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Searching for Carbon Leaks in Multinational Companies

Antoine Dechezleprêtre, Caterina Gennaioli, Ralf Martin, Mirabelle Muûls and Thomas Stoerk

No 97, Working Papers from Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research

Abstract: Does unilateral climate change policy cause companies to shift the location of production, thereby creating carbon leakage? In this paper, we analyse the effect of the European Union Emissions Trading System (EU ETS) on the geographical distribution of carbon emissions of multinational companies. The empirical evidence is based on unique data for the period 2007-2014 from the Carbon Disclosure Project, which tracks emissions of multinational businesses by geographical region. Because they already operate from multiple locations, multinational firms should be the most prone to carbon leakage. Our data includes regional emissions of 1,122 companies, of which 261 are subject to EU ETS regulation. We find no evidence that the EU ETS has led to a displacement of carbon emissions from Europe towards the rest of the world, including in countries with no climate policy in place and within energy-intensive companies. A large number of robustness checks confirm this finding. Overall, the paper suggests that modest differences in carbon prices between countries do not induce carbon leakage.

Keywords: Carbon leakage; EU-ETS; CO2 emissions; multinational companies. (search for similar items in EconPapers)
JEL-codes: H23 Q53 Q54 Q58 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
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http://webspace.qmul.ac.uk/pmartins/CGRWP97.pdf

Related works:
Working Paper: Searching for Carbon Leaks in Multinational Companies (2019) Downloads
Working Paper: Searching for carbon leaks in multinational companies (2014) Downloads
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