The Joint Effects of Energy Prices and Carbon Taxes on Environmental and Economic Performance: Evidence from the French Manufacturing Sector

OECD Environment Working Papers No. 154 / by Damien Dussaux

[Abstract] The paper estimates the effect of energy prices and carbon taxation on firms’ environmental and economic performance. The analysis uses data on 8 000 firms that are representative of the French manufacturing sector and observed during 2001-2016. This paper also measures the causal impact of the carbon tax over the period 2014-2018 and simulates the effect of further increasing the carbon tax rate from €45 to €86 per tonne of CO2.

[From Press Release…What does the OECD study tell us?

  1. At the firm level, a 10% increase in energy costs results in a 6% decline in energy use, a 9% decrease in carbon emissions, and a 2% decrease in the number of full-time employees within one year. However, these jobs are not lost, but are reallocated to other firms.
  2. At the industry level, there is no statistical link between energy prices and net job creation, indicating that jobs lost at affected firms are compensated by increases in employment in other firms operating in the same sector during the same year…

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