Research

Working Papers

• The Geopolitical Externality of Climate Policy (with T. Beaufils, K. Conyngham, M. de Vries, M. Jakob, M. Kalkuhl, D. Spiro, L. Stern, and J. Wanner), Kiel Working Papers No. 2283, 2025.
  Abstract: This paper formalizes the geopolitical externality of climate policy and estimates its plausible magnitudes. Specifically, domestic reductions in fossil fuel demand depress global prices, thereby lowering export revenues for resource-rich autocracies – many of which allocate substantial resources to military spending. As a result, climate policy reduces geopolitical and security burdens on Western democracies, offering a potential “peace dividend” as a cobenefit. Exploiting the link between the European Union’s oil consumption and the EU’s costs of the Russian war in Ukraine as a case study, we highlight the relevance of this externality. We estimate that each euro spent on oil in the EU generates geopolitical costs of 0.37 [0.01 - 4.7] euros related to Russia’s war on Ukraine. Based on our central estimate, a carbon price of 62 euros per ton of CO₂ would be required to internalize these costs. Even under conservative assumptions, our analysis highlights that the geopolitical externality offers a compelling argument for strong unilateral efforts to reduce fossil fuel demand in the EU.
• Is Germany Becoming the European Pollution Haven? (with E. Rottner and K. von Graevenitz), ZEW Discussion Paper No. 23-069, 2024.
  Abstract: Relative prices determine competitiveness of different countries. We investigate the impact of diverging developments in implicit carbon prices – a measure comprising carbon and energy prices, as well as command-and-control measures – between Germany and other EU countries on CO₂ emissions from manufacturing. We quantify a trade and environment model, using data on aggregate output, trade, and emissions, with model parameters estimated from the German Manufacturing Census. Our model recovers the evolution of implicit carbon prices in Germany, the rest of the EU, and the rest of the world. From 2005 to 2019, implicit carbon prices declined across most manufacturing sectors in both Germany and other EU countries, with a more pronounced decrease in Germany. Our counterfactual analyses suggest that this intra-EU divergence has substantially increased German industrial emissions. Had the rest of the EU experienced the same path in implicit carbon prices as Germany, German emissions would have been notably lower. In this regard, Germany has increasingly emerged as the European pollution haven. We discuss the efficiency of reallocating emissions within Europe in the context of emissions trading and overlapping industrial policy.
• Unilateral Environmental Policy and Offshoring (with S. J. Bolz and F. Naumann), CESifo Working Paper No. 11096, 2024.
  Abstract: Expanding on a general equilibrium model of offshoring, we analyze the effects of a unilateral emissions tax increase on the environment, income, and inequality. Heterogeneous firms allocate labor across production tasks and emissions abatement, while only the most productive can benefit from lower labor and/or emissions costs abroad and offshore. We find a non-monotonic effect on global emissions, which decline if the initial difference in emissions taxes is small. For a sufficiently large difference, global emissions rise, implying emissions leakage of more than 100%. The underlying driver is a global technique effect: While the emissions intensity of incumbent non-offshoring firms declines, the cleanest firms start offshoring. Moreover, offshoring firms become dirtier, induced by a reduction in the foreign effective emissions tax in general equilibrium. Implementing a BCA prevents emissions leakage, reduces income inequality in the reforming country, but raises inequality across countries.

Publications

• Unilateral Tax Policy in the Open Economy (with M. Kohl), Journal of International Economics, 145: 103829, 2023.
  → Github repository; WP Version
• Strategic Environmental Policy and the Mobility of Firms (with M. Runkel and R. C. Schmidt), Journal of the Association of Environmental and Resource Economists, 8(5): 863-893, 2021.
  → WP Version
• Environmental Policy and Firm Selection in the Open Economy (with H. Egger and U. Kreickemeier), Journal of the Association of Environmental and Resource Economists, 8(4): 655-690, 2021.
  → WP Version
• Coal Taxes as Supply-Side Climate Policy: A Rationale for Major Exporters? (with R. Mendelevitch and F. Jotzo), Climatic Change, 150(1-2): 43-56, 2018.
• CO₂ Emission Intensity and Exporting: Evidence from Firm-Level Data (with A. Schiersch), European Economic Review 98: 373-391, 2017.
• Shaking Dutch Grounds Won’t Shatter the European Gas Market (with F. Holz, H. Brauers and T. Roobeek), Energy Economics 64: 520-529, 2017.
• The Role of Natural Gas in a Low-Carbon Europe: Infrastructure and Supply Security (with F. Holz and R. Egging), The Energy Journal 37: 33-59, 2016.
• All Quiet on the Eastern Front? Disruption Scenarios of Russian Natural Gas Supply to Europe (with F. Holz), Energy Policy 80: 177-189, 2015.
• A Global Perspective on the Future of Natural Gas: Resources, Trade, and Climate Constraints (with F. Holz and R. Egging), Review of Environmental Economics and Policy 9(1): 85-106, 2015.
• From Boom to Bust? A Critical Look at US Shale Gas Projections, Economics of Energy and Environmental Policy 4(1): 131-151, 2015.
• Trade and the Environment: The Role of Firm Heterogeneity (with U. Kreickemeier), Review of International Economics 22: 209-225, 2014.

Selected Work in Progress

• Heterogeneous Sourcing, CO₂ Emissions, and Exporting (with T. Köveker, A. Schiersch and R. Sogalla)
• The Impact of Border Carbon Adjustment on Global Emissions Shifting (with J. Wanner)
• Unilateral Trade Policy and its Distributional Effects (with M. Kohl)
• Redistributing Emission Tax Revenues: The Impact on Occupational Choice Decisions
• Strategic Firm Behaviour and Environmental Policy under General Oligopolistic Equilibrium (with S. J. Bolz)