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The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata

Author

Listed:
  • Ralf Martin
  • Laure B. de Preux
  • Ulrich J. Wagner

Abstract

We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.

Suggested Citation

  • Ralf Martin & Laure B. de Preux & Ulrich J. Wagner, 2011. "The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata," NBER Working Papers 17446, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17446
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    References listed on IDEAS

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    1. Barker, Terry & Ekins, Paul & Foxon, Tim, 2007. "Macroeconomic effects of efficiency policies for energy-intensive industries: The case of the UK Climate Change Agreements, 2000-2010," Energy Economics, Elsevier, vol. 29(4), pages 760-778, July.
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    Cited by:

    1. repec:ces:ifofob:81 is not listed on IDEAS
    2. Lundgren, Tommy & Marklund, Per-Olov & Samakovlis, Eva & Zhou, Wenchao, 2013. "Carbon Prices and Incentives for Technological Development," CERE Working Papers 2013:4, CERE - the Center for Environmental and Resource Economics.
    3. 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.
    4. Caterina Gennaioli & Ralf Martin & Mirabelle Muûls, 2013. "Using micro data to examine causal effects of climate policy," Chapters,in: Handbook on Energy and Climate Change, chapter 20, pages 453-470 Edward Elgar Publishing.
    5. Nicholas Rivers & Brandon Schaufele, 2015. "The Effect of Carbon Taxes on Agricultural Trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(2), pages 235-257, June.
    6. Spencer, Thomas & Lucas, Chancel & Emmanuel, Guerin, 2012. "Exiting the crisis in the right direction: A sustainable and shared prosperity plan for Europe," MPRA Paper 38802, University Library of Munich, Germany.
    7. Olivier Deschenes, 2014. "Environmental regulations and labor markets," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-22, July.
    8. Nicholas Rivers & Brandon Schaufele, 2012. "Carbon Tax Salience and Gasoline Demand," Working Papers 1211E, University of Ottawa, Department of Economics.
    9. Ana Maria Montoya Gómez & Markus Zimmer, 2017. "Assessing the Effects of Climate Policy on Companies' Greenhouse Gas Emissions," CESifo Working Paper Series 6651, CESifo Group Munich.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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