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Carbon tax reform and French industry response Insights from panel data, 2005-2019

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  • Mélanie MARTEN

    (Université de Cergy-Pontoise, THEMA)

Abstract

This paper investigates the effects of the 2014 French carbon tax reform on plant manufacturing energy use patterns and employment outcomes using a linear panel event study specification spanning fifteen years. The analysis constructs a proxy for exposure and expected exposure to increasingly higher carbon pricing, as the rate was expected to reach e100 per tCO2 by 2030. A 10 percentage point (pp) increase in exposure is significantly associated with a 2.03 pp increase in the share of electricity over fossil fuel use. This increase is more likely driven by a decrease in total energy use, and particularly in fossil fuel use. Additional results uncover evidence of input shifting across fossil fuel inputs to the benefit of natural gas, as well as in improvements in energy efficiency. Findings does not suggest that exposure is associated with job losses on average

Suggested Citation

  • Mélanie MARTEN, 2022. "Carbon tax reform and French industry response Insights from panel data, 2005-2019," THEMA Working Papers 2022-19, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2022-19
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    File URL: https://thema.u-cergy.fr/IMG/pdf/2022-19_v3.pdf
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    References listed on IDEAS

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    1. John Coglianese & Lucas W. Davis & Lutz Kilian & James H. Stock, 2017. "Anticipation, Tax Avoidance, and the Price Elasticity of Gasoline Demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(1), pages 1-15, January.
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    5. Robert Germeshausen, 2020. "The European Union Emissions Trading Scheme and Fuel Efficiency of Fossil Fuel Power Plants in Germany," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(4), pages 751-777.
    6. Damien Dussaux, 2020. "The joint effects of energy prices and carbon taxes on environmental and economic performance: Evidence from the French manufacturing sector," OECD Environment Working Papers 154, OECD Publishing.
    7. Julius J. Andersson, 2019. "Carbon Taxes and CO2 Emissions: Sweden as a Case Study," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 1-30, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Carbon tax; Policy Evaluation; Manufacturing; France; Expectations;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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