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The competitiveness impact of a UK carbon price: what do the data say?

Grover, David and Shreedhar, Ganga and Zenghelis, Dimitri (2016) The competitiveness impact of a UK carbon price: what do the data say? Policy Paper. Grantham Research Institute on Climate Change and the Environment, London, UK.

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Abstract

This analysis uses the Input-Output tables from the UK National Accounts for 2011 to simulate the full multiplied impact of a uniform £20 per tonne carbon price on fuels and production costs across all 106 industries that comprise the UK economy, as well as whole economy production costs and final consumer prices. The carbon price is imposed on top of any carbon cost that was already present in 2011. Full cost pass-through is assumed along the value chain. The paper finds that only a small number of industries – including the oil refinement, coal, iron and cement sectors – that account for around 2 per cent of UK GDP, are likely to face production cost increases that put them under pressure from competition abroad. It states that “carbon policies will provide incentives to increase energy efficiency and resource productivity which could afford UK producers a competitive advantage in the long term, in a world where fossil fuel prices could rise and carbon reduction policies are likely to become more widespread and ambitious.” The paper concludes that policies are needed to help sectors that emit high levels of greenhouse gases and are exposed the international trade – such as the cement, mining and petroleum refinement industries – adapt to changing economic conditions resulting from a uniform carbon tax.

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk/GranthamInstitute/
Additional Information: © 2016 The Authors
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
Q Science > Q Science (General)
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Date Deposited: 07 Mar 2016 14:58
Last Modified: 09 Mar 2016 13:31
Funders: Grantham Foundation for the Protection of the Environment, Global Green Growth Institute
URI: http://eprints.lse.ac.uk/id/eprint/65622

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