What drives carbon emissions in German manufacturing: Scale, technique or composition?

Elisa Rottner and Kathrine von Graevenitz

No 21-027, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Drastic emission reductions are necessary to combat climate change. However, despite several climate policies, carbon emissions from German manufacturing have actually increased between 2005 and 2017. In this paper, we provide evidence of how the policy mix overall has affected the German manufacturing sector in its entirety. Using detailed administrative micro-data at the product-level, we decompose changes in carbon emissions between 2005 and 2017 into scale, composition (changes in the mix of goods produced) and technology (emission factors of production) effects. We find that much of the increase in carbon emissions is due to an increase in manufacturing's production scale. Relative to the strong output growth, our analysis reveals a clean-up of manufacturing of 9 %. This clean-up is exclusively due to a shift towards a cleaner product composition from 2011 onwards, while production technique has mostly become dirtier. The results display substantial sectoral heterogeneity and are largely driven by the most energy and emission intensive sectors.

Keywords: Carbon emissions; Climate Policy; Statistical Decomposition; Manufacturing (search for similar items in EconPapers)
JEL-codes: D22 L60 Q41 Q48 (search for similar items in EconPapers)
Date: 2022, Revised 2022
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: What Drives Carbon Emissions in German Manufacturing: Scale, Technique or Composition? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:21027

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