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Economic and environmental impact of carbon taxes on energy-intensive companies

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.