Labour Productivity and Development of Carbon Competitiveness: Industry-Level Evidence from Europe

Ville Kaitila

No 139, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract A drastic decline in global greenhouse gas (GHG) emissions is needed to stop the climate change. This requires a variety of political and market mechanisms. Europe is globally at the forefront among the industrialised countries in reducing its GHG emissions. We analyse the development of emission intensities – GHG emissions relative to value added produced – and use a panel data to further our understanding of their evolution at the level of industries in 2008–2020 in Europe. We find that labour productivity is negatively associated with changes in GHG-emission intensities. Furthermore, higher investments, higher carbon prices within the ETS mechanism, and higher environmental taxes are associated with lower GHG-emission intensities. Consequently, policies that promote productivity growth and financial incentives to decrease emissions lead to lower emissions. Finland’s carbon competitiveness, as measured by relative GHG-emission intensities, varies by industries. See also Etla Brief no 123 Carbon Competitiveness is Shaped in Firms (in Finnish).

Keywords: Greenhouse gas emissions (GHG); 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: 28 pages
Date: 2023-05-22
New Economics Papers: this item is included in nep-eff, nep-ene and nep-env
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