Secure Data Service

Video text transcript

One of the policies we looked at was the climate change levy, which was introduced in 2001 and which was at the time -- and is still today -- one of the major policy initiatives by the UK government to deal with climate change and reduced emissions from companies in the industrial sector. 

We did a study where we used firm level data from the ONS to examine and evaluate the effect of this policy. The firm level data was crucial because some firms, not all firms, were exposed to that, so you could basically, by exploiting the variation between firms that were exposed and which were not exposed, you could examine the effect and that's what we did.

So we had a lot of data we combined, a lot of datasets: the productivity data from the ARD and the fuel consumption data from the Quarterly Fuels Inquiry, and we combined that with information from HMRC and from DEFRA at the time on which firms received the full tax rate, which ones were exempted from the tax rate, and which ones were eligible and which ones were not. 

And then we found that basically the tax had quite a significant impact particularly on electricity consumption of companies that faced the full tax rate. Of course at the time, and still today, a big concern for governments imposing such climate change policies is that they might endanger competitiveness of the companies affected. And so we also looked at the economic performance of these companies which paid the full rate versus the companies which didn't pay the full rate, and we found that there was not much of a difference.

So basically it means this policy reduced energy consumption -- and therefore emissions -- of the companies without affecting negatively competitiveness or economic performance, it seems.