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Imposing a unilateral carbon constraint on European energy-intensive industries and its impact on their international competitiveness - data & analysis

Author

Listed:
  • Manfred Bergmann
  • Andreas Schmitz
  • Mark Hayden
  • Katri Kosonen

Abstract

We examine the implications of EU climate policy for energy intensive industries by calculating, for a range of energy-intensive processes and products, the product price increases that would be required to maintain unit profits at present levels, based on likely values of allowance prices in the European Union Emissions Trading Scheme up to 2020. We also investigate in how far it would be possible for the affected activities to pass through cost increases to their clients, by analysing their exposure to domestic and international competition. It concludes that the sectors analysed are typically relatively highly concentrated (sometimes even at the world level) and form parts of vertically integrated and locally-clustered value chains. This tends to increase market entry and exit barriers and, thus, to reduce the risk of large output losses and delocalisation.

Suggested Citation

  • Manfred Bergmann & Andreas Schmitz & Mark Hayden & Katri Kosonen, 2007. "Imposing a unilateral carbon constraint on European energy-intensive industries and its impact on their international competitiveness - data & analysis," European Economy - Economic Papers 2008 - 2015 298, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0298
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    Cited by:

    1. Cumbul Altay, Melek & Sivri, Nüket & Onat, Burcu & Sahin, Ülkü & Zoraga, Mert & Fatih Altay, Hulusi, 2011. "Recycle of metals for end-of-life vehicles (ELVs) and relation to Kyoto protocol," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(5), pages 2447-2451, June.
    2. Rentschler, Jun & Kornejew, Martin & Bazilian, Morgan, 2017. "Fossil fuel subsidy reforms and their impacts on firms," Energy Policy, Elsevier, vol. 108(C), pages 617-623.
    3. Sato, Misato, 2014. "Product level embodied carbon flows in bilateral trade," Ecological Economics, Elsevier, vol. 105(C), pages 106-117.
    4. Bruno Lanz & Thomas F. Rutherford & John E. Tilton, 2013. "Subglobal Climate Agreements and Energy-intensive Activities: An Evaluation of Carbon Leakage in the Copper Industry," The World Economy, Wiley Blackwell, vol. 36(3), pages 254-279, March.

    More about this item

    Keywords

    climate change; competitiveness; energy-intensive industries; emissions trading; bergmann; schmitz; hayden; gerday; kosonen;
    All these keywords.

    JEL classification:

    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • F18 - International Economics - - Trade - - - Trade and Environment
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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