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Carbon pricing and competitiveness: Are they at odds?

Author

Listed:
  • Jane Ellis

    (OECD)

  • Daniel Nachtigall

    (OECD)

  • Frank Venmans

    (University of Mons)

Abstract

This paper reviews ex-post empirical assessments on the impact of carbon pricing on competitiveness in OECD and G20 countries in the electricity and industrial sectors. Most of these assessments find no statistically significant effects of carbon pricing or energy prices on different dimensions of competitiveness, including net imports, foreign direct investments, turnover, value added, employment, profits, productivity, and innovation. When statistically significant results have been found, the magnitude of such effects tends to be small - either positive or negative. Thus, concerns about negative short-term effects of carbon pricing on firms’ or sectors’ international competitiveness have not come to pass, at least to date. These findings are in part because carbon price levels have been low and because of exemptions to carbon taxes for industry, or generous levels of free allowances to firms covered by emissions trading schemes.

Suggested Citation

  • Jane Ellis & Daniel Nachtigall & Frank Venmans, 2019. "Carbon pricing and competitiveness: Are they at odds?," OECD Environment Working Papers 152, OECD Publishing.
    • Handle: RePEc:oec:envaaa:152-en
    DOI: 10.1787/f79a75ab-en
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    Keywords

    carbon markets; carbon pricing; competitiveness; environmental regulation;
    All these keywords.

    JEL classification:

    • 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
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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