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What Drives Carbon Emissions in German Manufacturing: Scale, Technique or Composition?

Author

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  • Elisa Rottner

    (ZEW - Leibniz Centre for European Economic Research and University of Basel)

  • Kathrine Graevenitz

    (ZEW - Leibniz Centre for European Economic Research and University of Mannheim)

Abstract

Emissions of local pollutants from industry have declined across many developed countries over the last decades. For carbon emissions such reductions have yet to materialize. Using German administrative micro-data at the product level, we apply the workhorse model for decomposing emission changes into scale, composition (changes in the mix of goods produced) and technology (emission factors of production) effects. We find that the production composition in German manufacturing shifted towards less CO2 intensive goods, while emission intensities of production increased. We show that data aggregation matters. Both effects are substantially underestimated when using data at the sector level as compared to the product level. A complementary plant level decomposition reveals that emission intensities of production increased both within plant, and due to a reallocation of production to more emission intensive plants.

Suggested Citation

  • Elisa Rottner & Kathrine Graevenitz, 2024. "What Drives Carbon Emissions in German Manufacturing: Scale, Technique or Composition?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(9), pages 2521-2542, September.
    • Handle: RePEc:kap:enreec:v:87:y:2024:i:9:d:10.1007_s10640-024-00894-7
    DOI: 10.1007/s10640-024-00894-7
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    1. Ederington Josh & Levinson Arik & Minier Jenny, 2004. "Trade Liberalization and Pollution Havens," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(2), pages 1-24, November.
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    5. Nouri Najjar & Jevan Cherniwchan, 2021. "Environmental Regulations and the Cleanup of Manufacturing: Plant-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 103(3), pages 476-491, July.
    6. Flues, Florens & Lutz, Benjamin Johannes, 2015. "The effect of electricity taxation on the German manufacturing sector: A regression discontinuity approach," ZEW Discussion Papers 15-013, ZEW - Leibniz Centre for European Economic Research.
    7. Forslid, Rikard & Okubo, Toshihiro & Ulltveit-Moe, Karen Helene, 2018. "Why are firms that export cleaner? International trade, abatement and environmental emissions," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 166-183.
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    Cited by:

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    2. Robin Sogalla & Joschka Wanner & Yuta Watabe, 2024. "New Trade Models, Same Old Emissions?," Discussion Papers of DIW Berlin 2077, DIW Berlin, German Institute for Economic Research.
    3. Sogalla, Robin & Wanner, Joschka & Watabe, Yuta, 2024. "New trade models, same old emissions?," Kiel Working Papers 2267, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Carbon emissions; Climate policy; Statistical decomposition; Manufacturing;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • 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

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