The influence of the fossil fuel and emission‐intensive industries on the stringency of mitigation policies: Evidence from the OECD countries and Brazil, Russia, India, Indonesia, China and South Africa

Abstract

The article assesses the effects of different industrial sectors on the design of marketbased policies that mitigate climate change. It claims that the emission-intensive and fossil fuel industries, especially those exposed to trade, have a negative impact on the stringency of domestic market-based mitigation policies, namely, carbon taxes and Emission Trading Systems (ETS). To address endogeneity between industrial and policy outputs, the empirical analysis resorts to a nontraditional instrumental variable method constructing instruments with heteroskedastic errors in the data. With a dataset that covers 34 countries from 1990 to 2015, the analysis shows that there is a negative and statistically significant association between these industries and policy stringency, albeit in a differentiated way. Whereas the upstream fossil fuel industries have a negative relationship with carbon taxes, the power industry was only negatively associated with ETS. Emission-intensive manufacturers and the downstream fossil fuels industry have a negative effect on both policies. The design and practical applications of each policy explain the disparities; although ETS regulate larger emission-intensive installations such as power plants, carbon taxes tend to impose tariffs on activities that are not necessarily emission-intensive, such as oil extraction or specific fuels. The results, robust to different estimation methods, support that larger industrial outputs are significantly associated with less stringent mitigation policies.

Emissions trading in China: New political economy dynamics

“…The national targets of achieving carbon peak and carbon neutrality ( tandafeng and tanzhonghe , 碳达峰碳中和) may provide momentum for this, but its efforts could still be overshadowed by the fragmented authority framework and ongoing economic challenges. Our analysis resonates with two strands of earlier research published in Environmental Policy and Governance : one on the political economy of emissions trading (Deters, 2019; Skjærseth, 2010; Stevens, 2019; Thomas et al, 2011) and the other on the integration and interactions of environmental governance at different levels of the Chinese government (Schreurs, 2017; Tsang & Kolk, 2010; Zhang et al, 2020).…”

Government Reform, Regulatory Change and Carbon Disclosure: Evidence from Australia

“…While the questions remain over whether the government should intervene to reduce carbon emissions by legislating corporate environmental management activities, the alternative appears to be to leave corporations to regulate themselves in this area. However, the majority of the largest and most powerful corporations are involved in the fossil fuel industry, and numerous studies indicate that they have a vested interest in discrediting the effect of carbon emissions and lobbying against the implementation of stricter government laws [59][60][61]. Despite these multinationals' persistent lobbying, numerous international negotiations and collaborative partnerships have been established over the years to recognise the implications of carbon emissions.…”

Decomposition Analysis of CO2 Emissions Embodied in the International Trade of Russia

“…Studying CO 2 emissions from production and consumption sides is an effective way to show the carbon flow from supply to demand [10,11]. The differences in exporting CO 2 emissions and importing CO 2 emissions will intuitively indicate the influence of the international trade on a country's CO 2 emissions [12][13][14]. With the development of trade globalization, Russia faces a continuous growth in energy production and exports.…”