The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms

51 Pages Posted: 3 Feb 2014 Last revised: 29 Mar 2014

See all articles by Sebastian Petrick

Sebastian Petrick

German Institute for Economic Research (DIW Berlin); Kiel Institute for the World Economy

Ulrich J. Wagner

University of Mannheim - Department of Economics

Date Written: March 28, 2014

Abstract

We estimate the causal impact of the EU Emissions Trading Scheme on manufacturing firms using comprehensive panel data from the German production census. Semiparametric matching estimators yield robust evidence that the policy caused treated firms to abate one fifth of their CO2 emissions between 2007 and 2010, relative to non-treated firms. This reduction was achieved predominantly by improving energy efficiency and by curbing the consumption of natural gas and petroleum products, but not electricity use. We find no evidence that emissions trading lowered employment, gross output or exports of treated firms.

Keywords: EU ETS, emissions trading, climate policy, policy evaluation, microdata

Suggested Citation

Petrick, Sebastian and Wagner, Ulrich J., The Impact of Carbon Trading on Industry: Evidence from German Manufacturing Firms (March 28, 2014). Available at SSRN: https://ssrn.com/abstract=2389800 or http://dx.doi.org/10.2139/ssrn.2389800

Sebastian Petrick

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

Ulrich J. Wagner (Contact Author)

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

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