Labour Productivity and Development of Carbon Competitiveness: Industry-Level Evidence from Europe

Abstract

A drastic decline in global greenhouse gas (GHG) emissions is needed to stop the climate change. This requires a variety of political and market mechanisms. Europe is globally at the forefront among the industrialised countries in reducing its GHG emissions. We analyse the development of emission intensities – GHG emissions relative to value added produced – and use a panel data to further our understanding of their evolution at the level of industries in 2008–2020 in Europe. We find that labour productivity is negatively associated with changes in GHG-emission intensities. Furthermore, higher investments, higher carbon prices within the ETS mechanism, and higher environmental taxes are associated with lower GHG-emission intensities. Consequently, policies that promote productivity growth and financial incentives to decrease emissions lead to lower emissions. Finland’s carbon competitiveness, as measured by relative GHG-emission intensities, varies by industries.

See also Etla Brief no 123 Carbon Competitiveness is Shaped in Firms (in Finnish).

Information om publikationen

Serie
ETLA Raportit - Reports 139
Datum
22.05.2023
Nyckelord
Greenhouse gas emissions (GHG), GHG-intensity, Carbon competitiveness, Productivity, ETS
ISSN
2323-2447, 2323-2455 (Pdf)
JEL
C23, O44, Q54, Q56
Sidor
28
Språk
Engelska