04/2026 – Climate Policy and Competition

Climate policy is increasingly caught between ambitious emission targets and international competitiveness. Rising energy prices, new carbon pricing regimes and industrial policy interventions raise the question of how climate action can be designed efficiently without putting firms at a disadvantage in global competition.

In this edition of ZEW Monthly, titled “Climate Policy and Competition”, we present key findings from our analyses, in which we examine the effects of an industrial electricity price, the impact of carbon taxes in aviation, and how climate targets under the new EU emissions trading system ETS2 can be achieved cost-effectively. Our research shows that consistent, market-based instruments are of key importance.