Implications for competitiveness of the Estonian carbonintensive industry post-2013
AbstractFrom 2013 the total quantity of permitted CO2 emissions in the European Union will be decreasingly capped, putting pressure on their unit price. This in turn will influence carbon-intensive companies’ total costs and potentially affect profit margins. This article offers analysis of a small open country’s carbon-intensive firms’ variable cost sensitivity to CO2 prices at €15, €25 and €50 per tonne, using Estonia as a reference. The analysis reveals that firms using heavily carbon-intensive fuels (such as oil shale) could experience variable cost increase up to 100%. Although such fuel is primarily used in Estonia’s electricity generation, the biggest impact would hit the country’s mineral sector where carbon-intensive manufacturing faces on average a 20% variable cost change. Such companies could eventually move their activities outside the EU.
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Bibliographic InfoArticle provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.
Volume (Year): 11 (2011)
Issue (Month): 2 (December)
CO2 emissions; energy-intensive industry; cost competitiveness; Estonia;
Find related papers by JEL classification:
- Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
- N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
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- Commins, Nicola & Lyons, Seán & Schiffbauer, Marc & Tol, Richard S. J., 2009. "Climate Policy and Corporate Behaviour," Papers WP329, Economic and Social Research Institute (ESRI).
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