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Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization

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  • aus dem Moore, Nils
  • Großkurth, Philipp
  • Themann, Michael

Abstract

This study seeks to investigate the causal effect of the EU Emissions Trading System (EU ETS) on firms' holdings of fixed assets as an early indicator of industrial relocation, exploiting installation level inclusion criteria of the regulation. To single out companies with particularly low relocation costs, global multinational enterprises (MNEs), we identify ownership structures for the full sample of EU ETS-firms. Matched Difference-in-Differences estimates provide robust evidence that contradicts the specter of an erosion of European asset bases. Baseline results for the manufacturing sector indicate that the EU ETS led to an on average increase of treated firms' asset bases of 12,1%. However, for a particular subgroup of MNEs, this increase is a mere 2.1%. For these companies, the EU ETS may have induced a shift in investment priorities.

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  • aus dem Moore, Nils & Großkurth, Philipp & Themann, Michael, 2019. "Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization," Journal of Environmental Economics and Management, Elsevier, vol. 94(C), pages 1-26.
    • Handle: RePEc:eee:jeeman:v:94:y:2019:i:c:p:1-26
    DOI: 10.1016/j.jeem.2018.11.003
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    More about this item

    Keywords

    EU ETS; Cap-and-trade; Carbon leakage; Multinational corporation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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