Publication

This paper introduces intra- and inter-sectoral technology diffusion via foreign direct investment (FDI) and imports into a recursive-dynamic CGE model for climate policy analyses. It examines China’s accession to a post-Kyoto emission regime that keeps global emissions from 2012 on constant. The author argues that, due to ongoing energy efficiency gains and partly stemming from international technology diffusion, China will become a net seller of emission permits and steadily reduce emissions, possibly below their 2004 level, until 2030. This will reduce the world CO2 price significantly.