Subsidizing polluting industries generally leads to increased pollution. However, given the diversity of production technologies across countries and international trade, the overall impact of unilateral policies is not a-priori clear. We use the agricultural sector model CAPRI to simulate the impact of removing the voluntary coupled support (VCS) for ruminants permitted under the present Common Agricultural Policy.
Findings are that this reduces beef production and GHG emissions in the EU. Emission leakage significantly diminishes the global impact since emission reduction in the EU to a large extent (about 3/4) is offset by increased emissions in the rest of the world.
For a brief version in Swedish, see AgriFood Policy Brief 2018:5.