Total emissions have decreased in the Finnish economy, and especially at the manufacturing industry. The purpose of this research project is to examine the association between emissions and evolution of manufacturing sector in Finland. In particular, we examine the extent to which the total emissions have changed within manufacturing firms, and how the firm restructuring, as well as economic cycles are related to climate change. This information is important for achieving Finland’s stricter emission reduction targets in the future.
In the first part of the project, we examine the role of firm restructuring (e.g., continuing firms, new firms and exiting firms) in shaping the overall emissions in Finland. This is important because new evidence on the types of manufacturing firms that have met their emission reduction targets is needed. Emission targets will be tightened in the future, and the importance of public subsidies will also be emphasized. We need detailed information on the types of manufacturing firms that should be given more attention.
The second part of the project examines the effect of business cycles on emissions. We hypothesize that manufacturing firms are generally more exposed to economic shocks and will be therefore financially more constrained to invest in new technologies in reducing emissions. This could have far-reaching effects on mitigating climate change in Finland. This should be taken into account when discussing on public subsidies targeted to manufacturing firms in enhancing their investments at different phases of the economic cycle.