Is Germany becoming the European pollution haven?

12  March 2024    2:00 pm CET

Join Kathrine von Graevenitz as she examines the role of regulatory differences and their effects on Germany's carbon emissions.

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Relative prices determine the competitiveness of different locations. In this paper, the focus is on the role of regulatory differences between Germany and other EU countries which affect the shadow price of carbon emissions. The authors calibrate a Melitz-type model, extended by firms’ emissions and abatement decisions using data on aggregate output, trade, and emissions. The parameter estimates are derived from the German Manufacturing Census. The quantitative model allows the recovery of a measure of how regulatory stringency evolved in the EU and Germany in terms of an implicit carbon price paid on emissions. This price reflects energy and carbon prices in addition to command-and-control measures and decreased from 2005 to 2019 in most sectors – both in Germany and other EU countries. The trend is more pronounced in Germany than in the rest of the EU. In counterfactual analyses, it is shown that this intra-EU difference has substantially increased German industrial emissions. Had the EU experienced the same decrease in implicit carbon prices as Germany, German emissions would have been substantially lower. Germany has increasingly become a pollution haven.

The project leading to this webinar has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement No. 101031139.

Any dissemination of the results of this event, reflects only the presenters' view. The European Commission is not responsible for any use that may be made of the information it contains. 

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Kathrine von Graevenitz is Deputy Head of ZEW’s Research Unit “Environmental and Climate Economics” and Assoc. Professor of Empirical Environmental Economics at the University of Mannheim as of October 2021. She studied economics and econometrics at the University of Aalborg in Denmark, the University of Essex in the United Kingdom, and the European University Institute in Italy. She finished her PhD at the University of Copenhagen in Denmark in 2013 and joined ZEW in 2014. Her current research interests are in environmental economics – especially in the context of the German energy transition.


Armando Rungi is a professor of economics at IMT School for Advanced Studies in Lucca, Italy, where he teaches econometrics and international economics to PhD students. He is especially interested in international economics, industrial organization, applied econometrics, and statistical learning. His most recent work focuses on the organization of multinational enterprises, global value chains and labour markets, the cyber-resilience of supply chains, the determinants and consequences of firms' international market power, and the integration of econometric and machine learning tools for predictive analyses and policy evaluation.
Armando has been a consultant on international trade and investment issues for the European Commission, the OECD, and the United Nations Conference for Trade and Development (UNCTAD).

Scientific Organiser(s):

Fabio Santeramo (European University Institute)

Mahdi Ghodsi (The Vienna Institute for International Economic Studies)