Conference Agenda

This paper provides the first comprehensive analysis of how firms in emerging economies respond to carbon taxation, leveraging detailed administrative data from South Africa – a potential trailblazer for other developing countries with limited state capacity amid the growing global push for carbon pricing. We examine the dynamic impacts of the carbon tax on firm-level outcomes – such as profits, sales, capital, and labor inputs – across manufacturing and mining firms, which are key sectors in the context of the carbon tax. Contrary to concerns that carbon taxes may hinder economic growth or reduce employment, our findings show no evidence of negative average impacts on firm performance or jobs. However, this overall result masks significant heterogeneity in the tax’s effects across sectors, driven by the sector-specific design elements of the South African carbon tax. Firms expecting higher effective tax rates may have intensified their use of emission-intensive machinery and depreciated capital in anticipation of the tax. This behavior appears to stem from firms resolving regulatory uncertainty or seeking to recover costs from stranded assets.

This paper investigates the environmental and economic effects of carbon taxation in Sweden, and their implications for labor market inequality. Using matched employer-employee data from the Swedish registers for the years 2004-2018, I estimate the effects of a reform that increased the stringency of the tax for a subset of firms in the manufacturing sector. Using a difference-in-difference framework, I find that the reform significantly reduced emissions among treated firms. However, it also reduced the employment of workers without a high school degree. In addition, I find that negative employment impacts are concentrated among emission-intensive firms, which face the largest cost increases when carbon tax rates rise. The results show that carbon taxation, while effective at reducing emissions, may have strongly heterogeneous employment impacts, and that complementary policies might be needed to address labor market inequalities when implementing climate policy.

While the EU-wide carbon price has already been adopted for the buildings and transport sectors with ETS 2, detailed analyses of the macroeconomic and distributional effects (both within and be-tween countries) are scarce. We use the macroeconomic model ADAGIO to estimate the effects of EU-wide carbon pricing. For two case study countries (Austria and Poland), which differ considera-bly in terms of the structure of their energy systems and economies, results are discussed along with the EU 27. We focus on the macroeconomic and GHG effects of the introduction of a carbon price under various revenue recycling options. Moreover, the distributional effects of the policy scenarios are investigated. The introduction of carbon pricing leads to negative macroeconomic ef-fects for the EU 27, which vary in level depending on the recycling option as well as the assumed model closure and exchange rates. For Austria and Poland, slightly positive macroeconomic effects are found in some simulations. Additionally, our analysis confirms the efficiency-equity trade-off in the context of carbon pricing with respect to different revenue recycling options

This paper studies the relationship between climate policy, market power and innovation. Using linked data on patent applications and firms’ balance sheets, I document five empirical facts, some of them novel to the literature. Most importantly, I find that firms with a higher degree of market power are, on average, more invested in dirty technologies than their direct competitors. These findings motivate me to develop a model of directed technical change and the environment with strategic innovation incentives, incorporating all five facts. Firms compete for market power by innovating in clean or dirty technologies. A carbon tax can decrease the effective technological distance between two competitors, and thus affects market power and both the intensity and the direction of innovation. In the calibrated model, the increase of a carbon tax lowers aggregate markups and increases clean innovation while also increasing dirty innovation by some firms.