European Climate Policy and Industrial Relocation: Evidence from German Multinational Firms

Koch, Nicolas; Mama, Houdou Basse

doi:10.2139/ssrn.2868283

“…In contrast, the overall effect of a sizeable asset increase can be extended to all samples. The finding complements insights provided by Koch and Basse Mama (2016) and Borghesi et al (2016), which show that, while the large majority of firms is unresponsive, some small subgroups with very low capital intensities or high trade intensities may behave differently and, in their case, relocate to a certain degree. Similar to the cited studies, we find that our subgroup does not correspond at all to an important amount of emissions under the EU ETS.…”

Section: Discussionsupporting

confidence: 78%

“…A simple comparison of means between participating and non-participating firms will thus not yield a reliable estimate of the causal effect of the EU ETS if the distributions of observed and unobserved confounders are not balanced between the two groups. We thus follow a two stage approach proposed by Heckman et al (1998) that was applied in the context of the evaluation of the EU ETS in similar ways by Koch and Basse Mama (2016) and Zaklan (2016). In the first stage, our goal is to find a subgroup of non EU ETS firms that is very similar to our treated group of EU ETS firms in pre-2005 characteristics.…”

Section: Methodsmentioning

confidence: 99%

“…However, the few ex-post studies for the EU ETS have so far not revealed any substantial leakage effect, neither via sectoral trade flows (e.g. Naegele and Zaklan 2016), nor through a rise in Foreign Direct Investment, analyzed for Italian MNEs by Borghesi et al (2016) and for German MNEs by Koch and Basse Mama (2016). The study that most closely shares our conceptual emphasis on potential intra-firm shifts of emissions is Dechezleprêtre et al (2015).…”

Section: Introductionmentioning

confidence: 92%

See 1 more Smart Citation

Multinational Corporations and the EU Emissions Trading System: Asset Erosion and Creeping Deindustrialization?

Moore

¹

,

Grosskurth

²

,

Themann

³

2018

SSRN Journal

0

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editors. Terms of use: Documents in Ruhr Economic Papers #719

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“…Our primary findings are also in line with the evidence obtained by novel studies that focus on the causal impact of the EU ETS on firms' location decisions, outward foreign direct investment and emissions leakage. Koch and Basse Mama (2016) find for Germany that, on average, treated firms did not increase their outward FDI. Dechezleprêtre et al (2015) conclude that the EU ETS has not induced global shifts in emissions within multinational companies.…”

Section: Discussionmentioning

confidence: 70%

Multinational Corporations and the EU Emissions Trading System: Asset Erosion and Creeping Deindustrialization?

Moore

¹

,

Grosskurth

²

,

Themann

³

2018

SSRN Journal

0

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editors. Terms of use: Documents in Ruhr Economic Papers #719

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“…Some research addresses the relocation channel: Dechezleprêtre et al (2014) use a survey of multinational firms and find no evidence that the EU ETS induced the relocation of emission-intensive processes within multinational firms. Other research addresses the investment channel: using firm-level data on foreign direct investment (FDI) by German multinational companies, Koch and Basse Mama (2016) find no evidence that the EU ETS has contributed to relocation through an increase in outbound FDI. Martin et al (2014) conduct a survey of managers; they find that relocation risk is limited and that the current EU ETS rules largely over-compensate many sectors given the small risk of relocation.…”

Section: Introductionmentioning

confidence: 99%

Does the EU ETS Cause Carbon Leakage in European Manufacturing?

Naegele

¹

,

Zaklan

²

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Carbon leakage is an issue of major interest in both academic and policy debates about the effectiveness of unilateral climate policy addressing global externalities. The debate is particularly salient in Europe, where the EU Emissions Trading System (EU ETS) covers emissions of many traded sectors. In a first step, we review how carbon leakage and the pollution haven effect are defined and identified in the literature. In a second step, we evaluate whether the emission cost introduced by the EU ETS has caused carbon leakage in European manufacturing. We compute trade flows in embodied carbon and value, using GTAP trade and input-output data and administrative data from the EU ETS. We evaluate the effect of four measures of environmental stringency on both net trade flows and bilateral trade flows. We do not find evidence that the EU ETS has caused carbon leakage. Terms of use: Documents inJEL codes: F18, Q58, Q54 Keywords: Carbon leakage, pollution haven, EU ETS, cap-and-trade, CO 2 emissions, policy evaluation. * We thank conference participants in Zurich (EAERE), Lisbon (EARIE), Oviedo (EMEE) and Bergen (IAEE), and seminar participants in Toulouse and Berlin for fruitful discussions. We also thank Jan Abrell, Pio Baake, Sylvain Chabé-Ferret, Antoine Dechezleprêtre, Denny Ellerman, Christian von Hirschhausen, Philipp Richter, and Sebastian Schwenen for valuable comments. All remaining errors are ours.

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European Climate Policy and Industrial Relocation: Evidence from German Multinational Firms

Cited by 13 publications

References 67 publications

Multinational Corporations and the EU Emissions Trading System: Asset Erosion and Creeping Deindustrialization?

Multinational Corporations and the EU Emissions Trading System: Asset Erosion and Creeping Deindustrialization?

Multinational Corporations and the EU Emissions Trading System: Asset Erosion and Creeping Deindustrialization?

Does the EU ETS Cause Carbon Leakage in European Manufacturing?

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