Seminar in International Economics: Is Germany becoming the European pollution haven?

The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic

Is Germany becoming the European pollution haven?

Presenter: Kathrine von Graevenitz (ZEW – Leibniz Centre for European Economic Research in Mannheim)
Discussant: Armando Rungi (IMT School for Advanced Studies in Lucca)

Abstract:
Relative prices determine the competitiveness of different locations. In this paper, the focus is on the role of regulatory differences between Germany and other EU countries which affect the shadow price of carbon emissions. The authors calibrate a Melitz-type model, extended by firms’ emissions and abatement decisions using data on aggregate output, trade, and emissions. The parameter estimates are derived from the German Manufacturing Census. The quantitative model allows the recovery of a measure of how regulatory stringency evolved in the EU and Germany in terms of an implicit carbon price paid on emissions. This price reflects energy and carbon prices in addition to command-and-control measures and decreased from 2005 to 2019 in most sectors – both in Germany and other EU countries. The trend is more pronounced in Germany than in the rest of the EU. In counterfactual analyses, it is shown that this intra-EU difference has substantially increased German industrial emissions. Had the EU experienced the same decrease in implicit carbon prices as Germany, German emissions would have been substantially lower. Germany has increasingly become a pollution haven.

The presentation if available, will be posted after the event.

The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW and the European University Institute. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.