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Differentiation and Dynamics of Competitiveness Impacts from the EU ETS

Author

Listed:
  • Misato Sato

    (Electricity Policy Research Group (EPRG), Faculty of Economics, University of Cambridge)

  • Michael Grubb
  • Jim Cust
  • Katie Chan
  • Anna Korppoo

Abstract

We summarises the main factors that differentiate impacts of the EU ETS on profitability and market share. By examining sampling a range of sectors, we present some simple metrics and indicators to help judge the nature of potential impacts. We also consider briefly the mitigation response to these impacts by sectors, and how they may evolve over time. The broad conclusion confirms the aggregate findings presented in the existing literature - most participating sectors are likely to profit under the current ETS structure out to 2012 at the cost of a modest loss of market share, but this may not hold for individual companies and regions. The period 2008-12 can assist participating sectors to build experience and financial reserves for longer term technology investments and diversification, providing the continuation and basic principles of the EU ETS post-2012 is quickly defined and incentives are in place for sectors to pursue this.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Misato Sato & Michael Grubb & Jim Cust & Katie Chan & Anna Korppoo, 2007. "Differentiation and Dynamics of Competitiveness Impacts from the EU ETS," Working Papers EPRG 0704, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg0704
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. J. G. Fournier Gabela & F. Freund, 2023. "Potential carbon leakage risk: a cross-sector cross-country assessment in the OECD area," Climatic Change, Springer, vol. 176(5), pages 1-21, May.
    2. Zhang, Zhong Xiang, 2012. "Competitiveness and Leakage Concerns and Border Carbon Adjustments," International Review of Environmental and Resource Economics, now publishers, vol. 6(3), pages 225-287, December.
    3. Pablo del Río & Javier Carrillo-Hermosilla & Totti Könnölä & Carlos Suárez, 2008. "Challenges and opportunities of a post-Kyoto mitigation regime: a survey of the European electricity sector," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 13(8), pages 863-885, October.
    4. Ralf Martin & Mirabelle Mu?ls & Laure B. de Preux & Ulrich J. Wagner, 2014. "Industry Compensation under Relocation Risk: A Firm-Level Analysis of the EU Emissions Trading Scheme," American Economic Review, American Economic Association, vol. 104(8), pages 2482-2508, August.
    5. Frédéric Branger & Oskar Lecuyer & Philippe Quirion, 2015. "The European Union Emissions Trading Scheme: should we throw the flagship out with the bathwater?," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 6(1), pages 9-16, January.
    6. repec:ces:ifodic:v:5:y:2007:i:4:p:14567295 is not listed on IDEAS
    7. Martin, Ralf & Muûls, Mirabelle & de Preux, Laure B. & Wagner, Ulrich J., 2014. "On the empirical content of carbon leakage criteria in the EU Emissions Trading Scheme," Ecological Economics, Elsevier, vol. 105(C), pages 78-88.
    8. Barry Anderson & Jorg Leib & Ralf Martin & Marty McGuigan & Mirabelle Muûls & Ulrich J. Wagner & Laure B. de Preux, 2011. "Climate Change Policy and Business in Europe. Evidence from Interviewing Managers," CEP Occasional Papers 027, Centre for Economic Performance, LSE.
    9. Fournier Gabela, Julio G. & Freund, Florian, 2022. "Potential carbon leakage risk: A cross-sector cross-country assessment in the OECD area," Conference papers 333468, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Christoph Böhringer & Victoria Alexeeva-Talebi, 2011. "Unilateral climate policy and competitiveness: The implications of differential emission pricing," Working Papers V-338-11, University of Oldenburg, Department of Economics, revised Jun 2011.
    11. Peter Egger & Sergey Nigai, 2015. "Energy Demand and Trade in General Equilibrium," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 191-213, February.
    12. Michael Grubb, 2007. "The European Emissions Trading Scheme: An Overview of Operations and Lessons," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(4), pages 17-25, 06.
    13. Jos Sijm, 2012. "Tradable Carbon Allowances: The Experience of the European Union and Lessons Learned," Chapters, in: Chin Hee Hahn & Sang-Hyop Lee & Kyoung-Soo Yoon (ed.), Responding to Climate Change, chapter 3, Edward Elgar Publishing.
    14. Lakatos, Csilla & Walmsley, Terrie, 2011. "Dispute Settlement at the WTO: Impacts of a No Deal in the US-Brazil Cotton Dispute," Conference papers 332059, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. repec:old:wpaper:338 is not listed on IDEAS
    16. Pablo del R�o Gonz�lez, 2006. "Harmonization versus decentralization in the EU ETS: an economic analysis," Climate Policy, Taylor & Francis Journals, vol. 6(4), pages 457-475, July.
    17. Luo, Le & Tang, Qingliang, 2016. "Determinants of the Quality of Corporate Carbon Management Systems: An International Study," The International Journal of Accounting, Elsevier, vol. 51(2), pages 275-305.
    18. repec:zbw:hohpro:338 is not listed on IDEAS
    19. Fischer, Carolyn & Fox, Alan K., 2012. "Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 199-216.
    20. Robin van Emous & Rytis Krušinskas & Wim Westerman, 2021. "Carbon Emissions Reduction and Corporate Financial Performance: The Influence of Country-Level Characteristics," Energies, MDPI, vol. 14(19), pages 1-19, September.

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    More about this item

    Keywords

    Emissions trading; industrial competitiveness; spillovers; allowance allocation; perverse incentives;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • F18 - International Economics - - Trade - - - Trade and Environment

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