Industry Winners and Losers in a Lower-Carbon Economy: A Structural Model

Abstract

The authors model a viable low-carbon economy using global input-output tables along with emissions data for 54 industries in 57 countries. Some high-emitting industries such as air transport and retailing support a wide range of otherwise low-carbon goods and services and are predicted to fare well. Apparently green industries such as health care and banks appear more vulnerable because of their reliance on high-emission sectors such as construction. To test the model, the authors use high historical energy prices to proxy more stringent carbon regulation. Industries that their model classifies as resilient perform well, whereas industries that are commonly viewed as green significantly underperform in the face of high energy costs.