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Carbon-Energy TaxationLessons from Europe$
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Mikael Skou Andersen and Paul Ekins

Print publication date: 2009

Print ISBN-13: 9780199570683

Published to Oxford Scholarship Online: February 2010

DOI: 10.1093/acprof:oso/9780199570683.001.0001

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The Impact of Energy Taxes on Competitiveness: A Panel Regression Study of 56 European Industry Sectors 1

The Impact of Energy Taxes on Competitiveness: A Panel Regression Study of 56 European Industry Sectors 1

Chapter:
(p.100) 5 The Impact of Energy Taxes on Competitiveness: A Panel Regression Study of 56 European Industry Sectors1
Source:
Carbon-Energy Taxation
Author(s):

Martin K. Enevoldsen

Anders Ryelund

Mikael Skou Andersen

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199570683.003.0005

The focus of this chapter is the extent to which energy taxes – via the resulting increase in real energy prices, or in their own right – reduce or enhance industrial competitiveness. From a panel data set covering 56 industry sectors throughout Europe over the period 1990–2003, we estimate how changes in real carbon‐energy taxes and real energy prices affect, on the one hand, competitiveness measured in terms unit energy costs and unit wage costs and, on the other hand, economic performance expressed in terms of output (value added). Accordingly, the chapter distinguishes between competitiveness as an economic potential, for example low unit energy costs, and the effects of that potential which, for example, could be higher economic output. If the industries experience a lasting impact on unit energy costs leading to significantly lower output as a consequence of a tax‐imposed increase in real energy prices, it is a clear indication that this outcome resulted because the energy taxes reduced their competitiveness. Findings do not allow us to reject the Porter hypothesis in the specific case studied.

Keywords:   unit energy costs, carbon‐energy taxation, Porter hypothesis, energy prices and taxes, competitiveness, energy‐intensive industries

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