European Economy. Economic Papers
Manfred Bergmann, Andreas Schmitz, Mark Hayden, Katri Kosonen (European Commission)
Imposing a unilateral carbon constraint on European energy-intensive industries and its impact on their international competitiveness – data & analysis(5 MB)
(European Economy. Economic Papers. 298. December 2007.
Brussels. pdf. 113pp. Tab. Graph. Bibliogr. )
KC-AI-07-298-EN-N ISBN: 978-92-79-04651-3 ISSN: 1725-3187
We examine the implications of EU climate policy for energy intensive industries by calculating, for a range of energy-intensive processes and products, the product price increases that would be required to maintain unit profits at present levels, based on likely values of allowance prices in the European Union Emissions Trading Scheme up to 2020.
We also investigate in how far it would be possible for the affected activities to pass through cost increases to their clients, by analysing their exposure to domestic and international competition. It concludes that the sectors analysed are typically relatively highly concentrated (sometimes even at the world level) and form parts of vertically integrated and locally-clustered value chains. This tends to increase market entry and exit barriers and, thus, to reduce the risk of large output losses and delocalisation.