Our study focuses on an analysis of the preferential tax treatment accorded to energy-intensive and carbon leakage-prone companies. Among companies not subject to the European Union Emissions Trading Scheme (EU ETS), energy-intensive and carbon leakage-prone companies pay a lower energy tax bill than companies which are also carbon leakage-prone, but which do not meet any of the criteria for being deemed energy-intensive. Therefore, the marginal tax rate on fossil fuels is a deterministic, discontinuous function of energy intensity. Using the regression-by-discontinuity (RD) method, we will examine the causal impact of carbon taxes on company competitiveness, as well as on CO2 emission reductions.
Economic and environmental impact of carbon taxes on energy-intensive companies
Théorie Economique Modélisation et Applications - CERGY-PONTOISE - 2020