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Understanding the competitiveness implications of future phases of EU ETS on the industrial sectors

Author

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  • Oberndorfer, Ulrich
  • Alexeeva-Talebi, Victoria
  • Löschel, Andreas

Abstract

In making key decisions for the future phases of the European Union Emissions Trading Scheme (EU ETS), policy makers need to fully understand the competitiveness implications of these decisions on industrial sectors. In this paper, we conduct an empirical analysis of cost pass-through ability of producers of selected products within the sectors refineries, glass, chemicals and ceramics of the UK economy. Our results provide new insights into the debate on the ability of pass-through of costs generated by the EU ETS. They suggest that some of the sectors analysed have the ability to pass-through a portion of their carbon costs to the consumers: The UK sectors are not capable to completely pass-through their costs into output prices, with the exception of UK ceramic goods.

Suggested Citation

  • Oberndorfer, Ulrich & Alexeeva-Talebi, Victoria & Löschel, Andreas, 2010. "Understanding the competitiveness implications of future phases of EU ETS on the industrial sectors," ZEW Discussion Papers 10-044, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:10044
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    Citations

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    Cited by:

    1. Neuhoff, K. & Ritz, R., 2019. "Carbon cost pass-through in industrial sectors," Cambridge Working Papers in Economics 1988, Faculty of Economics, University of Cambridge.
    2. Alexeeva-Talebi, Victoria, 2011. "Cost pass-through of the EU emissions allowances: Examining the European petroleum markets," Energy Economics, Elsevier, vol. 33(S1), pages 75-83.
    3. Alexeeva-Talebi, Victoria, 2010. "Cost pass-through in strategic oligopoly: Sectoral evidence for the EU ETS," ZEW Discussion Papers 10-056, ZEW - Leibniz Centre for European Economic Research.
    4. Aatola, Piia, 2013. "Putting a Price on Carbon – Econometric Essays on the European Union Emissions Trading Scheme and its Impacts," Research Reports P62, VATT Institute for Economic Research.
    5. Ma, Ning & Li, Huajiao & Zhang, Jinwei & Han, Xiaodan & Feng, Sida & Arif, Asma, 2021. "The short-term price effects and transmission mechanism of CO2 cost pass-through in China: A partial transmission model," Resources Policy, Elsevier, vol. 70(C).
    6. Mordue, Greig, 2017. "Electricity prices and industrial competitiveness: A case study of final assembly automobile manufacturing in the United States and Canada," Energy Policy, Elsevier, vol. 111(C), pages 32-40.
    7. Misato Sato & Karsten Neuhoff & Verena Graichen & Katja Schumacher & Felix Matthes, 2013. "Sectors under scrutiny � Evaluation of indicators to assess the risk of carbon leakage in the UK and Germany," GRI Working Papers 113, Grantham Research Institute on Climate Change and the Environment.
    8. Misato Sato & Karsten Neuhoff & Verena Graichen & Katja Schumacher & Felix Matthes, 2015. "Sectors Under Scrutiny: Evaluation of Indicators to Assess the Risk of Carbon Leakage in the UK and Germany," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(1), pages 99-124, January.
    9. Tim Laing & Misato Sato & Michael Grubb & Claudia Comberti, 2013. "Assessing the effectiveness of the EU Emissions Trading System," GRI Working Papers 106, Grantham Research Institute on Climate Change and the Environment.
    10. Remes, Piia, 2013. "Putting a Price on Carbon – Econometric Essays on the European Union Emissions Trading Scheme and its Impacts," Research Reports 62, VATT Institute for Economic Research.
    11. Cludius, Johanna & de Bruyn, Sander & Schumacher, Katja & Vergeer, Robert, 2020. "Ex-post investigation of cost pass-through in the EU ETS - an analysis for six industry sectors," Energy Economics, Elsevier, vol. 91(C).
    12. David Oliveira & Isabel Mendes, 2017. "Green Taxation on Competitiveness: The Effect of the ISP Tax on the Portuguese Retail Sector of Road Fuels," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 178-184.

    More about this item

    Keywords

    Emissions Trading; Competitiveness; Cost Pass-Through;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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