The Effects of EU Climate Legislation on Business Competitiveness

Author
Mark Kenber, Oliver Haugen, Madeleine Cobb
Source
http://www.theclimategroup.org/about/publications
Publisher
The Climate Group
Publication date
September 2009
Type
Reports
Industry
Transport
Oil, Gas & Mining
Engineering & Construction
Energy
Chemicals
Category
Environment/Climate Change
Corporate Responsibility and Public Policy
Language
English
Link
The Effects of EU Climate Legislation on Business Competitiveness
Free/Pay for content
Free
 
EffectsEU Climate LegislationDiscussions in the United States around the introduction of a cap-and-trade system to cut greenhouse gas emissions have reignited debates about the potential effects of such measures on industrial competitiveness and job security, echoing concerns voiced a few years earlier in Europe. This report presents qualitative evidence of the analysis of the short-term impact of the EU climate legislation, based on interviews with a cross- section of leading, trade-exposed companies.

The key findings are:

  • The EU ETS has not resulted in significant costs to business to date, especially when compared to the impact of other factors such as energy price fluctuations and the economic downturn.
  • So far there has been no major impact on companies’ competitivess: they have not relocated their operations, reduced their workforce, or lost market share as a result of carbon pricing.
  • One exception is the aluminum smelter, due to the predominance of electricity costs in its overall cost structure.
  • Company decision-making has taken carbon pricing on board, but climate legislation has not led to fundamental shifts in strategy.
  • Companies have improved their monitoring and reporting of emissions and realized energy efficiency gains.
  • While they have fared well so far relative to their non-EU competitors, some heavy industrial emitters fear possible competitive impacts in the third phase of the EU ETS, beginning in 2013.
Overall, the study’s empirical findings agree with much of the recent literature on the subject. They also help alleviate the oft-cited concern that climate policies can lead to significant costs to business and a corresponding loss of market share to companies in countries with laxer environmental laws . To be sure, firms with operations in Europe have made some adjustments since the introduction of the EU ETS and EU climate policies, but their concerns about loss of competitiveness have to date either been unfulfilled or assuaged through policy design
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