Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 565: The Effect of EU-ETS on Swedish Industry's Investment in Carbon Mitigating Technologies

Åsa Löfgren (), Markus Wråke, Tomas Hagberg and Susanna Roth
Additional contact information
Åsa Löfgren: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GOTHENBURG, Sweden

Abstract: The European Union’s Emissions Trading Scheme (EU-ETS) is so far the largest emissions trading system in the world. It covers about 12000 installations, representing approximately 45% of EU emissions of CO2, with the objective to establish a carbon price creating incentives for cost efficient reductions of emitted green house gases. In this article we perform an expost analysis where we use detailed firm level data to analyse the effect of the EU ETS on firms’ investment decisions in carbon reducing technologies. In addition we draw on the existing literature and control for firm specific characteristics that has previously been shown to be determinants of firms’ investment in clean technology.

Keywords: investment; technological adoption; clean technology; EU ETS; firm behavior; climate change; carbon

JEL-codes: D21; O33; Q53

37 pages, April 2, 2013

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