Climate Policies and Electricity Prices - Why Abate when you can Generate? (with Kathrine von Graevenitz), ZEW Discussion Paper No. 22-038, conditionally accepted at AEJ: Economicy Policy
Climate policies often lead to stronger increases in electricity prices than in the prices of fossil fuels. Using administrative micro data, we provide causal evidence that these increases in electricity prices drive manufacturing plants into on-site generation of electricity. As many industrial onsite generators are not covered under the EU ETS, this implies leakage effects...
Rising Energy Prices without Falling Consumption? The Role of Energy Price Dispersion in a Multi Product World (with Kathrine von Graevenitz and Joscha Krug), ZEW Discussion Paper No. 25-047
Climate and energy policies have led to a right shift in the distriution of energy prices that manufacturing firms face. Yet, we document simultaneous increases in aggregate energy intensity of German manufacturing. Expanding a canonical model of product portfolio choice, we provide an explanation for this pattern: As energy price increases are heterogeneous across firms, in equilibrium, the production of energy intensive products moves from clean firms facing high energy prices to rather dirty firms facing lower energy prices. We provide suggestive evidence that supports this reshuffling mechanism...
Is Germany Becoming the European Pollution Haven? (with Kathrine von Graevenitz and Philipp Richter), ZEW Discussion Paper No. 23-069
What is the role of regulatory differences with foreign economies for the domestic emissions development? We analyse this question at the example of carbon emissions in German industry, calibrating a Melitz-type trade model. We find that the implicit carbon price paid on emissions, reflecting energy and carbon prices in addition to command-and-control measures, decreased from 2005 to 2019 in most industrial sectors – both in Germany and other EU countries. Yet, the trend has been more pronounced in Germany than in the rest of the EU. Had the EU experienced the same decrease in implicit carbon prices as Germany, German emissions would have been substantially lower. Germany seems to have increasingly become a pollution haven...
Do Climate Policies Lead to Outsourcing? ZEW Discussion Paper No. 23-070
When climate policy stringency differs across countries, firms might in response outsource emission intensive processes abroad. I combine micro-data from the German Manufacturing Census with firm-level import data. I show that German industrial firms increasingly rely on imports. Also, when energy prices rise, firms tend to increase imports. Despite this descriptive evidence, in a quasi-experimental setup, I don't find any evidence in line with outsourcing. Firms subject to a sudden drop in electricity prices subsequently do not buy less intermediate materials, either domestically or abroad, or increase their value added relative to similar control firms...
What drives Carbon Emissions in German manufacturing: Scale, Technique or Composition? (with Kathrine von Graevenitz), Environmental and Resource Economics
Emissions of local pollutants from industry have declined across many developed countries over the last decades. For carbon emissions, this is not true. We apply workhorse decomposition methods using German administrative micro data to understand why. Using the exceptional granularity of the data, we show how effects might be underestimated when using data at the sector level as compared to the product level. We complement decomposition methods at the product level with plant level decompositions. Surprisingly, emission intensities of production have increased - both within products, and within plants...
Energy Use Patterns in German Manufacturing from 2003 to 2017 (with Kathrine von Graevenitz), Jahrbücher für Nationalökonomie und Statistik
Energy Use patterns in German manufacturing have changed substantially over the years. In particular, we observe a strong trend towards more onsite generation and an increase in the usage of natural gas. How have energy intensities developed? How large are within-sector heterogeneities? Presenting descriptive statistics, we take stock of recent developments in the energy use patterns of German manufacturing...
The Net Zero Transition in Manufacturing: Regulatory Stringency, Competitiveness, and Industrial Policy (with Kathrine von Graevenitz), commissioned for the Oxford Review of Economic Policy
Changing the Geography of Emissions and Production through Industrial Policy in Europe (with Kathrine von Graevenitz and Philipp Richter)