1、 www.esri.ie Working Paper No. 329 November 2009 Climate Policy and Corporate Behaviour Nicola Commins, Sen Lyons, Marc Schiffbauer,aand Richard S.J. Tolb,c Abstract: In this paper, we study the impact of energy taxes and the EU ETS on a large number of firms in Europe between 1996 and 2007. Using c
2、ompany level micro-data, we examine how firms in different sectors were affected by environmental policies. Aspects of behaviour and performance studied include total factor productivity, employment levels, investment behaviour and profitability. On the whole, energy taxes increased total factor pro
3、ductivity and returns to capital but decreased employment, with a mixed effect on investment, for the sectors included in our analysis. However, large sectoral variation is observed, with some industries losing out in terms of productivity and profitability when faced with increased energy taxes, wh
4、ile others benefitted. Corresponding Author: Richard.Tolesri.ie Key words: energy taxes, productivity, investment, firm performance a World Bank, 1818 H Street NW, Washington DC 20015, USA b Institute for Environmental Studies, Vrije Universiteit, Amsterdam, The Netherlands c Department of Spatial E
5、conomics, Vrije Universiteit, Amsterdam, The Netherlands ESRI working papers represent un-refereed work-in-progress by members who are solely responsible for the content and any views expressed therein. Any comments on these papers will be welcome and should be sent to the author(s) by email. Papers
6、 may be downloaded for personal use only. 2Climate Policy and Corporate Behaviour 1. Introduction With increasing emphasis on environmental regulation in the industrial sector in recent years, it is important to understand the impacts of such measures on firm productivity and investment behaviour. W
7、hile much attention has been focused on the environmental benefits of differing climate policies, there is relatively little empirical evidence of their impact on company behaviour. In this paper, we are interested in the effect of energy and carbon taxes on various measures of corporate behaviour a
8、nd performance. Using firm level micro-data, we focus on the influence of these taxes on the employment levels, investment behaviour and productivity of European companies for the years 1996 to 2007. Theory provides conflicting guidance as to the likely effects of environmental regulation and taxes
9、on firm behaviour and performance. Taxes represent additional costs for a firm, and as such would be expected to be a constraint on their production possibilities and thus reduce profits. However, when faced with higher environmental taxes, firms may seek to reduce their costs by locating in “pollut
10、ion havens” or countries where environmental standards or regulatory costs are relatively low. This is known as the pollution haven hypothesis. Other models stress the importance of the availability of clean natural resources as factor inputs, which could help to improve the production possibilities
11、 of firms (factor endowment hypothesis). Equally, technology innovation as a result of increased regulation is also considered a potential outcome. According to the Porter Hypothesis (Porter 1991; Porter notably wearing apparel, textiles, and primary resource sectors. Air transport shows a strongly
12、negative association, with a 10% tax rise being associated with a 15% reduction in employment. Other sectors exhibit weaker positive or negative effects. In this case, the average effect (weighted by sectoral employment shares in Europe) is negative. Overall, then, a marginal increase in energy taxe
13、s is associated with lower employment for this set of sectors in Europe. Air transport also features a large and significant effect in relation to corporate investment (Figure 3 below). In this case the effect is positive, with a hypothetical 10% tax rise being associated with a 20% increase in fixe
14、d investment. Basic metals, refining and water transport also have relatively large positive coefficients, while tobacco has a very large negative association and the recycling and leather sectors have smaller negative coefficients. The average effect, weighted by total sectoral investment, is not s
15、ignificantly different from zero. This implies that energy taxes at 11the margin do not have a statistically significant effect on total investment levels in this sample. -5-4-3-2-10123Air transportBasic metalsWatertransportRefineryOther transport equipmentGasextractionOther machineryElectricityand
16、gasMetal productsPulpandpaperOfficemachineryWood productsChemicalsLandtransportQuarryingMotor vehiclesMediaWaterTextilesElectricalmachineryMedicalinstrumentsFood processingOther manufacturingMetalminingWearing apparelPlasticsRadioequipmentConstructionCementLeatherRecyclingTobaccoWEIGHTED AVERAGE% ch
17、ange ininvestmentFigure 3: Average partial effect of 1% rise in energy taxes on firms investment by sector Our final model examined the association between energy taxes and company profitability, proxied by the return on capital employed. This relationship proves to be positive in most cases, with t
18、he strongest relationship being for air transport. Only a few sectors water transport, refining, wood products, coal and peat extraction, food processing and quarrying having significant negative coefficients. The average effect, weighting sectoral effects by the output shares of these sectors in Eu
19、rope, is positive and statistically significant. This suggests that a marginal increase in energy taxes would increase profitability on average. 12-1.5-1-0.500.511.522.5Air transportGas extractionTobaccoOther manufacturingOfficemachineryCementElectricalmachineryMotor vehiclesLeatherMedical instrumen
20、tsRadioequipmentMetalminingWearing apparelOthertransport equipmentOthermachineryTextilesConstructionBasicmetalsMetalproductsPlasticsLandtransportRecyclingChemicalsMediaWaterElectricityandgasQuarryingFood processingPulpandpaperWood productsRefineryWater transportWEIGHTED AVERAGE%changein returnon cap
21、ital employedFigure 4: Average partial effect of 1% rise in energy taxes on firms return on capital employed by sector We considered whether the sectoral pattern of energy tax effects shown above might be driven by broader sectoral characteristics such as energy intensity or technology intensity. Ho
22、wever, grouping sectors by these classifications did not reveal any obvious association with the tax effects. The impact of energy taxes on TFP, employment, investment and profitability vary by sector even amongst industries which have similar energy and technology use. Other effects Since we have e
23、stimated these models in differences, we only observe effects for factors that vary over time. All models allow for ETS participation effects, and the relevant coefficients are shown in Table 1 below. We find no significant association between ETS participation and employment or investment. However,
24、 both TFP growth and return on capital employed were lower in ETS participant firms, ceteris paribus. For a firm with a TFP growth rate of 2%, participation in the ETS would be associated with 0.12% lower TFP growth. 13Table 1: ETS participation effects Dependent variable ETS effect Robust standard
25、error TFP growth -0.0616* 0.0196 ln(employment) 0.0173 0.0142 ln(investment) 0.00161 0.0249 ln(Return on capital employed) -0.0673* 0.0185 Lower productivity and profitability among ETS firms is consistent with the view that the scheme increased firms costs without inducing significant Porter Hypoth
26、esis effects. With the dataset we are using here, it is not possible to tell whether a different design or level of stringency for the ETS would have changed this conclusion. Finally, we can report a range of secondary results. In the TFP model, sectoral import intensity, national education level an
27、d labour costs were not significant (we had expected the first two factors to have a positive effect on TFP and the third to have a negative effect). Labour cost was, as expected, negative and highly significant in the employment model. Returning to the TFP model, the output gap and electricity pric
28、es both showed highly significant negative effects, which was in line with our expectations. 5. Conclusions In this paper, we study the impact of energy taxes and the EU ETS on a large number of firms in Europe between 1996 and 2007. To the best of our knowledge, we are the first to do so. We estima
29、te the effect on the change in total factor productivity (a proxy for technological progress), on employment, on investment, and on the returns to capital (a proxy for accounting profits). The following results emerge. First, as one would expect, results vary dramatically between sectors, not just i
30、n the size of the estimated effects but also in their signs. Second, total factor productivity accelerates with higher carbon taxes. Although the effect is insignificant in large parts of the economy, and negative in some sectors, the positive impact in a number of sectors dominates. This finding su
31、pports the Porter Hypothesis. Regulation spurs innovation. Third, energy taxes reduce employment. There is a significant impact on employment 14in almost all sectors. The most important effect is a large shift in labour between sectors, but the overall effect is negative. While energy taxes create j
32、obs, more jobs are destroyed. Fourth, energy taxes increase investment. The impact is again significant in most sectors, and the most notable effect is a shift in investment between sectors. The aggregate effect is positive, however. This suggests that businesses respond to energy taxes by substitut
33、ing labour for capital. This is in sharp contrast to the findings by Koetse et al. (2008). Fifth, energy taxes increase the returns to capital. Again, differences between sectors are pronounced, but the average effect is positive. This finding reinforces the results for investment. We obtain differe
34、nt results for the EU ETS. The effect on productivity and profits are negative, while the effect on labour and investment are insignificant. These results are indicative only, as our data only cover the experimental phase of the ETS and we were unable to define a permit price. Future research, using
35、 data from the second phase of the ETS, should reinvestigate this. Acknowledgments Helpful comments were received from Barry Anderson, Frank Convery and other participants at an ESRI seminar. This study was funded by the Environmental Protection Agency under the ERTDI programme. References Anger, N.
