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Spillovers of Climate Policy Besides primary effects such as reducing greenhouse gas emissions, the implementation of climate policies in Annex I countries of the Kyoto protocol may have secondary (side) effects, as the resulting increase in carbon or fossil fuel costs may affect energy prices and, hence, the profitability of energy-using industries in Annex I versus non-Annex I countries. From a global warming point of view, these secondary effects or 'spillovers' of climate policy may be either negative or positive. Negative spillovers refer particularly to the incidence of carbon leakage, i.e. an increase in CO2 emissions in non-abating countries due to the implementation of climate policy in Annex I countries. Positive spillovers, on the other hand, refer especially to the inducement of carbon-saving technological innovations and the diffusion of these innovations, both at home and abroad. Furthermore the report presents the major findings of the three empirical case studies on climate policy spillovers, particularly in the energy-intensive manufacturing industry, the wind power industry, and the biomass and bio-energy industry. Finally, it discusses the major policy implications of the project 'Spillovers of climate policy'. Author: Sijm JPM et al. (report ECN: C--05-014)
March 2005
To the report
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