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Time

Thursday 24 April 2025, at 12:15 - 12:45

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Location

Fuglesangs Allé 4, 8210 Aarhus V, Building 2632, Room 242

Organizer

Stefan Hirth and Anders Merrild Posselt

By Pernille Vorsø Jachobsen

Presenter: Santanu Kundu, AU

Title: Exporting Carbon Emissions? Evidence from Space

Abstract: Emission trading systems (ETS) are an important policy tool to reduce carbon emissions and fight climate change. However, the local nature of all existing ETSs gives rise to the possibility of carbon leakage, i.e., that firms emit more in regions not subject to an ETS to save costs. We use satellite-based production facility location data and provide evidence that firms from the cement and steel industry (which are responsible for more than a third of all industrial carbon emissions) with production facilities within the EU leak emissions to countries not affected by the EU ETS. They do so by emitting more in their non-EU facilities and by acquiring new facilities outside the EU. Emissions are more likely to be leaked to pollution havens. Additionally, firms headquartered in countries with more developed financial markets and in civil law countries as well as private firms leak more emissions. Financially constrained firms are more likely to leak emissions within their existing network of facilities, while unconstrained firms are more likely to acquire new non-EU facilities.

Organizers: Stefan Hirth and Anders Merrild Posselt

Finance Internal Seminar: Santanu Kundu

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