Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization

Moore, Nils aus dem; Grosskurth, Philipp; Themann, Michael

doi:10.1016/j.jeem.2018.11.003

Cited by 62 publications

(20 citation statements)

References 44 publications

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“…For a certain subset of regulated firms, Aus dem Moore et al . () find – consistent with the hypothesis of investment leakage – that very little investment in fixed capital was undertaken in response to the EU ETS. These results quite clearly indicate that some investment leakage has taken place, but it has been limited to specific sectors.…”

Section: Discussionsupporting

confidence: 72%

“…Despite its special relevance, however, only two studies (Borghesi et al ., ; Koch and Mama, ), out of all those that we found, analyse the effects of the EU ETS on regulated firms’ foreign direct investments (FDIs). Conceptually, closely related to the same studies is a third one (Aus dem Moore et al ., ) which looks at the effects of the EU ETS on regulated firms’ holdings of tangible fixed assets, as an (indirect) indicator for industrial relocation.…”

Section: Mapping the Literaturementioning

confidence: 99%

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

Verde

2020

Journal of Economic Surveys

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This paper carefully surveys the econometric literature that tests for competitiveness effects and related carbon leakage caused by the EU Emissions Trading System (EU ETS). The results of this literature tell us that to date there is no evidence of the EU ETS having had widespread negative or positive effects on the competitiveness of regulated firms, nor is there evidence of significant carbon leakage. However, the paper also identifies three important caveats to this general conclusion. Firstly, the evidence we have still largely refers to the first two trading periods, namely Phases I (2005–2007) and II (2008–2012). Secondly, some heterogeneity of estimated effects is observed, but patterns, notably sectoral patterns, hardly emerge. Thirdly, very little explored is whether the EU ETS has had long‐term effects on the economy via investment leakage or firm dynamics. Further empirical studies investigating these long‐term effects are particularly desirable.

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Section: Discussionsupporting

confidence: 72%

Section: Mapping the Literaturementioning

confidence: 99%

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

Verde

2020

Journal of Economic Surveys

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“…In other words, carbon price volatility reduces the incentives to invest in clean projects, as risk-averse investors value stable returns higher than volatile returns. 25…”

mentioning

confidence: 99%

“…To approximate the magnitude of the effect, consider how carbon price volatility alters the costs of capital of a green investment project. Taking electricity generation as an example, Aurora Energy Research (2018 [25]) reports 1.5 percentage points lower capital costs for investment in renewable energy in a scenario with a carbon price floor compared to a scenario without. Roques (2018 [26]) estimates that an insurance against a low-carbon price reduces capital costs for investment in renewable energy projects by about 1 percentage points.…”

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confidence: 99%

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Carbon pricing design: Effectiveness, efficiency and feasibility

Flues¹,

Dender²

2020

OECD Taxation Working Papers

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OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works. Comments on Working Papers are welcomed, and may be sent to the Centre for Tax Policy and Administration, OECD,

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Do investors care about carbon emissions under the European Environmental Policy?

Mama

Mandaroux

2021

Bus Strat Env

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We explore the extent to which cross-sectional differences in carbon dioxide emissions matter for future valuations of European firms regulated under the European Union Trading Scheme (EU ETS). Counterintuitively, we find that firm-level emissions share a robust concave relationship with future market valuations. Initially, market valuations increase in emissions potentially because emissions are considered essential for normal production processes; however, the valuation premium decreases and becomes negative beyond a threshold of emissions due to looming regulatory and transition risks. Firms in the lower quartile of emissions trade at an average premium of 2.42%, against a 20.78% discount in the upper quartile (the peak is 3.85%). Importantly, the concave relationship obtains only in smaller firms with lower analyst coverage and lower institutional ownership, and the predictive power of emissions is limited to firms with no reported investments in clean technology. Therefore, policymakers might consider promoting the development and diffusion of green technologies.

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Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization

Cited by 62 publications

References 44 publications

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

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

Carbon pricing design: Effectiveness, efficiency and feasibility

Do investors care about carbon emissions under the European Environmental Policy?

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