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In our geopolitical turmoil, here’s an example where trade can constructively advance U.S. & global interests. Last month, Congress introduced the Clean Competition Act to further decarbonization & maintain U.S. competitiveness. Today, we at @emlab.ucsb.edu release modeling of CCA impacts. 1/

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21/1/26, 2:37 pm1 repost3 likes

Kyle Meng

@kylemeng.com

21 Jan

CCA pairs a U.S. domestic carbon performance fee applied to dirtier-than-average U.S. firms with a carbon import tariff in carbon-intensive, trade-exposed (CITE) sectors. It also has climate club provisions that waive carbon tariffs for trade partners with comparable domestic climate policies. 2/

Kyle Meng

@kylemeng.com

21 Jan

Greg Casey (Williams), Ivan Rudik (Cornell) and I use a general-equilibrium global trade model custom-built for climate and trade policies to analyze CCA’s U.S. and global economic and climate impacts. Here are key results. 3/

Kyle Meng

@kylemeng.com

21 Jan

Result 1: CCA lowers U.S. CITE emissions by 8%. CCA lowers global CITE emissions by 44.9 mtons, 16.3 mtons from U.S. and 28.6 mtons from abroad. It raises $10.6B in revenue annually. While CITE output is slightly lower, CCA has essentially no effect on U.S. GDP. If anything, GDP rises slightly. 4/

Kyle Meng

@kylemeng.com

21 Jan

RESULT 2: If CCA were implemented as a carbon tariff without a domestic performance fee, U.S. GHG emissions rise and emissions abroad fall. Without a domestic performance fee, CCA cut global GHGs by two-thirds as much, raise one-third the revenue, and deliver smaller U.S. GDP & welfare gains. 5/