The Impacts of the Climate Change Levy on Manufacturing: Evidence from Microdata

We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.

The Impacts of the Climate Change Levy on business: Evidence from Microdata

We estimate the impacts of the Climate Change Levy (CCL) on manufacturing plants using panel data from the UK production census. Our identification strategy builds on the comparison of outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a Climate Change Agreement (CCA). Exploiting exogenous variation in eligibility for CCA participation, we find that the CCL had a strong negative impact on energy intensity and electricity use. We cannot reject the hypothesis that the tax had no detrimental effects on economic performance and on plant exit.Climate policy, carbon tax, United Kingdom, manufacturing, impact assessment

Anatomy of a Paradox: Management Practices, Organisational Structure and Energy Efficiency

This paper presents new evidence on managerial and organizational factors that explain firm level energy efficiency and TFP. We interviewed managers of 190 randomly selected manufacturing plants in the UK and matched their responses with official business microdata. We find that 'climate friendly' management practices are associated with lower energy intensity and higher TFP. Firms that adopt more such practices also engage in more R&D related to climate change. We show that the variation in management practices across firms can be explained in part by organizational structure. Firms are more likely to adopt climate friendly management practices if climate change issues are managed by the environmental or energy manager, and if this manager is close to the CEO. Our results support the view that the "energy efficiency paradox" can be explained by managerial factors and highlight their importance for private-sector innovation that will sustain future growth in energy efficiency.climate policy, energy efficiency, firm behavior, management practices, manufacturing,microdata, organizational structure

Industry compensation under recolation risk: a firm-level analysis of the EU emissions trading scheme

When regulated firms are offered compensation to prevent them from relocating, efficiency requires that payments be distributed across firms so as to equalize marginal relocation probabilities, weighted by the damage caused by relocation. We formalize this fundamental economic logic and apply it to analyzing compensation rules proposed under the EU Emissions Trading Scheme, where emission permits are allocated free of charge to carbon intensive and trade exposed industries. We show that this practice results in substantial overcompensation for given carbon leakage risk. Efficient permit allocation reduces the aggregate risk of job loss by more than half without increasing aggregate compensationThe authors gratefully acknowledge financial support from the British Academy (Martin), from the Leverhulme Trust (Muûls) and from the Spanish Government, reference numbers SEJ2007-62908 and ECO2012-31358 (Wagner).10.1257/aer.104.8.2482Publicad

Sex differences in dementia risk and risk factors: Individual‐participant data analysis using 21 cohorts across six continents from the COSMIC consortium

Introduction: Sex differences in dementia risk, and risk factor (RF) associations with dementia, remain uncertain across diverse ethno‐regional groups. Methods: A total of 29,850 participants (58% women) from 21 cohorts across six continents were included in an individual participant data meta‐analysis. Sex‐specific hazard ratios (HRs), and women‐to‐men ratio of hazard ratios (RHRs) for associations between RFs and all‐cause dementia were derived from mixed‐effect Cox models. Results: Incident dementia occurred in 2089 (66% women) participants over 4.6 years (median). Women had higher dementia risk (HR, 1.12 [1.02, 1.23]) than men, particularly in low‐ and lower‐middle‐income economies. Associations between longer education and former alcohol use with dementia risk (RHR, 1.01 [1.00, 1.03] per year, and 0.55 [0.38, 0.79], respectively) were stronger for men than women; otherwise, there were no discernible sex differences in other RFs. Discussion: Dementia risk was higher in women than men, with possible variations by country‐level income settings, but most RFs appear to work similarly in women and men

The impacts of climate change levy on business: evidence from microdata

We estimate the impacts of an energy tax – the Climate Change Levy (CCL) – on the manufacturing sector using panel data from the UK production census. Our identification strategy builds on the comparison of trends in outcomes between plants subject to the CCL and plants that were granted an 80% discount on the levy after joining a so-called Climate Change Agreement (CCA). Since the CCAs stipulate specific targets for energy usage or carbon emissions, this comparison yields a lower bound on the impact of the discount. To address a likely selection endogeneity in CCA participation, we adopt an IV approach that exploits exogenous variation in pollution discharges that determined eligibility for CCA participation. We find robust evidence that CCA participation had a strong positive impact on growth in both energy intensity and energy expenditures. An analysis of fuel choices at the plant level reveals that this effect is mainly driven by stronger growth in electricity use and translates into a positive impact on CO2 emissions. We do not find any statistically significant impacts of the tax on employment, gross output or total factor productivity. We conclude that, had the CCL been implemented at full rate for all businesses, further cuts in energy use of substantial magnitude could have been achieved without jeopardizing economic performance

Policy-makers are often unnecessarily timid in imposing climate change regulations

When governments design policies to reduce firms’ greenhouse gas emissions, are they too lenient on heavy polluters that claim such measures will damage their ability to compete in the global economy? Using European and UK survey data, Ralf Martin, Laure de Preux and Ulrich Wagner assess the UK’s experience with the climate change levy

Climate change policy and business in Europe: evidence from interviewing managers

This report presents new evidence relating to the effects of climate policy in Europe, particularly the European Union Emissions Trading Scheme (EU ETS). The evidence is based on new data from almost 800 phone interviews we conducted with managers in manufacturing plants in six European countries: Belgium, France, Germany, Hungary, Poland and the UK. The interview design follows an innovative method that has recently emerged in the study of management practices and that mitigates well-known biases found in more conventional survey designs such as paper-based or web-based questionnaires. This report describes the interview design in detail and summarises the responses. For further analysis, we link the interview data with company data from a range of secondary sources including transaction data from the official EU ETS registry and performance data from both commercial and government sources. We use the combined data to analyse three aspects of the EU ETS in depth, namely (i) the behaviour of firms in the EU ETS, (ii) the vulnerability of firms in terms of negative impacts on employment and carbon leakage, along with an assessment of how well the proposed EU legislation to protect vulnerable firms does at identifying them, and (iii) alternative criteria for the allocation of free emission permits during the next phase of the EU ETS