{"id":14164,"date":"2016-07-05T09:53:52","date_gmt":"2016-07-05T07:53:52","guid":{"rendered":"https:\/\/preprod.i4ce.org\/publication\/an-independent-peer-review-of-the-study-ex-post-investigation-of-cost-pass-through-in-the-eu-ets-an-analysis-of-six-sectors\/"},"modified":"2022-07-15T21:50:59","modified_gmt":"2022-07-15T19:50:59","slug":"an-independent-peer-review-of-the-study-ex-post-investigation-of-cost-pass-through-in-the-ets-an-analysis-of-six-sectors","status":"publish","type":"publication","link":"https:\/\/staging.i4ce.org\/en\/publication\/an-independent-peer-review-of-the-study-ex-post-investigation-of-cost-pass-through-in-the-ets-an-analysis-of-six-sectors\/","title":{"rendered":"An independent Peer review of the study \u201cEx-post Investigation of Cost Pass-Through in the EU ETS: an analysis of six sectors\u201d"},"content":{"rendered":"<p><strong>This I4CE report provides a peer review of the study <\/strong>\u201c<a href=\"https:\/\/www.google.fr\/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;uact=8&amp;ved=0ahUKEwiom_HBnMPPAhWBfxoKHa0rAgkQFgghMAA&amp;url=http%3A%2F%2Fec.europa.eu%2Fclima%2Fpolicies%2Fets%2Frevision%2Fdocs%2Fcost_pass_through_en.pdf&amp;usg=AFQjCNEe7qRyBzqaetcHFq-3A5FZptFMjA&amp;sig2=oerX0AcH2cS3KEEUR4zlWA\"><strong>Ex-post Investigation of Cost Pass-Though in the EU ETS: an analysis of six sectors<\/strong><\/a><strong>\u201d<\/strong> <strong>produced by CE-Delft and Oeko Institut and published by the EU Commission in November 2015<\/strong>.<\/p>\n<p>In the discussion on the <strong>potential risk of carbon leakage related to the EU ETS<\/strong> and the effect of safeguard measures, the scope for passing through carbon costs in final product prices is deemed a key issue. This study of CE-Delft and Oeko Institut (2015) investigates whether and to what extent ETS-related carbon costs have indeed been passed through into product prices by EU industry across iron and steel, refineries, cement, organic basic chemicals, fertilizer, and glass.<\/p>\n<p><strong>The peer-review of the CE-Delft and Oeko Institut study <\/strong><strong>is produced by I4CE on the basis of the three academic peer reviews mandated by I4CE. <\/strong><\/p>\n<p><strong>The I4CE Peer review, <\/strong>focused on two only sectors: refineries and basic organic chemicals. <strong>concludes that the results of the study cannot be used as direct policy recommendations due to the following three main limitations. <\/strong><\/p>\n<ul>\n<li><strong>The robustness of the econometric results is not clearly grounded: the claims of the study are only supported at a low confidence level <\/strong>(the chosen confidence interval was 10% while sound econometric practice would require at least 5%).<\/li>\n<li>Moreover, detailed analysis shows that the hypothesis of a cost pass-through is significant (at 10%) only for some products and for some EU countries. <strong>The results are heterogeneous and not representative of a conclusion at the EU level for either sector.<\/strong><\/li>\n<li>The quantitative estimates on <strong>the cost pass-through rates are obtained through a simple accounting relationship between input costs and output prices. <\/strong>Economic practice would rather use <strong>an explicit price formation model allowing for such factors as trade intensity, market structure and concentration, heterogeneity of competitors, etc&#8230; Some of these factors are marginally analyzed in the study without providing clear conclusions. <\/strong>Indeed, without any in-depth statistical analysis, the study cannot establish a statistical significant relationship between market shares and cost pass-through rates. Other explanatory variables such as the role of EUA price volatility and the macroeconomic environment should also have been considered. <strong>Altogether the simple relationship used by the study cannot provide a valid estimate of the cost pass through.<\/strong><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>This I4CE report provides a peer review of the study \u201cEx-post Investigation of Cost Pass-Though in the EU ETS: an analysis of six sectors\u201d produced by CE-Delft and Oeko Institut and published by the EU Commission in November 2015. In the discussion on the potential risk of carbon leakage related to the EU ETS and [&hellip;]<\/p>\n","protected":false},"featured_media":48999,"template":"","meta":{"_acf_changed":false,"inline_featured_image":false},"type_publication":[47],"class_list":["post-14164","publication","type-publication","status-publish","has-post-thumbnail","hentry","type_publication-special-issues"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>An independent Peer review of the study \u201cEx-post Investigation of Cost Pass-Through in the EU ETS: an analysis of six sectors\u201d - I4CE<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.i4ce.org\/en\/publication\/an-independent-peer-review-of-the-study-ex-post-investigation-of-cost-pass-through-in-the-ets-an-analysis-of-six-sectors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An independent Peer review of the study \u201cEx-post Investigation of Cost Pass-Through in the EU ETS: an analysis of six sectors\u201d - I4CE\" \/>\n<meta property=\"og:description\" content=\"This I4CE report provides a peer review of the study \u201cEx-post Investigation of Cost Pass-Though in the EU ETS: an analysis of six sectors\u201d produced by CE-Delft and Oeko Institut and published by the EU Commission in November 2015. 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