Trade in Fuels and Environmental Regulation: A Two-Sided Story

In this paper, we show how environmental regulation affects trade in fuels. The regulation is assessed along two dimensions: one tackling the extraction and another one dealing with the use of fuels. Using a gravity model with 141 countries for the period 1998–2015, we show that regulations on the extraction of fuels have no impact on trade compared to those related to the use of these non-renewable resources. Specifically, we find that introducing Energy laws slows down fuels trade at the world level and that if importers get involved in more international environmental treaties, they will import less fuels.