Carbon intensity and corporate performance: A micro-level study of EU ETS industrial firms

Alienor Cameron and Maria Garrone

No 2024-26, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: To reach its 2050 objective of carbon neutrality, the European Union (EU) must continue to step up its climate efforts, while ensuring the competitiveness of its industries is not harmed. The EU Emission Trading Scheme (ETS) is at the core of the bloc's industrial decarbonization efforts. This paper explores this topic by digging into whether there is a causal relationship between industrial firms' emission intensity and their economic and financial performance. We construct a dataset covering around 1,200 industrial firms covered by the EU ETS' third phase and estimate a novel indicator of volume-based emission intensities for these firms. Applying an IV approach to a within-firm panel model, we find that firms' emission intensity is negatively related to their corporate performance, and that this does not depend on the competitive environment they operate in.

Keywords: EU ETS; heavy industry; emission intensity; corporate performance. (search for similar items in EconPapers)
JEL-codes: D22 H23 L51 Q58 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2024
New Economics Papers: this item is included in nep-eec, nep-eff, nep-ene, nep-env, nep-eur and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2024-26

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