for exports of prior taxes or other prices imposed on emissions. Border adjustments ensure that the same price is paid regardless of the location of production. Border adjustments, however, are complex to impose and potentially incompatible with the WTO. Moreover, numerous studies show that border adjustments do not significantly improve the effectiveness of regional carbon policies. We propose a better solution to the leakage problem. Our solution, the extraction/production tax or the EPT, combines a tax on domestic extraction with a conventional tax on emissions from domestic production. The core intuition behind this hybrid tax is that shifts in location due to carbon prices arise because of their effects on the price of energy seen by foreign actors. By reducing demand for fossil fuels, taxes on emissions from domestic production lower the global price of energy. In response, foreign actors increase their energy use, generating leakage. Border adjustments do not change this effect: carbon taxes on production with border adjustments also reduce the price of energy and increase energy use abroad. A tax on domestic extraction, however, raises the global price of energy because it reduces supply. A higher price of energy causes foreign users of energy to reduce their energy use, reducing leakage. Foreign extractors of energy, however, increase their supply. By combining a tax on the supply of energy and a tax on the demand for energy, the EPT sets these two forces against each other. A tax on the supply side of the market allows a lower tax on the demand side, with the two taxes set to minimize distortions in non-taxing regions. The EPT not only better solves the economic problem of leakage than conventional approaches; it is also much simpler to implement. The EPT can be implemented by imposing a nominal tax on domestic extraction and border adjustments only on energy (but not goods in general) at a lower rate than the nominal extraction tax. Both an extraction tax and border adjustments on energy are easy to impose, which means that the EPT can greatly simplify the administration of carbon taxes. Finally, the EPT reduces concerns with WTO legality raised by traditional approaches. The EPT is a practical solution to the leakage problem and, therefore, can be a key piece to solving the global climate change problem

Trade, Leakage, and the Design of a Carbon Tax

Climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. When climate policies vary across countries, energy-intensive industries have an incentive to relocate to places with few or no emissions restrictions, an effect known as leakage. Relocated industries would continue to pollute but would be operating in a less desirable location. We consider solutions to the leakage problem in a simple setting where one region of the world imposes a climate policy and the rest of the world is passive. We solve the model analytically and also calibrate and simulate the model. Our model and analysis imply: (1) optimal climate policies tax both the supply of fossil fuels and the demand for fossil fuels; (2) on the demand side, absent administrative costs, optimal policies would tax both the use of fossil fuels in domestic production and the domestic consumption of goods created with fossil fuels, but with the tax rate on production lower due to leakage; (3) taxing only production (on the demand side), however, would be substantially simpler, and almost as effective as taxing both production and consumption, because it would avoid the need for border adjustments on imports of goods; (4) the effectiveness of the latter strategy depends on a low foreign elasticity of energy supply, which means that forming a taxing coalition to ensure a low foreign elasticity of energy supply can act as a substitute for border adjustments on goods

Globalization and wage polarization

In the 1980s and 1990s, the US labour market experiences a remarkable polarization along with fast technological catch-up, as Europe and Japan improve their global innovation performance. Is foreign technological convergence an important source of wage polarization? To answer this question, we build a multi-country Schumpeterian growth model with heterogeneous workers, endogenous skill formation and occupational choice. We show that convergence produces polarization through business stealing and increasing competition in global innovation races. Quantitative analysis shows that these channels can be important sources of US polarization. Moreover, the model delivers predictions on the US wealth-income ratio consistent with empirical evidence

Real-time video mosaicing with a high-resolution microendoscope

Microendoscopes allow clinicians to view subcellular features in vivo and in real-time, but their field-of-view is inherently limited by the small size of the probe's distal end. Video mosaicing has emerged as an effective technique to increase the acquired image size. Current implementations are performed post-procedure, which removes the benefits of live imaging. In this manuscript we present an algorithm for real-time video mosaicing using a low-cost high-resolution microendoscope. We present algorithm execution times and show image results obtained from in vivo tissue

Electrical transport and optical studies of ferromagnetic Cobalt doped ZnO nanoparticles exhibiting a metal-insulator transition

The observed correlation of oxygen vacancies and room temperature ferromagnetic ordering in Co doped ZnO1-o nanoparticles reported earlier (Naeem et al Nanotechnology 17, 2675-2680) has been further explored by transport and optical measurements. In these particles room temperature ferromagnetic ordering had been observed to occur only after annealing in forming gas. In the current work the optical properties have been studied by diffuse reflection spectroscopy in the UV-Vis region and the band gap of the Co doped compositions has been found to decrease with Co addition. Reflections minima are observed at the energies characteristic of Co+2 d-d (tethrahedral symmetry) crystal field transitions, further establishing the presence of Co in substitutional sites. Electrical transport measurements on palletized samples of the nanoparticles show that the effect of a forming gas is to strongly decrease the resistivity with increasing Co concentration. For the air annealed and non-ferromagnetic samples the variation in the resistivity as a function of Co content are opposite to those observed in the particles prepared in forming gas. The ferromagnetic samples exhibit an apparent change from insulator to metal with increasing temperatures for T>380K and this change becomes more pronounced with increasing Co content. The magnetic and resistive behaviors are correlated by considering the model by Calderon et al [M. J. Calderon and S. D. Sarma, Annals of Physics 2007 (Accepted doi: 10.1016/j.aop.2007.01.010] where the ferromagnetism changes from being mediated by polarons in the low temperature insulating region to being mediated by the carriers released from the weakly bound states in the higher temperature metallic region.Comment: 7 pages, 6 figure

Expansion of patient eligibility for virtual glaucoma clinics: a long-term strategy to increase the capacity of high-quality glaucoma care

AIMS: The virtual glaucoma clinic (VGC) is a well-established diagnostic pathway for delivery of glaucoma care. Current UK national guidance recommends VGCs for patients with ocular hypertension, glaucoma suspects or early glaucoma. This study evaluates whether expanded eligibility criteria, including other glaucoma phenotypes and disease stages, can deliver safe and effective care with a positive patient experience. METHODS: Records of over 8000 patients were reviewed in order to determine suitability for VGC attendance using expanded eligibility criteria. Patients with three prior consecutive visits within the glaucoma service were included. Follow-up interval, clinic type, visual acuity (VA), intraocular pressure (IOP) and visual field performance were recorded. Patient satisfaction was recorded for a sample of 118 patients. RESULTS: 2017 patients over 31 months were included. Two-thirds of eyes had ocular comorbidities, a fifth of eyes had undergone prior cataract surgery and 10% of eyes had undergone a prior laser treatment for glaucoma. After three visits, 32% of patients remained in the VGC, 42% were seen in face-to-face clinics and 25% were discharged. There were no clinically significant changes in VA, IOP and visual field performance during follow-up. 72% of patients expressed a preference to continue their care within VGCs. CONCLUSIONS: This study demonstrates that VGCs with expanded patient eligibility criteria can deliver high-quality glaucoma care that is safe, effective and with high levels of patient satisfaction. This approach provides a long-term solution to adapt delivery of glaucoma care to our expanding and ageing population

Development of a multimodal foveated endomicroscope for the detection of oral cancer

A multimodal endomicroscope was developed for cancer detection that combines hyperspectral and confocal imaging through a single foveated objective and a vibrating optical fiber bundle. Standard clinical examination has a limited ability to identify early stage oral cancer. Optical detection methods are typically restricted by either achievable resolution or a small field-of-view. By combining high resolution and widefield spectral imaging into a single probe, a device was developed that provides spectral and spatial information over a 5 mm field to locate suspicious lesions that can then be inspected in high resolution mode. The device was evaluated on ex vivo biopsies of human oral tumors