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Implications for competitiveness of the Estonian carbon­intensive industry post-2013

Listed author(s):
  • Jüri Kleesmaa


    (Tallinn School of Economics and Business Administration (TSEBA) at Tallinn University of Technology)

  • Marko Viiding


    (University of Tartu)

  • Eduard Latõšov


    (Tallinn School of Economics and Business Administration (TSEBA) at Tallinn University of Technology)

Registered author(s):

    From 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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    Article provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.

    Volume (Year): 11 (2011)
    Issue (Month): 2 (December)
    Pages: 41-58

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    Handle: RePEc:bic:journl:v:11:y:2011:i:2:p:41-58
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    1. 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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