Impacts of the Québec carbon emissions trading scheme on plant-level performance and employment

Abstract

In 2013, Qu ebec implemented a greenhouse gas (GHG) emissions trading system (QC ETS), despite opposition from industry, which feared loss of competitiveness and warned about job destruction. This article assesses the impact of that carbon regulation on industrial facilities in Qu ebec. Conditional difference-indifferences ordinary least squares regressions show that regulated plants reduced their GHG emissions by about 9.8%, employment by about 6.8% and carbon intensity by about 3.7% more compared to non-regulated plants in the rest of Canada during the period 2013-2015. This suggests that facilities adapted to the new program by improving their technology, but first and foremost by scaling down their activity , which raises questions about the ability of the QC ETS to induce enough environmental investment and innovation in industrial facilities. The results, in terms of employment effects, contrast with the findings of similar studies on the early stages of the European ETS and the British Columbia carbon tax scheme, and this information challenges the initial allocation scheme for permits, in particular, with a view to a green fiscal reform.

What do we know about the employment impacts of climate policies? A review of the ex post literature

“…Unlike Dechezleprêtre et al, however, they do not use a one‐to‐one matching between similar firms. Interestingly, Hanoteau and Talbot (2019) employ a similar approach to Wagner et al with similar results. Employees at regulated plants in Quebec Canada faced a 6.8% decrease in employment compared with non‐ETS plants in the rest of Canada.…”

“…Ex post evaluations of the employment impacts of emissions trading schemes have relatively good country coverage considering that only around 10 countries and the EU have such a scheme in place at the national or regional level, with papers from Canada (Hanoteau & Talbot, 2019), China (Zhang & Zhang, 2020), France (Wagner et al, 2014), and the EU (Dechezleprêtre et al, 2018) in the selection. Overall, the results present a mixed picture with two negative, one neutral, and one positive outcome reported, though differences in methods highlight limits to comparability.…”

The Effect of China's Pilot Low-Carbon City Initiative on Enterprise Labor Structure

“…It is found that, within the first phase of EU ETS, the relative allowance allocation has no significant influence on the performance and labor force of the regulated German enterprises. Hanoteau and Talbot (2019), based on the DID model, find that the implementation of the Quebec carbon emission trading system (QC ETS) reduces greenhouse gas emissions but the regulated plants first and foremost scales down their investment activities to adapt to the implementation of the policy, resulting in labor demand reduction, and its employment effect is in contrast to the findings of similar studies on the early stages of EU ETS and BC carbon tax. The results promote the QC ETS to develop the ability to induce facilities to improve technology and innovation activities.…”

How the Carbon Emissions Trading System Affects Green Total Factor Productivity in Logistics Industry?

“…Author Copy Studies assessing the environmental effects of the CETS indicate that the implementation of the policy has resulted in increased carbon emission reduction costs for enterprises. To mitigate the costs of carbon emission reduction, enterprises promote carbon emission reduction through increased R&D investment and the adoption of low-carbon energy-saving technologies and equipment [19][20][21][22][23]. Regarding the assessment of the economic effects of the CETS, most studies found that after the implementation of the pilot policy, enterprises in the pilot region either choose to innovate technologically or exit their operations to reduce pollution emissions, thereby improving the regional industrial structure and promoting regional economic growth [24].…”