Seminarios académicos y conferencias
"Renewable energy financing and firm competitiveness in the manufacturing sector"
22 Agosto 2018 - 15:30 hrs.
Sala de postgrados, Facultad de Ciencias Económicas y Administrativas UC
Abstract: Global concerns for climate change have led to a surge in subsidies for renewable energy sources (RES). Subsidies are typically financed through a levy on electricity prices that can represent an important cost factor for firms in the industry, negatively impacting their international competitiveness. This paper exploits a recent policy change in RES financing that considerably expanded the group of firms that are eligible for a levy exemption to test for the impact of a permanent change in electricity prices on plant-level electricity consumption, fuel input choices, and competitiveness indicators employing production data from the census of the German manufacturing industry. We find that plants that are exempt from the levy increase their electricity consumption by about 5-7.5%, translating to an own-price elasticity of demand for electricity of about -0.22 to -0.33. We find further evidence for fuel substitution from gas to electricity, which contributes to higher CO2 emissions. We do not find evidence that the levy exemption increases international competitiveness, indicating that policies are not effective and result in wealth transfers to the energy-intensive industry.