Microsoft Word - CPLCI_Climate Change, Investment and Carbon Markets and Prices_ 110131.doc

This research paper analyzes the impact of the European Union Emissions Trading System (EU ETS) on low-carbon investment and innovation in manufacturing firms. Based on interviews with approximately 800 firms across six European countries, the study examines how carbon pricing influences energy-saving measures, R&D for clean processes and products, and the strategic behavior of firms within the carbon market.

• A significant majority of manufacturing firms are implementing measures to reduce greenhouse gas (GHG) emissions, with over 60% focusing on energy- and GHG-saving measures related to core processes and machinery.
• Firms exhibit wide variation in the payback periods they require for energy-saving investments, averaging nearly four years. The UK reports the lowest average payback time at 3.5 years, while Poland reports the highest at over five years.
• There is a disparity between clean process innovation and clean product innovation. Approximately 70% of firms engage in clean process innovation (reducing their own emissions), while only 40% pursue clean product innovation (developing products to help customers reduce emissions).
• Clean innovation activity varies by country, with France leading in process innovation and Germany leading in product innovation, while Hungary and Poland show the lowest levels of activity.
• Roughly 30% of firms in the EU ETS participate passively, viewing the system as a compliance requirement rather than a financial opportunity. Furthermore, many firms do not trade allowances unless they possess a significant excess, typically between 5,000 and 10,000 allowances.
• Firms expect carbon prices to rise significantly in the future, with an average expected price of €40 for the post-2012 trading period. They also anticipate tighter emission caps in Phase III (starting 2013), with the proportion of firms seeing their caps as non-binding dropping from 40% in Phase II to under 10% in Phase III.
• There is a causal link between the expected stringency of company-specific emission caps and clean product innovation. Firms that narrowly miss out on free allowance exemptions (and thus face tighter caps) engage in significantly more product innovation than those that receive free allowances.

APA

Climate Policy Initiative (n.d.). Microsoft Word - CPLCI_Climate Change, Investment and Carbon Markets and Prices_ 110131.doc. https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Climate-Change-Investment-and-Carbon-Markets-and-Prices.pdf

Chicago

Climate Policy Initiative. Microsoft Word - CPLCI_Climate Change, Investment and Carbon Markets and Prices_ 110131.doc. n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Climate-Change-Investment-and-Carbon-Markets-and-Prices.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Microsoft Word - CPLCI_Climate Change, Investment and Carbon Markets and Prices_ 110131.doc |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Climate-Change-Investment-and-Carbon-Markets-and-Prices.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiativendmicrosoft, author = {{Climate Policy Initiative}}, title = {{Microsoft Word - CPLCI\_Climate Change, Investment and Carbon Markets and Prices\_ 110131.doc}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Climate-Change-Investment-and-Carbon-Markets-and-Prices.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }