The Project TRACE examines instruments such as the European Emissions Trading Scheme, the German Renewable Energy Sources Act and electricity network charges with regard to their influence on the competitiveness and energy consumption of the German industry. In addition effects of climate policy regulations on the labour market are analyzed. The results can contribute to the improved design of climate policy regulation.
Emissions trading did not significantly affect CO2 emissions of the manufacturing sector during the first two trading phases on average, although partly very heterogeneous effects on subgroups of companies were found. The clear result is that the developments of value added, employment and exports do not differ significantly between regulated and non-regulated companies. With respect to the partial exemption from the EEG levy, a comparison between firms that are exempt and similar non-exempt firms shows that exempt firms use more electricity. In contrast, no statistically significant effects on competitiveness indicators can be demonstrated. Increasing electricity grid fees lead to decreasing electricity consumption in industry, but no statistically significant effects on sales and employment are found. In the period between 2012 and 2020, climate protection activities in the occupational profiles have increased - as has the number of employees in occupations with these activities.
Illustration of project results
The graph shows the effects of a 1 ct/kWh increase in network charges on electricity purchases, consumption, employment, sales and investments. The estimated values are shown as dots and indicate the percentage change in the dependent variables. The dashes represent the 95% confidence intervals. An increase in network charges of 1 ct/kWh leads to a 3% reduction in electricity purchases and consumption. The estimated effect thus corresponds to a price elasticity of -0.4 to -0.6 for electricity prices between 15 and 20 ct/kWh.
- Emissions from German industry have increased since 2005, even though emission intensity has decreased.
- Higher electricity costs reduce electricity consumption, but negative effects on turnover or employment are neither economically nor statistically significant.
- Significantly more employees now work in occupations with climate protection activities than 10 years ago. The regional distribution of climate-friendly and -harmful occupations is similar.
von Graevenitz, K., Rottner, E. (2020):
Energy Use Patterns in German Manufacturing Since 2003. ZEW Discussion Paper No. 20-008.
Rottner, E., von Graevenitz, K. (2021):
What Drives Carbon Emissions in German Manufacturing: Scale, Technique oder Composition? ZEW Discussion Paper No. 21-027.