Why Europe is not carbon competitive

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Europe specialises more than its main global competitors in industries with relatively high carbon emissions, such as minerals and chemicals, rather than in high-tech industries and services . This would have a real effect
on Europe’s competitiveness in a world regulated by carbon pricing schemes such as the EU’s Emissions Trading Scheme – even if other blocs apply them as the EU does. Furthermore, in the absence of fair and undistorting carbon
pricing schemes worldwide, there is a real risk that business will resort to regulatory arbitrage which will entail a shift in where emissions take place –
but no reduction in global emissions. In any case, the issue of which economies are ‘carbon competitive’ will gradually become a much bigger part of the global trade conversation.

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