Impacts of environmental agreements on bilateral trade of climate industry

Sung Jin Kang, Sun Lee, Seon Ju Lee

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)

    Abstract

    We investigated the effect of agreements related to climate change on bilateral trade, using the Poisson pseudo-maximum likelihood (PPML) estimator on a large dataset that requires computing high-dimensional fixed effects. This study develops the concordance between commodities based on harmonized systems (HS) and technologies defined by both international and cooperative patent classifications (IPC/CPC). Using the OECD ENV-TECH classification, covering 169 exporting countries and 179 importing countries worldwide from 1991 to 2019, we determined the relationship between HS commodities and IPC/CPC climate change technologies. The main findings show that, first, the Kyoto Protocol has increased international bilateral trade in the climate change industry, while the Montreal Protocol has led to the opposite effect. In addition, the impact of environmental stringency on international bilateral trade in climate-related industries was negative and significant, refuting the Porter Hypothesis. This result was consistent within the trade between the convention countries. Therefore, national and industrial perspectives are relative, and voluntary climate mitigation methods should be applied, considering the areas where carbon reduction is relatively difficult. In other words, the conventions and policies must shift to a global paradigm in environmental protection and a more inclusive approach, with recognition of diversity in governance types.

    Original languageEnglish
    Article number7277
    JournalEnergies
    Volume14
    Issue number21
    DOIs
    Publication statusPublished - 2021 Nov 1

    Bibliographical note

    Funding Information:
    Funding: This research was supported by a Korea University Grant (K2108881) of Korea.

    Publisher Copyright:
    © 2021 by the authors. Licensee MDPI, Basel, Switzerland.

    Keywords

    • Climate change
    • Environmental agreements
    • Gravity model
    • Poisson pseudo-maximum likelihood
    • Technology

    ASJC Scopus subject areas

    • Renewable Energy, Sustainability and the Environment
    • Fuel Technology
    • Energy Engineering and Power Technology
    • Energy (miscellaneous)
    • Control and Optimization
    • Electrical and Electronic Engineering

    Fingerprint

    Dive into the research topics of 'Impacts of environmental agreements on bilateral trade of climate industry'. Together they form a unique fingerprint.

    Cite this