Is it possible to reduce CO2 emissions without hurting jobs or a company’s financial performance?
There have been concerns that carbon pricing policies to reduce emissions would weaken industry competitiveness
But, according to two OECD studies, it is possible to reduce CO2 emissions by 10% without hurting jobs or companies’ financial performance.
This study estimates the effect of energy prices and carbon taxation on firms’ environmental and economic performance. The analysis uses data on 8 000 firms that are representative of the French manufacturing sector and observed during 2001-2016. The paper shows that (i) even though a 10% increase in energy prices causes a decline in energy use by 6% at the firm level, this increment has no effect on net employment at the industry level, but it motivates a reallocation of production and workers from energy intensive to energy-efficient firms. Our conclusion calls for complementary labour market policies that minimise costs on affected workers and ease between-firms adjustments in employment.
Read the blog post: Carbon tax, emissions reduction and employment: Some evidence from France
There have been concerns that the EU ETS’ main policy to reduce emissions would weaken European industry competitiveness. But, according to OECD findings, it is possible to reduce CO2 emissions by 10% without hurting jobs or companies’ financial performance.
This paper investigates the joint impact of the European Union Emissions Trading System (EU ETS), Europe’s main climate change policy, on carbon emissions and economic performance of regulated companies. The impact on emissions is analysed using installation-level carbon emissions from national Polluting Emissions Registries from France, Netherlands, Norway and the United Kingdom complemented with data from the European Pollutant Release and Transfer Register (E-PRTR).
The impact on firm performance is analysed using firm-level data for all countries covered by the EU ETS. A matching methodology exploiting installation-level inclusion criteria combined with difference-in-differences is used to estimate the policy’s causal impact on installations’ emissions and on firms’ revenue, assets, profits and employment.