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What drives carbon emissions in German manufacturing: Scale, technique or composition?

Author

Listed:
  • Rottner, Elisa
  • von Graevenitz, Kathrine
Abstract
Drastic emission reductions are necessary to combat climate change. However, despite several climate policies, carbon emissions from German manufacturing have actually increased between 2005 and 2017. In this paper, we provide evidence of how the policy mix overall has affected the German manufacturing sector in its entirety. Using detailed administrative micro-data at the product-level, we decompose changes in carbon emissions between 2005 and 2017 into scale, composition (changes in the mix of goods produced) and technology (emission factors of production) effects. We find that much of the increase in carbon emissions is due to an increase in manufacturing's production scale. Relative to the strong output growth, our analysis reveals a clean-up of manufacturing of 9 %. This clean-up is exclusively due to a shift towards a cleaner product composition from 2011 onwards, while production technique has mostly become dirtier. The results display substantial sectoral heterogeneity and are largely driven by the most energy and emission intensive sectors.

Suggested Citation

  • Rottner, Elisa & von Graevenitz, Kathrine, 2022. "What drives carbon emissions in German manufacturing: Scale, technique or composition?," ZEW Discussion Papers 21-027, ZEW - Leibniz Centre for European Economic Research, revised 2022.
    • Handle: RePEc:zbw:zewdip:21027
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    References listed on IDEAS

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    Cited by:

    1. Dan Xie, 2024. "China’s Manufacturing Pollution, Environmental Regulation and Trade," FIW Working Paper series 198, FIW.
    2. Robin Sogalla & Joschka Wanner & Yuta Watabe, 2024. "New Trade Models, Same Old Emissions?," Discussion Papers of DIW Berlin 2077, DIW Berlin, German Institute for Economic Research.
    3. Sogalla, Robin & Wanner, Joschka & Watabe, Yuta, 2024. "New trade models, same old emissions?," Kiel Working Papers 2267, Kiel Institute for the World Economy (IfW Kiel).
    4. Polina Ustyuzhanina, 2022. "Decomposition of air pollution emissions from Swedish manufacturing," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(2), pages 195-223, April.
    5. Watabe,Yuta & Sogalla,Robin & Wanner,Joschka, 2024. "New Trade Models, Same Old Emissions?," IDE Discussion Papers 926, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    More about this item

    Keywords

    Carbon emissions; Climate Policy; Statistical Decomposition; Manufacturing;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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