Title: The impact of unilateral OECD carbon taxes on the location of aluminium smelting

Authors: Alan S. Manne, Lars Mathiesen

Addresses: Department of Operations Research, Stanford University, Stanford, CA 94305-4022, USA. ' Department of Economics, Norwegian School of Economics, Business Administration, 5035 Bergen-Sandviken, Norway

Abstract: Aluminium smelting is electricity intensive. Within the OECD region, electricity generation is based largely on fossil fuels, and a carbon tax would have a significant impact on the cost of electricity. Outside the OECD, there are large amounts of additional electricity that could be generated through hydro-electricity or flare gas. If carbon limits were adopted unilaterally by the OECD nations, domestic producers would be at a competitive disadvantage. To quantify these ideas, we have updated a global aluminium trade model constructed at the World Bank during the early 1980s. According to our business-as-usual scenario, there will be a gradual shift toward new sources of production located outside the OECD region. Unilateral OECD carbon restrictions could dramatically accelerate this process.

Keywords: aluminium smelting; carbon taxes; electricity generation; industrial relocation; OECD; world trade; plant location; electricity costs; aluminium industry; modelling.

DOI: 10.1504/IJGEI.1994.063526

International Journal of Global Energy Issues, 1994 Vol.6 No.1/2, pp.52-61

Published online: 16 Jul 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article