Abstract

One of the largest challenges currently facing society is the threat of climate change. At the Climate Summit in Paris in 2015, the international community agreed to curb temperature increase to maximum 2 degrees centigrade within the next century. This goal requires substantial mitigation of CO2 emissions. Germany has a particularly ambitious political agenda with the Energy Transition (Energiewende). In order to achieve the ambitious targets set at the national and international level, several policy instruments have already been implemented. Some of the most important are the European Emissions Trading System (ETS), the expansion of renewable energy sources financed by the renewables surcharge (EEG-Umlage), as well as the German electricity tax. The instruments implemented generally result in increased energy costs for firms which should induce energy conservation as well as incentives to reduce carbon content of energy used. As a result of rising energy costs and heterogeneity in the stringency of regulation across countries concern has been raised that regulation could have a negative impact on firm competitiveness and result in e.g. loss of jobs, decreasing market shares and exports. An assessment of the effectiveness and cost efficiency of the policy instruments used can improve the design of current and future policies to ensure the achievement of the policy goals at lowest cost. Such assessment is best achieved through the use of ex post evaluation of the policy instruments based on detailed micro data and careful empirical strategies with an emphasis on uncovering causal effects. TRACE contributes to the policy and research agenda in several dimensions. The project first creates new data sets through the merger of information on regulation as well as electricity and network charges to administrative data sets on firms and employment. The goal of the analysis is to uncover causal evidence on both the intensive (energy use, employment, exports, revenues) and extensive (firm openings and closures) margin. In addition to effects on the number and type of jobs it is conceivable that regulation may impact job content. A further analysis will therefore focus on the job content and skills of workers on tasks level. It will identify tasks associated with the environment and climate protection (i.e. “greenness”) of different occupations. The analysis will examine how occupational “greenness” has evolved over time and as far as possible the extent to which these developments are associated with regulation. In sum, TRACE addresses several important questions on the effects of policy tools implemented to foster the transformation towards a low carbon economy and will provide valuable feedback to policy makers and stakeholders for the design of future policies. See also: https://kooperationen.zew.de/trace/