36、 and Oberndorfer, U. (2008): Firm performance and employment in the EU emissions trading scheme: An empirical assessment for Germany. Energy Policy 36, 12-22. Enevoldsen, M., Ryelund, A. and Skou, M. (2007): The Impact of Energy Taxes on Competitiveness, Output and Exports: a panel regression study
37、of 56 European Sectors, Work Package 3 in Competitiveness Effects of Environmental Tax Reforms, Final Report to the European Commission, DG Research and DG Taxation and Customs Union. Henderson, D.J. and Millimet, D.L. (2005): Environmental regulation and US state-level production. Economics Letters
38、 87, 4753 Koetse, M.J., de Groot, H.L.F and Florax, R.J.G.M. (2008): Capital-Energy Substitution and Shifts in Factor Demand: A Meta-Analysis. Energy Economics 30(5), 2236-2251. 15Leiter, A. M., Parolini, A. and Winner, H. (2009): Environmental Regulation and Investment: Evidence from European Indus
39、tries. Working Paper 2009-04, University of Innsbruck, Austria. Martin, R., de Preux, L.B. and Wagner, U.J. (2009): The Impacts of the Climate Change Levy on Business: Evidence from Microdata. CEP Discussion Paper No. 917. London School of Economics and Political Science, London, United Kingdom. Oll
40、ey, S.G., and Pakes A. (1996): The Dynamics of Productivity in the Telecommunications Equipment Industry, Econometrica, 64(6), 12631297. Porter, M.E. (1991): Americas Green Strategy. Scientific American 264(4): 96 Porter, M.E. and van der Linde, C. (1995): Towards a New Conception of the Environment
41、-Competitiveness Relationship, Journal of Economic Perspectives 9(4): 97-118. Veith, S., Werner, J.R. and Zimmermann, J. (2009): Capital market response to emissions rights returns: Evidence from the European power sector. Energy Economics 31, 605-613. Wagner, M. (2003): The Porter Hypothesis Revisi
42、ted: A Literature Review of Theoretical Models and Empirical Tests. Centre for Sustainability Management, Universitat Luneburg, Germany. 16Tables Table 2: Variable definitions Table 3: Variable means TFP Employment Return On Capital Employed Investment Independent Variables 227942 obs. 649809 obs. 5
43、06682 obs. 427483 obs. Tax rate 0.004 0.003 0.004 0.004 Lagged Tax rate 0.004 0.003 0.004 0.004 Labour Cost 0.589 0.623 Education 19.742 Output Gap -0.093 Electricity price 0.070 Import Intensity 0.277 Dependent variables Independent variables Total Factor Productivity (lnTFP) Olley-Pakes method. Lo
44、g TFP in first differences Tax rate (lntax_rate) Log of energy taxes by sector and country, first differences. Includes taxes on petrol, diesel, gas, electricity etc. Employment (lnL) Log number of employees in a firm in year t, in first differences. Lagged Tax rate (lntax_rate t-1) Log of energy ta
45、xes, 1 period lag. First differences. Return on Capital Employed Return on capital employment in year t, in first differences Import Intensity Imports/ (Production Exports + Imports) Investment Log change in tangible fixed assets minus depreciation, in first differences Education Tertiary education
46、attainment for age group 25-64, as a percentage of the population of that age group in each country. Output Gap Deviations of actual GDP from potential GDP as a percentage of potential GDP Electricity price (ln elec price) Electricity prices per country ( per kWH) Labour Cost Total Labour Costs as a
47、 percentage of Output, per country ETS Emissions Trading Scheme dummy variable, 1 if sector covered by ETS, 0 otherwise 17Annex A: Regression results Table 4: Total factor productivity regression results, OLS panel regression in first differences; dependent variable: ln(TFPit) Variables and statisti
48、cs Coef. Robust standard error Ltax_rate 0.935* 0.109 Ltax_rate-1 0.257* 0.0539 import_intensity 0.0268 0.0228 education -0.0552 0.0331 output_gap -0.166* 0.0568 Lelectricityprice -0.129* 0.0382 labourcost -1.77 2.9 ETS -0.0616* 0.0196 NACExTax11 -1.04* 0.00638 NACExTax13 -0.371* 0.104 NACExTax14 -1
49、* 0.104 NACExTax15 -1.01* 0.0808 NACExTax16 -2.95* 0.0588 NACExTax17 -1.04* 0.121 NACExTax18 -1.09* 0.12 NACExTax19 -1.49* 0.127 NACExTax20 -0.956* 0.118 NACExTax21 -0.79* 0.0732 NACExTax22 -0.63* 0.0751 NACExTax23 -0.823* 0.106 NACExTax24 -0.956* 0.108 NACExTax25 -0.945* 0.109 NACExTax26 -0.97* 0.108 NACExTax27 -0.924* 0.11 NACExTax28 -0.926* 0.111 NACExTax29 -0.963* 0.107 NACExTax30 -0.795* 0.112 NACExTax31 -0.631* 0.115 NACExTax32 -0.782* 0.111 NACExTax33 -0.875* 0.116 NACExTax3
