The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

Verde, Stefano F.

doi:10.1111/joes.12356

Cited by 69 publications

(35 citation statements)

References 54 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This article contributes to the growing literature about trade and the environment centering around the theoretical and empirical relationship among trade liberalization, environmental regulation and environmental pollution [11][12][13][14][15][16][17][18][19][20][27][28][29][30][31]. Copeland and Taylor [4] distinguish the impact of trade liberalization on the environment from the impact of environmental regulation on trade.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The former is related to the pollution haven hypothesis (PHH), which states that tariff cuts could lead to the relocation of dirty industries from countries with stringent environmental control to countries with lax environmental regulations [27][28][29][30][31]. The latter refers to the pollution haven effect (PHE), suggesting that a stringent environmental regulation would affect site choices of firms in the dirty industries and henceforth the direction of trade flows [11][12][13][14][15][16][17][18][19][20].…”

Section: Literature Reviewmentioning

confidence: 99%

“…The existence of the pollution haven effect has important implications for international trade negotiations, when there is debate over whether to expand trade agreements to include cooperation with domestic policies [5][6][7]. Despite the importance of the pollution haven effect, however, empirical studies fail to provide conclusive results on the effects of environmental regulation, with some finding no such effects [8][9][10][11] and others documenting significant effects [12][13][14][15][16][17][18][19][20]. There are two opposing views on the effects of asymmetric environmental policies on the performance of companies competing in the same market: the conventional view and the Porter hypothesis.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Environmental Regulation and Firm Exports: Evidence from a Quasi-Natural Experiment in China

Zhang

Yuhai

et al. 2022

Sustainability

View full text Add to dashboard Cite

This research studies the impact of a unique environmental regulatory policy called mandatory Cleaner Production Audit on firm exports from China using matched firm-level data. Employing the difference-in-differences approach to examine this effect shows that firms subject to the mandatory Cleaner Production Audit suffer a relative decline in exports, and this negative effect is stronger when the implementation of mandatory Cleaner Production Audit was substantially improved in the later stage. Heterogeneity analyses present that the stringent environmental regulations barely affect state-owned firms, whereas they are a strong influence on private firms located in the eastern region of China, and have a much larger negative effect on exports of small-size firms relative to large-size firms. Mechanism discussions show that there are both the compliance costs effect and the innovation offsets effect, but the benefits from the innovation offsets effect do not appear to be large enough to outweigh the compliance costs effect for the regulated firms.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Environmental Regulation and Firm Exports: Evidence from a Quasi-Natural Experiment in China

Zhang

Yuhai

et al. 2022

Sustainability

View full text Add to dashboard Cite

show abstract

“…Carbon leakage refers to the increase in GHG emissions in third countries in response to domestic climate policies. It can occur when GHG-intensive production relocates to other countries with less stringent policies in place, or when domestic firms lose market share as a consequence of increased costs for consumers (Verde 2020). The upshot is that global GHG emissions are not reduced and could even increase.…”

Section: Box 1 What Is Carbon Leakage?mentioning

confidence: 99%

Swedish policy positions and perspectives on CBAM

Gallegos¹,

Asselt²,

Suljada³

2022

View full text Add to dashboard Cite

The European Commission's proposal for a Carbon Border Adjustment Mechanism (CBAM) puts forward a policy measure to prevent carbon leakage from domestic energy-intensive and trade-exposed industries by leveling production costs of European and international markets. From the perspective of Swedish climate ambitions and industry competitiveness, four important elements of the proposal include (1) the phase-out of free allowances, (2) the exclusion of exports from its coverage, (3) the scope of emissions covered, and (4) crediting third countries' climate policies. This discussion brief explores the various options for these issues, as well as Swedish stakeholders' views on them.The Carbon Border Adjustment Mechanism (CBAM) is a climate policy measure put forward by the European Commission under the European Green Deal. The measure aims to address the displacement of greenhouse gas emissions of energy-intensive industries due to the introduction of climate policies, or "carbon leakage" (see Box 1).According to the proposal, the CBAM would impose an embedded carbon price -based on the average weekly EU Emissions Trading System (EU ETS) auctioning price -on imported goods from specific sectors in the form of import certificates. This would effectively level the production costs of the covered sectors in Europe and internationally. By addressing the risk of carbon leakage, the CBAM aims to safeguard the reduction of global GHG emissions within its scope. Though the ultimate objective of the CBAM is to cover a wide range of products, the current proposal covers a limited number of sectors deemed to be at high risk of carbon leakage and for which the introduction of the measure is administratively and technically feasible. The selected sectors are iron and steel, cement, aluminum, fertilizers, and electricity, with extended coverage of 30 products down the value chain.To unpack the multiple layers of the CBAM proposal and allow for an analysis of their implications, it is necessary to identify the multiple and often intertwined elements of its scope and affected stakeholders. The existing literature points to at least the following elements (Marcu et al., 2020(Marcu et al., , 2021: policy mechanism or design, coverage of trade flows (i.e. imports, exports), geographic scope, sectoral scope, emissions scope, determination of embedded emissions (i.e. actual emissions, default values), calculation of the adjustment, use of revenue, phase-out of free allowances, and administration.The following sections focus on four elements that have generated significant debate after the Commission's proposal and during the consultation and feedback period, Swedish policy positions and perspectives on CBAM SEI discussion brief

show abstract

“…A growing literature examines the effects of the EU ETS on carbon leakage and various indicators of competitiveness; see Verde (2020) for a comprehensive survey. He concludes that so far, there is no evidence of the EU ETS having resulted in a loss of competitiveness or in carbon leakage.…”

Section: Effects Of the Eu Ets And Other Country-specific Policiesmentioning

confidence: 99%

Revisiting Carbon Leakage

Wingender¹,

Misch²

2021

IMF Working Papers

View full text Add to dashboard Cite

This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations along two lines. First, we exploit recently published data on sector-country-specific changes in energy prices to identify changes in domestic carbon emissions and other flows (rather than the historically limited variation in carbon prices or adherence to international climate agreements). Second, we present a simple accounting framework to derive carbon leakage rates from reduced-form regressions in contrast to existing papers, thereby making our results directly comparable to model-based estimates of carbon leakage. We show that carbon leakage rates differ across countries and could be larger than what existing estimates suggest.

show abstract

The Impact of the Eu Emissions Trading System on Competitiveness and Carbon Leakage: The Econometric Evidence

Cited by 69 publications

References 54 publications

Environmental Regulation and Firm Exports: Evidence from a Quasi-Natural Experiment in China

Environmental Regulation and Firm Exports: Evidence from a Quasi-Natural Experiment in China

Swedish policy positions and perspectives on CBAM

Revisiting Carbon Leakage

Contact Info

Product

Resources

About