Impact of climate policies on energy-intensive industries
Year: 2015
Type: preprint
Abstract: This thesis contributes to the literature on carbon leakage and competitiveness losses in energy-intensive industries generated by uneven climate policies. After a meta-analysis of modelling studies assessing carbon leakage with or without Border Carbon Adjustments; we use time series econometrics and find no evidence of competitiveness-driven operational leakage due to the European Union Emissions Trading System (EU ETS) for steel and cement. Next, we decompose emissions the European cement sector into seven effects with a Log Mean Divisia Index method, and show that most of the variations can be attributed to the activity effect. Abatement due to the EU ETS is estimated at around 2% between 2005 and 2012 while the amount of “overallocation profits” is assessed at 3.5 billion euros. Further, we demonstrate that the cement industry strategically reacted to the introduction of a new rule supposed to reduce free allocation in low-producing installations. Companies artificially increased production in some plants, generating distortions going against the low carbon transformation in this sector. We finally discuss possible reforms in the EU ETS and advocate for output-based allocation in the short term.
Author: Frédéric Branger
Language: French
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2302404502