Publikasjon

Carbon pricing, compensation, and competitiveness: Lessons from UK manufacturing

Forfattere: Basaglia, Piero, Elisabeth T. Isaksen, Misato Sato

Publisert: 2025

Sammendrag: Carbon pricing is often paired with compensation to carbon-intensive firms to mitigate the risk of carbon leakage. This paper empirically examines the effects of indirect carbon cost compensation on UK manufacturing firms. Using administrative microdata, we combine difference-in-differences and fuzzy regression discontinuity designs to exploit firm-level eligibility criteria and identify the causal impact of compensation. We find that compensation reduces output contraction but also increases electricity consumption and emissions. These findings highlight a key policy trade-off – while compensation can help protect firms’ competitiveness and reduce leakage risks, it may also delay industrial decarbonization and increase the overall cost of achieving national emission targets.

DOI: 10.1016/j.jeem.2025.103208

Referanse: Basaglia, Piero, Elisabeth T. Isaksen, Misato Sato, 2025, «Carbon pricing, compensation, and competitiveness: Lessons from UK manufacturing», Journal of Environmental Economics and Management, vol 133, 103208

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