Template-Type: ReDIF-Paper 1.0
Title: Climate Policies and Electricity Prices: To Abate or to Generate?
Author-Name: Kathrine von Graevenitz
Author-Email: kathrine.vongraevenitz@zew.de
Author-Name: Elisa Rottner
Author-Email: elisa.rottner@zew.de
Classification-JEL: D22, L60, Q41, Q48
Keywords: Electricity use, firm performance, climate policy

Abstract: Climate change is the result of global market failure and remedying the situation requires effective policy action. Climate policies often increase energy prices
thereby affecting all actors in the economy. Concerns about competitiveness impacts of unilateral policies hamper the development of effective policies. We provide
causal evidence on how industrial plants respond to electricity price increases. Our
research design uses exogenous variation in German electricity prices in combination with detailed administrative data on German manufacturing plants. We find
that rising electricity prices led German manufacturing plants to significantly reduce their electricity procurement with an own-price elasticity of -0.4 to -0.6 on
average and substantial variation across procurement levels. They also induced
industrial users to replace electricity procurement by electricity generated onsite
contributing to a decentralization of electricity generation. We find no statistically
significant negative effects on competitiveness indicators.


Note: 
Length: 80
Creation-Date: 2024-02
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp504
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_504