Carbon Competitiveness is Shaped in Firms

Ville Kaitila

No 123, ETLA Brief from The Research Institute of the Finnish Economy

Abstract: Abstract Greenhouse gas (GHG) emissions are now one factor that affects firms’ broader competitiveness. We analyse the development of emission intensities – GHG emissions relative to value added produced – at the level of industries in 2008–2020 in Europe. Finland’s carbon competitiveness, as measured by relative GHG-emission intensities, is average but varies by industries. Competitiveness is good in most industries, but it falls behind the EU27 average in agriculture, paper industry, construction, and land transportation, and behind Sweden and/or Germany also in basic metals, energy industry, and sewerage and waste management. We find that labour productivity is negatively associated with the level of and changes in GHG-emission intensities in Europe. Furthermore, higher investments, higher carbon prices within the ETS mechanism, and higher environmental taxes are associated with lower emission intensities. Consequently, policies that promote productivity growth and financial incentives to decrease emissions are likely to help reach lower emissions. See also Etla Report no 139 Labour Productivity and Development of Carbon Competitiveness: Industry-Level Evidence from Europe.

Keywords: Greenhouse gas emissions; GHG-intensity; Carbon competitiveness; Productivity; ETS (search for similar items in EconPapers)
JEL-codes: C23 O44 Q54 Q56 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2023-05-22
New Economics Papers: this item is included in nep-agr, nep-eff, nep-ene and nep-env
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