Firm competitiveness and the European Union emissions trading scheme
AbstractThe European Union Emissions Trading Scheme is the first international cap-and-trade program for CO2 and the largest carbon pricing regime in the world. A principle concern over the Emissions Trading Scheme is the potential impact on the competitiveness of industry. Using a panel of 5873 firms in 10 European countries during 2001–2009, this paper seeks to assess the impact of the carbon regulation on three variables through which the effects on firm competitiveness may manifest—unit material costs, employment and revenue. Our analysis focuses on three most polluting industries covered under the program-power, cement, and iron and steel. Empirical results indicate that the emissions trading program had different impacts across these three sectors. While no impacts are found on any of the three variables in cement and iron and steel industries, our analysis suggests a positive effect on both material costs and revenue in the power sector: the effect on material costs likely reflects the costs to comply with emissions constraints or other parallel renewable incentive programs while that on revenue may partly due to cost pass-through to consumers in a market less exposed to competition outside EU. Overall our findings do not substantiate concerns over carbon leakage, job loss and industry competitiveness at least during the study period.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Energy Policy.
Volume (Year): 63 (2013)
Issue (Month): C ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/enpol
Cap and trade; EU emissions trading scheme; Firm competitiveness;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jurate Jaraite & Corrado Di Maria, 2011.
"Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU,"
2011.19, Fondazione Eni Enrico Mattei.
- Jaraitė, Jūratė & Di Maria, Corrado, 2012. "Efficiency, productivity and environmental policy: A case study of power generation in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1557-1568.
- Jaraite, Jurate & Di Maria, Corrado, 2011. "Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU," CERE Working Papers 2011:3, CERE - the Center for Environmental and Resource Economics.
- Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
- Considine , Timothy J. & Larson, Donald F., 2009. "Substitution and technological change under carbon cap and trade : lessons from Europe," Policy Research Working Paper Series 4957, The World Bank.
- Schmalensee, Richard & Stavins, Robert N., 2012.
"The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment,"
Working Paper Series
rwp12-030, Harvard University, John F. Kennedy School of Government.
- Stavins, Robert Norman & Schmalensee, Richard, 2012. "The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," Scholarly Articles 9368024, Harvard Kennedy School of Government.
- Richard Schmalensee & Robert Stavins, 2012. "The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," NBER Working Papers 18306, National Bureau of Economic Research, Inc.
- Richard Schmalensee & Robert N. Stavins, 2012. "The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," Working Papers 2012.60, Fondazione Eni Enrico Mattei.
- Anger, Niels & Oberndorfer, Ulrich, 2008. "Firm performance and employment in the EU emissions trading scheme: An empirical assessment for Germany," Energy Policy, Elsevier, vol. 36(1), pages 12-22, January.
- Demailly, Damien & Quirion, Philippe, 2008. "European Emission Trading Scheme and competitiveness: A case study on the iron and steel industry," Energy Economics, Elsevier, vol. 30(4), pages 2009-2027, July.
- Carlson, Curtis & Burtraw, Dallas & Cropper, Maureen & Palmer, Karen L., 1998.
"Sulfur dioxide control by electric utilities : what are the gains from trade?,"
Policy Research Working Paper Series
1966, The World Bank.
- Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
- Burtraw, Dallas & Palmer, Karen & Cropper, Maureen & Carlson, Curtis, 1998. "Sulfur-Dioxide Control By Electric Utilities: What Are the Gains from Trade?," Discussion Papers dp-98-44-rev, Resources For the Future.
- Corrado Di Maria & Barry Anderson & Frank Convery, 2009.
"Abatement and Allocation in the Pilot Phase of the EU ETS,"
2009.110, Fondazione Eni Enrico Mattei.
- Barry Anderson & Corrado Di Maria, 2011. "Abatement and Allocation in the Pilot Phase of the EU ETS," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(1), pages 83-103, January.
- A. Ellerman & Barbara Buchner, 2008. "Over-Allocation or Abatement? A Preliminary Analysis of the EU ETS Based on the 2005–06 Emissions Data," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(2), pages 267-287, October.
- De Perthuis, Christian & Convery, Frank J. & Ellerman, Denny, 2010. "Pricing carbon : the European Union Emissions Trading Scheme," Economics Papers from University Paris Dauphine 123456789/10174, Paris Dauphine University.
- Jan Abrell & Anta Ndoye Faye & Georg Zachmann, 2011.
"Assessing the impact of the EU ETS using firm level data,"
Working Papers of BETA
2011-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Georg Zachmann & Anta Ndoye & Jan Abrell, 2011. "Assessing the impact of the EU ETS using firm level data," Working Papers 579, Bruegel.
- Sebastian Petrick & Ulrich J. Wagner, 2014. "The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms," Kiel Working Papers 1912, Kiel Institute for the World Economy.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.