Ruhr Economic Papers

Ruhr Economic Papers #719

Multinational Corporations and the EU Emissions Trading System: Asset Erosion and Creeping Deindustrialization?

von Nils aus dem Moore, Philipp Großkurth und Michael Themann

RWI, 11/2017, 47 S./p., 8 Euro, ISBN 978-3-86788-839-4 DOI: 10.4419/86788839



This study investigates the causal effect of the EU Emissions Trading System (EU ETS) on
firms’ holdings of fixed assets as an early indicator of industrial relocation, exploiting
installation level inclusion criteria of the regulation. To single out companies with
particularly low relocation costs, global multinational enterprises (MNEs), we identify
ownership structures for the full sample of EU ETS-firms. Matched difference-indifferences
estimates provide robust evidence that contradicts the idea of an erosion
of European asset bases. Baseline results indicate that the EU ETS led on average to
an increase of treated firms’ asset bases of 11,1%. However, for a particular subgroup
of MNEs, this increase is a mere 1.3%. For these companies, the EU ETS may have
induced a shift in investment priorities. While the positive overall effect is very robust,
the differential effect for the subgroup cannot be extended to all samples.

JEL-Classification: F23, H23, Q54, Q58,

Keywords: EU ETS; cap-and-trade; carbon leakage; multinational corporation