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
Understanding what leads firms to reduce their greenhouse gas emissions is crucial to manage the green industrial transformation. One channel for emission reductions could consist in adjustments in product portfolios. The patterns in German administrative micro-data however are not in line with existing theory: We observe a re-shuffling within the most emissions-intensive products rather than a shift away from them. We also find that firms with wider product scopes are more emissions-intensive than others – even though they should be the most productive firms according to existing theory. To make sense of these findings, we extend the canonical model of product portfolio choice to include energy as a factor of production. In our model framework, heterogeneous energy prices between firms can explain the unexpected empirical patterns we observe...
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...
WhyAbate when you can Generate? Climate Policies and Electricity Prices (with Kathrine von Graevenitz), ZEW Discussion Paper No. 22-038, R&R at AEJ: Economicy Policy
Climate policies often imply increasing electricity prices. We provide causal evidence on the response of industrial plants to electricity price increases using detailed administrative data. Rising electricity prices led German manufacturing plants to reduce their electricity procurement with a short-run own-price elasticity of -0.4 to -0.6. They however also incentivised large users to replace electricity procurement with onsite generation. As many industrial onsite generators are not covered under the EU ETS, this implies leakage effects...
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...
Changing the Geography of Emissions and Production through Industrial Policy in Europe (with Kathrine von Graevenitz and Philipp Richter)