Carbon cost pass-through in industrial sectors
Open accessAbstract
To achieve the ambitions of the 2015 Paris Climate Agreement, the decarbonization of energy-intensive industrial sectors is becoming increasingly important. This paper focuses on the economics of carbon cost pass-through: the change in product prices induced by carbon pricing. We provide a theoretical framework to understand pass-through at the sectoral level and a constructive review of the empirical evidence from the EU ETS and other jurisdictions. Our analysis is structured around three key drivers: international trade, market structure, and free allowance allocation. We provide a synthesis of our key findings for policymakers and identify gaps in the literature for future research.
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The likely extent of pass-through can be very hard to estimate.
“the likely extent of pass-through can be very hard to estimate (37-39).”
From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [38]
The extent to which companies can pass through costs to prices is usually linked to the sensitivity of demand and supply to price and the degree of competition, which in turn depends on multiple factors including trade barriers and global excess capacity.
“The extent to which companies can pass through costs to prices is usually linked to the sensitivity of demand and supply to price and the degree of competition, which in turn depends on multiple factors including trade barriers and global excess capacity”
From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [38]
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References 16 · Cited by 22
- Authors
- Neuhoff, K., & Ritz, R.
- ORCID
- Neuhoff, K.
- Venue
- Faculty of Economics, University of Cambridge
- Publisher
- Faculty of Economics, University of Cambridge
- Published
- 2019-10-31
- OpenAlex
- W2994360093
- Cited by
- 22
- References
- 16
- Citations by year
- 2025: 2 · 2024: 4 · 2023: 4 · 2022: 4 · 2021: 5 · 2020: 3
- Type
- posted content
- Language
- en
- Open access
- Locations
- RePEc: Research Papers in Economics (submittedVersion)
- Apollo (University of Cambridge) (submittedVersion)
- Apollo
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
- Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Keywords
- carbon pricing, industrial decarbonization, EU Emissions Trading System, product price, international trade, market structure, free allowance allocation, Paris Agreement, energy-intensive industries
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