Mikael Skou Andersen Presentation - The Porter Hypothesis at 20: Can Environmental Regulation...
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![Page 1: Mikael Skou Andersen Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010](https://reader036.fdocuments.in/reader036/viewer/2022062617/54c5d3ee4a7959bc298b469e/html5/thumbnails/1.jpg)
European Environment Agency
The ”Porter hypothesis” at 20 - reflections from Europe
Prof Mikael Skou Andersen
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European Environment Agency
What do we understand by ”competitiveness” ?
“the degree to which a country can, under free and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the longer term” (OECD, 1993)
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European Environment Agency
Porter hypothesis: environmental regulation*) promotes competitiveness
New framework for industry rivalry• directs attention to resource
inefficiencies• raises corporate awareness• more certainty for green
innovators• overcomes inertia and fosters
creativity• improves learning to obtain
long-term gains• induces change
The critics:
- company level gains are small and cannot offset cost increases
- cost-benefit analysis required to identify welfare economic advantages
*) Scientific American, 1991: Requires incentive-based regulations
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European Environment Agency
Green innovation and demand:(Enevoldsen et. al. 2009)
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European Environment Agency
Environmental tax reform (ETR)revenue as a share of GDP (1995-2003)
Denmark 1,1%
Finland 0,6%
Germany 0,8% Netherlands 0,5%
Sweden 0,9% UK (CCL) 0,1%
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Effect of ETR on total fuel demand
-8
-6
-4
-2
0
1994 1997 2000 2003 2006 2009 2012
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
Denmark
Germany
% difference from baseline
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Effect of ETR on total fuel demand
-8
-6
-4
-2
0
1994 1997 2000 2003 2006 2009 2012
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
Denmark
UK
Germany
Finland
% difference
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Effect of ETR on total fuel demand
-8
-6
-4
-2
0
1994 1997 2000 2003 2006 2009 2012
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
Denmark
Slovenia
UK
Germany
Finland
% difference
![Page 9: Mikael Skou Andersen Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010](https://reader036.fdocuments.in/reader036/viewer/2022062617/54c5d3ee4a7959bc298b469e/html5/thumbnails/9.jpg)
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Effect of ETR on total fuel demand
-8
-6
-4
-2
0
1994 1997 2000 2003 2006 2009 2012
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
Denmark
Slovenia
UK
Germany
Finland
Sweden
% difference
![Page 10: Mikael Skou Andersen Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010](https://reader036.fdocuments.in/reader036/viewer/2022062617/54c5d3ee4a7959bc298b469e/html5/thumbnails/10.jpg)
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Effect of ETR on total fuel demand
-8
-6
-4
-2
0
1994 1997 2000 2003 2006 2009 2012
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
Denmark
Netherlands
Slovenia
UK
Germany
Finland
Sweden
% difference
![Page 11: Mikael Skou Andersen Presentation - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010](https://reader036.fdocuments.in/reader036/viewer/2022062617/54c5d3ee4a7959bc298b469e/html5/thumbnails/11.jpg)
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Effect of ETR on GHG emissions
-8
-6
-4
-2
0
1994 1997 2000 2003 2006 2009 2012
Denmark
Netherlands
Slovenia
Germany
Finland
Sweden
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
UK
% difference
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The Effect of ETR on Employment
-0.5
0
0.5
1
1994 1997 2000 2003 2006 2009 2012
Denmark
UK
Germany
Sweden
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
% difference
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Effect of ETR on GDP
-0.5
0
0.5
1
1994 1997 2000 2003 2006 2009 2012
Denmark
Netherlands
Slovenia
UK
Germany
Finland
Sweden
Note(s) : % difference is the difference between the base case and the counterfactual reference case.
Source(s) : CE.
% difference
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Without Revenue Recycling:Effect of ETR on GDP
-1
-0.5
0
0.5
1994 1997 2000 2003 2006 2009 2012
Denmark
Netherlands
GermanyFinland
Sweden
% difference
Note(s) : % difference is the difference between the base case and the no revenue recycling case.Source(s) : CE.
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Why should we have faith in E3ME results ?
• Ex-post approach• Macro-econometric model based on time-series
data• Good representation of fuel carriers; high sectoral
disaggregation• ETR modelled with official figures for revenues, not
nominal tax rates• Technological progress indicator represents impact
via improved R&D
• Standard impact assessment tool for EU
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Why energy taxes differ from energy prices ?
• increased energy prices also have an impact on unit costs via prices on imported raw materials
• from an increased energy price no revenue can be recycled to lower distortionary taxes
• psychologically the signalling effect of tax is probably stronger than of price
• accompanying policy measures differ
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Kaldor paradox on competitiveness
• Increase in technological capacity (R&D) and productivity correlate better with increased market shares than unit labour costs
• If carbon-energy taxes improve R&D and productivity it may help explain how the test of international markets are met
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National Environmental Research Institute & Aarhus University, DENMARK
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European Environment Agency
Thanks foryour
attention