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PRINZ Seminar

Carbon pricing, compensation, and competitiveness: lessons from UK manufacturing

Pier Basaglia (University of Hamburg)


Thursday 19 January 2023 11:00 - 12:00

This event is both online and in person

SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

Carbon pricing is the cornerstone of cost-effective climate policy, but is often paired with compensation to carbon- and energy-intensive firms to mitigate carbon leakage risk. To what extent do such schemes compromise effective carbon price incentives? This paper examines the causal impact of compensation payments for indirect carbon costs embodied in electricity prices using UK plant level data. We hypothesize that the compensation payments incentivized firms to increase production and electricity use, with no effect on electricity intensity. By exploiting firm level inclusion criteria in both a difference-in-differences and regression discontinuity framework, we find that compensated firms maintained a higher production and energy use relative to uncompensated firms, with no detectable effect on energy intensity.


Participants are expected to adhere to the Events Code of Conduct.


This event will take place in SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

The building is labelled SAL on the map. Enter the building via Lincoln's Inn Fields.

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