The Competitiveness Impacts of Climate Change Mitigation Policies

Joseph Aldy and William Pizer

Journal of the Association of Environmental and Resource Economists, 2015, vol. 2, issue 4, 565 - 595

Abstract: The pollution haven hypothesis suggests that unilateral domestic climate change mitigation policy would impose significant economic costs on carbon-intensive industries, resulting in declining output and increasing net imports. In order to evaluate this hypothesis, we undertake a two-step empirical analysis. First, we estimate how production and net imports change in response to energy prices using a 35-year panel of approximately 450 US manufacturing industries. Second, we use these estimated relationships to simulate the impacts of changes in energy prices resulting from a $15 per ton carbon price. We find that energy-intensive manufacturing industries are more likely to experience decreases in production and increases in net imports than less-intensive industries. Our best estimate is that competitiveness effects--measured by the increase in net imports--are as large as 0.8% for the most energy-intensive industries and represent no more than about one-sixth of the estimated decrease in production.

Date: 2015
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Citations: View citations in EconPapers (114)

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Related works:
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2015)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2014)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2011)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2011)
Working Paper: The Competitiveness Impacts of Climate Change Mitigation Policies (2011)
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