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EU Emissions Trading Scheme, competitiveness and carbon leakage: new evidence from cement and steel industries

Author

Listed:
  • Mohamed Amine Boutabba

    (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne)

  • Sandrine Lardic

Abstract

The European Union Emissions Trading Scheme (EU ETS) is the world's first large implementation of a CO 2 cap-and-trade system. The possibility that the EU ETS would have adverse effects on sectoral competitiveness is a major concern of policy-makers and industry. This paper analyses whether and to what extent cement and steel industries are exposed to carbon leakage. Prior studies focused on ex-post EU ETS analysis without taking structural breaks into account. Considering this gap in the literature, the present study attempts to provide new empirical evidence on the risk of carbon leakage under the EU ETS. Using rolling cointegration approach, our estimation results reveal that the impact of EU ETS on these two industries varies over time. Indeed, carbon price affects positively the net imports of cement and steel sectors over multiple subperiods, suggesting that these two industries are affected by a negligible carbon leakage and competitiveness losses. However, results reveal that the steel sector is more affected than the cement sector. Policy makers and industry could benefit from the findings of this study that provides a broader understanding of the future role of the EU ETS. © 2016, Springer Science+Business Media New York.

Suggested Citation

  • Mohamed Amine Boutabba & Sandrine Lardic, 2017. "EU Emissions Trading Scheme, competitiveness and carbon leakage: new evidence from cement and steel industries," Post-Print hal-02877954, HAL.
    • Handle: RePEc:hal:journl:hal-02877954
    DOI: 10.1007/s10479-016-2246-9
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    Citations

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    Cited by:

    1. Di Li & Qianbin Di & Hailin Mu & Zenglin Han & Hongye Wang & Ye Duan, 2022. "Research on the Impact of Output Adjustment Strategy and Carbon Trading Policy on the Response, Stability and Complexity of Steel Market under the Dynamic Game," Sustainability, MDPI, vol. 14(19), pages 1-40, September.
    2. Saussay, Aurelien & Sato, Misato, 2024. "The impact of energy prices on industrial investment location: evidence from global firm level data," LSE Research Online Documents on Economics 123034, London School of Economics and Political Science, LSE Library.
    3. Zaman, Qamar uz & Zhao, Yuhuan & Zaman, Shah & Shah, Aadil Hameed, 2023. "Examining the symmetrical effect of traditional energy resources, industrial production, and poverty lessening on ecological sustainability: Policy track in the milieu of five neighboring Asian econom," Resources Policy, Elsevier, vol. 83(C).
    4. de Kleijne, Kiane & James, Jebin & Hanssen, Steef V. & van Zelm, Rosalie, 2020. "Environmental benefits of urea production from basic oxygen furnace gas," Applied Energy, Elsevier, vol. 270(C).
    5. Xiaojian Su & Chao Deng, 2019. "The heterogeneous effects of exchange rate and stock market on CO2 emission allowance price in China: A panel quantile regression approach," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-11, August.
    6. Jiasen Sun & Guo Li, 2020. "Designing a double auction mechanism for the re-allocation of emission permits," Annals of Operations Research, Springer, vol. 291(1), pages 847-874, August.
    7. Chenhao Fang & Tieju Ma, 2021. "Technology adoption with carbon emission trading mechanism: modeling with heterogeneous agents and uncertain carbon price," Annals of Operations Research, Springer, vol. 300(2), pages 577-600, May.
    8. Jianhui Cong & Huimin Wang & Xiaoxiao Hu & Yongbin Zhao & Yingying Wang & Weiqiang Zhang & Ling Zhang, 2023. "Does China’s Pilot Carbon Market Cause Carbon Leakage? New Evidence from the Chemical, Building Material, and Metal Industries," IJERPH, MDPI, vol. 20(3), pages 1-27, January.
    9. Tajbakhsh, Alireza & Hassini, Elkafi, 2022. "A game-theoretic approach for pollution control initiatives," International Journal of Production Economics, Elsevier, vol. 254(C).
    10. Lin, Weiming & Chen, Jianling & Zheng, Yi & Dai, Yongwu, 2019. "Effects of the EU Emission Trading Scheme on the international competitiveness of pulp-and-paper industry," Forest Policy and Economics, Elsevier, vol. 109(C).
    11. Sean Healy & Katja Schumacher & Wolfgang Eichhammer, 2018. "Analysis of Carbon Leakage under Phase III of the EU Emissions Trading System: Trading Patterns in the Cement and Aluminium Sectors," Energies, MDPI, vol. 11(5), pages 1-25, May.

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