Recent "green" policies - contested environmental benefits and import distortions

For the Asia-Pacific region, this paper estimates the impact of "green" crisis-era measures on energy intensity of imports and the extent of discrimination of these policies against foreign suppliers. Testable predictions are derived from Eaton and Kortum (2002). The results are surprising: "Green" measures whose purpose of implementation was not driven by the environmental policy agenda are associated with an increase of sourcing from more - rather than less - energy intensive countries. "Green" measures mainly implemented to mitigate climate change are more effective or at least neutral in "greening" imports. While the environmental benefits are limited based on the study of the import channel, these policies may have import distortive effects: "Direct" foreign competitors loose import share when "green" measures are implemented while "indirect" competitors gain. "Direct" (compared to "indirect") competitors are defined as foreign suppliers with energy intensities similar to those of implementing countries, where energy intensity is used as a proxy for quality or technology.