The Competitiveness Impacts of Climate Change Mitigation Policies

Abstract

The pollution haven hypothesis suggests that unilateral domestic emission mitigation policies could cause adverse "competitiveness" impacts on domestic manufacturers as they lose market share to foreign competitors and relocate production activity -and emissions -to unregulated economies. We construct a precise definition of competitiveness impacts appropriate for climate change regulation that can be estimated exclusively with domestic production and net import data. We use this definition and a 20+ year panel of 400+ U.S. manufacturing industries to estimate the effects of energy prices, which is in turn used to simulate the impacts of carbon pricing policy. We find that a U.S.-only $15 per ton CO2 price will cause competitiveness effects on the order of a 1.0 to 1.3 percent decline in production among the most energy-intensive manufacturing industries. This amounts to roughly one-third of the total impact of a carbon pricing policy on these firms" economic output.

The Effects of Environmental Regulations on the Manufacturing Industry’s Performance: A Comparison of Green and Non-Green Sectors in Korea

“…This study contributes to the environmental economic field in which studies that inspect the link between environmental policies and their effect on the economy are scarce outside the US. Environmental policies covered in literature using US data include Clean Water and Clean Air Acts [10,11], Clean Air Act Amendment [7], and Cross-State Air Pollution Rule [12]. Our empirical results suggest that employment and labor productivity were impacted by stricter environmental standards under LCGG in Korea and their effects were asymmetric depending on the industry's features.…”

Estimating state and sub‐state economic effects of a carbon dioxide tax policy: An application of a new multi‐region energy‐economy econometric model

“…Ho et al. () and Aldy and Pizer () also find a CO 2 tax‐induced slowdown in economic productivity, competitiveness and profits – especially in carbon‐intensive industries – due to a $10–$15 per ton carbon tax. The former employs the 2002 Department of Commerce input‐output tables to construct a series of partial and general equilibrium frameworks, while the latter uses regression analysis to estimate the supply and demand elasticities for energy with estimates that are highly disaggregated by industry (400+ sectors).…”

Optimization of Ship Speed and Fleet Deployment Under Carbon Emissions Policies for Container Shipping

“…A few studies have identified the impacts of carbon emissions policies on the shipping industry. There are two main potential carbon emissions policies available: the cap-and-trade programme and the carbon tax (Aldy, Pizer 2015;Carl, Fedor 2016;Yang et al 2017). Although the cap-and-trade programme policy is a promising mechanism to reduce CO 2 (Miola et al 2011), an appropriate carbon emissions cap is difficult to establish, because the associated CO 2 emissions are uncertain.…”