Scandinavian Working Papers in Economics

Working Paper Series,
Norwegian University of Life Sciences, School of Economics and Business

No 03-2016: The impacts of the EU ETS on Norwegian plants' environmental and economic performance

Marit E. Klemetsen (), Knut Einar Rosendahl () and Anja Lund Jakobsen ()
Additional contact information
Marit E. Klemetsen: University of Oslo/Statistics Norway, Postal: University of Oslo/Statistics Norway
Knut Einar Rosendahl: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway
Anja Lund Jakobsen: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway

Abstract: This paper examines the impacts of the EU Emissions Trading System (ETS) on the envi- ronmental and economic performance of Norwegian plants. The EU ETS is regarded as the cornerstone climate policy both in the EU and in Norway, but there has been considerable de- bate regarding its eects due to low quota prices and substantial allocation of free allowances to the manufacturing industry. Both quota prices and allocation rules have changed signicantly between the three phases of the ETS. The rich data allow us to investigate potential eects of the ETS on several important aspects of plant behavior. The results indicate a weak tendency of emissions reductions among Norwegian plants in the second phase of the ETS, but not in the other phases. We nd no signicant eects on emissions intensity in any of the phases, but positive eects on value added and productivity in the second phase. Positive eects on value added and productivity may be due to the large amounts of free allowances, and that plants may have passed on the additional marginal costs to consumers.

Keywords: Tradable emissions quotas; emissions intensity; productivity; propensity score matching; dierence-in-dierences

JEL-codes: C23; C54; D22; Q54; Q58

43 pages, February 10, 2016

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