Topic Industry

The New European Carbon Border Adjustment Mechanism

In October 2023, the EU Carbon Border Adjustment Mechanism (CBAM), a part of the reform of the European Emissions Trading System (EU ETS), will come into effect. Currently, energy-intensive industries do not need to purchase all of the necessary EU ETS allowances on the market to remain globally competitive, as the remaining allowances are freely allocated to them. The CBAM plans to gradually replace ...

VAT Pass-Through and Competition: Evidence from the Greek Islands

We examine how competition affects VAT pass-through in isolated oligopolistic markets as defined by the Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we investigate how changes in VAT rates are passed through to consumers in islands with different market structure. We show that pass-through increases with competition, going from 50% in monopoly to around 80% ...

Contracting Matters: Hedging Producers and Consumers with a Renewable Energy Pool

Renewable energy installations are rapidly gaining market share due to falling technology costs and supportive policies. Meanwhile, the energy price crisis resulting from the Russian-Ukrainian war has shifted the energy policy debate toward the question of how consumers can benefit more from the low and stable generation costs of renewable electricity. Here we suggest a Renewable Pool (“RE-Pool”) under ...

Power Sector Effects of Green Hydrogen Production in Germany

The use of green hydrogen can support the decarbonization of sectors which are difficult to electrify, such as industry or heavy transport. Yet, the wider power sector effects of providing green hydrogen are not well understood so far. We use an open-source electricity sector model to investigate potential power sector interactions of three alternative supply chains for green hydrogen in Germany in ...

Digitalisation and Modernity of Capital Stock in Europe

Policy Complementarity and the Paradox of Carbon Pricing

We present an economics framework appropriate to the exceptionally broad scope of the climate change problem. This considers that economic and social processes, particularly those involved in purposive transitions of energy technologies and systems, involve the interplay between three distinct domains of decision-making and associated actors. The first concerns small-scale and often short-term decision-making, ...

Broad Electricity Price Subsidies for Industry Are Not a Suitable Relief Instrument

The sharp rise in electricity prices has led to a discussion on possible subsidies for companies in the form of an industrial power tariff. The subsidies should help companies remain internationally competitive and prevent them from relocating overseas. Although German electricity prices for (industrial) firms are around the European average due to many tax exemptions, they are significantly higher ...

A Lasting Crisis Affects R&D Decisions of Smaller Firms: The Greek Experience

We use the prolonged Greek crisis as a case study to understand how a lasting economic shock affects the innovation strategies of firms in economies with moderate innovation activities. Adopting the 3-stage CDM model, we explore the link between R&D, innovation, and productivity for different size groups of Greek manufacturing firms during the prolonged crisis. At the first stage, we find that the ...

Contracts for difference against electricity price risks

Scenario Analysis as a Tool for InvestorS, Firms, and regulators on the path to climate neutralitY (SATISFY)

The Frankfurt School – UNEP Collaborating Centre, the German Institute for Economic Research, and Justus-Liebig-University Gießen jointly conduct research on scenario analysis as a tool on the path to climate neutrality. The three-year project SATISFY will produce insights into how investors, firms, and regulators can use scenario analysis in the climate transformation of business models in carbon...