CLIMATE & ENERGY PAPER SERIES 09 The effecTs of eU climaTe legislaTion on BUsiness compeTiTiveness: A SuRvEY ANd ANALYSIS mark kenBer Policy Director, he ° Climate Group oliver haUgen Policy Manager, he ° Climate Group madeleine coBB Policy Manager, he ° Climate Group
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The Effect of EU Climate Legislation on Business Competitiveness
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8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
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Te German Marshall Fund o the United States1744 R Street, NWWashington, DC 20009
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gmf p sTe GMF Paper Series presents research on a variety o transatlantic topics by sta , ellows, and partners o the GermanMarshall Fund o the United States. Te views expressed here are those o the authors and do not necessarily represent the views o GMF. Comments rom readers are welcome; reply to the mailing address above or by e-mail to in o@gm us.org.
ab ut gmfTe German Marshall Fund o the United States (GMF) is a non-partisan American public policy and grant-makinginstitution dedicated to promoting greater cooperation and understanding between North America and Europe.
GMF does this by supporting individuals and institutions working on transatlantic issues, by convening leaders to discussthe most pressing transatlantic themes, and by examining ways in which transatlantic cooperation can address a variety o global policy challenges. In addition, GMF supports a number o initiatives to strengthen democracies.
Founded in 1972 through a gi rom Germany as a permanent memorial to Marshall Plan assistance, GMF maintains astrong presence on both sides o the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven o ces inEurope: Berlin, Bratislava, Paris, Brussels, Belgrade, Ankara, and Bucharest.
Te Climate Group (www.theclimategroup.org) is an independent, not- or-proft organization working internationally withgovernment and business leaders to advance smart policies and technologies to cut global emissions and accelerate a lowcarbon economy. Its global coalition o companies, states, regions and cities around the world recognize the economic andenvironmental imperatives o taking decisive action now. Te Climate Group was ounded in 2004 and has operations inAustralia, China, Europe, India, and North America.
Tis paper would not have been possible without unding rom the ransatlantic Climate Bridge, an initiative jointly launched by German Foreign Minister Dr. Frank-Walter Steinmeier and German Environment Minister Sigmar Gabriel toconnect and support those working to address the challenges o climate change, energy security, and economic growth atthe local, the state, and the ederal level in the United States and Germany.
Te writing o this report was supported in part by a grant rom the Norwegian Royal Ministry o Foreign A airs.
8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
he E ects o EU Climate Legislation on Business Competitiveness:A Survey and an Analysis
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• The EU ETS has not resulted in significantcosts to business to date, especially whencompared to the impact of other factors suchas energy price fluctuations and the economicdownturn. A w
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Executive Summary
8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
due to the predominance of electricity costsin its overall cost structure. k
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• Company decision-making has taken carbon pricing on board, but climate legislation hasnot led to fundamental shifts in strategy.EU E S, k
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• Companies have improved their monitoringand reporting of emissions and realizedenergy efficiency gains.A ,
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• While they have fared well so far relativeto their non-EU competitors, some heavyindustrial emitters fear possible competitiveimpacts in the third phase of the EU ETSbeginning in 2013.S
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8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
he E ects o EU Climate Legislation on Business Competitiveness:A Survey and an Analysis
9
Companiesare having adifficult timedisaggregating potential carbon- related costincreases fromthose attributableto other factors,
such as theincrease in energy prices or changesin the operating environment.
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. The impact of the EU ETS is largely in linewith prior expectations.
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3. Although costs for some firms are increasing,there is scant evidence of effects oncompetitiveness—but concerns about thefuture persist, especially as the number of free allowances decreases and CO2 costs arereflected in electricity prices.
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8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
he E ects o EU Climate Legislation on Business Competitiveness:A Survey and an Analysis
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• The EU ETS has not resulted in a significantcost to business, especially when comparedto the impact of other factors such asenergy price fluctuations and the economicdownturn. A w
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Conclusions4
8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
• In spite a few rough edges, companies findmuch to be commended under the four year-old EU ETS.O
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• The prospect of a new cap-and-trade regime for greenhouse gas emissions in the UnitedStates seems daunting, but the experience ofthe EU ETS shows that it is feasibleeven if it requires some mitigating measures at theoutset, such as free allocation of allowances.W
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8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness
he E ects o EU Climate Legislation on Business Competitiveness:A Survey and an Analysis
19
A , J E W A P z ( )TheCompetitiveness Impacts of Climate Change Mitigation Policies.W , DC: P w C
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8/8/2019 The Effect of EU Climate Legislation on Business Competitiveness