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The competitiveness effects of the EU climate policy

Author

Listed:
  • Peterson, Sonja
  • Klepper, Gernot
Abstract
To show global leadership and to foster the international negotiations for a long term international climate regime the EU has decided to reduce its GHG emissions by 20% relative to 1990 until the year 2020. These reductions will even rise to 30% if there is an international agreement committing other developed countries to comparable emission reductions and economically more advanced developing countries to contributing adequately according to their responsibilities and respective capabilities. At the same time, the European council started in 2000 the so-called Lisbon process which established the issue of competitiveness as a priority area for EU policy and there is some concern about the competitiveness effects of EU climate policy. We use the multi-sector, multi-region computable general equilibrium model DART to assess the impacts of the recent EU climate policy proposals for the competitiveness of the European economies and specific sectors. There are three general insights. First, the effects of EU climate policies on competitiveness are relatively small if one leaves out the fossil fuels themselves the consumption of which is supposed to be reduced anyway. The losses of the energy intensive industries are compensated by gains in other manufacturing sectors. Secondly, there is no uniform effect across the member states of the EU. It is the special circumstances in side the different sectors within the member states that determine whether a sector wins or looses competitiveness. And finally, the changes in competitiveness are strongly influenced by the choice of the particular policy design. A more efficient instrument choice not only reduces the competitiveness effects it also distributes the burden more equally.

Suggested Citation

  • Peterson, Sonja & Klepper, Gernot, 2008. "The competitiveness effects of the EU climate policy," Kiel Working Papers 1464, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1464
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    References listed on IDEAS

    as
    1. Klepper, Gernot & Peterson, Sonja, 2004. "The EU emissions trading scheme allowance prices, trade flows and competitiveness effects," Open Access Publications from Kiel Institute for the World Economy 3270, Kiel Institute for the World Economy (IfW Kiel).
    2. Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects," Working Papers 2004.49, Fondazione Eni Enrico Mattei.
    3. Jenkins, Rhys, 1998. "Environmental Regulation and International Competitiveness: A Review of Literature and Some European Evidence," UNU-INTECH Discussion Paper Series 1998-01, United Nations University - INTECH.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Bosello, Francesco & Davide, Marinella & Alloisio, Isabella, 2016. "Economic Implications of EU Mitigation Policies: Domestic and International Effects," EIA: Climate Change: Economic Impacts and Adaptation 234938, Fondazione Eni Enrico Mattei (FEEM).
    2. Kretschmer, B. & Peterson, S. & Ignaciuk, A., 2010. "Integrating Biofuels into the DART Model: Analysing the Effects of the EU 10% Biofuel Target," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45, March.
    3. Kretschmer, Bettina & Peterson, Sonja & Ignaciuk, Adriana M., 2008. "Integrating biofuels into the DART model," Kiel Working Papers 1472, Kiel Institute for the World Economy (IfW Kiel).
    4. Mehdi Abbas, 2011. "Carbon border adjustement, trade and climate governance : issues for OPEC economies," Post-Print halshs-00617923, HAL.
    5. Robert Beestermöller & Ulrich Fahl, 2013. "Impacts of German energy policies on the competitiveness of national energy intensive industries," EcoMod2013 5653, EcoMod.
    6. Kretschmer, Bettina & Narita, Daiju & Peterson, Sonja, 2009. "The economic effects of the EU biofuel target," Open Access Publications from Kiel Institute for the World Economy 32984, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Post Kyoto; EU; emission trading; competitiveness;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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