Findings from the study indicate that climate policy has had a modest impact on technological development in the Swedish pulp and paper industry, with a rather negative impact in cases where the impact is significant.
Further, they authors suggest that the carbon price from the EU ETS is probably too low to induce technological development in the Swedish pulp and paper industry. This finding is in support with the recent concerns that carbon prices from the EU ETS might be too low.
The results also indicated that climate policy tend to be less effective when bad output is excluded relative to the case where it is included, but the authors pointed out that, no obvious different policy recommendations can be made in this regard. Read the CERE working paper "Carbon Prices and Incentives for Technological Development". Authors: Tommy Lundgren, Per-Olov Marklund, Eva Samakovlis and Wenchao Zhou
The paper will be presented at the EWEPA productivity Conference in Helsinki this summer.
The paper analyze empirically how the Swedish carbon tax and EU ETS have affected productivity development (especially technological development) in the Swedish pulp and paper industry for the period 1998-2008. With the concern that carbon prices generated from the EU ETS could be too low to create incentives that will stimulate technological development, the research question addressed in the paper has perhaps come at the right time as the third phase of the EU ETS just started. The authors constructed two productivity indexes, one with and the other without "bad" output (emissions) to assess how this might influence the impact of the different environmental policies.