This paper investigates the effects of the 2014 French carbon tax reform
on plant manufacturing energy use patterns and employment outcomes using a linear panel event study specification spanning fifteen years. The analysis exploits low-carbon electricity use to construct a proxy for exposure and expected exposure to increasingly higher carbon pricing, as the rate is set to reach Euro 100 per tCO2 by 2030. A 10 percentage point (pp) increase in exposure is significantly associated with a 1.9 pp increase in the electricity share of fuel use, along with a 4.39% decrease in total energy use. Exposure is not associated with a change in electricity use levels, but is weakly associated with a drop in fossil fuel use: the electricity to fossil fuel use ratio increases by around 4.86 percent. Exposure is also weakly associated with job losses.
The Effect of a 2016 Electricity Tax Reform on French Manufacturing: Evidence from Micro-Panel Data
This paper investigates the impact of a 2016 electricity tax reform on French manufacturing using micro-panel data spanning eight years. The reform introduced a tax reduction on electricity use contingent on gross electricity tax liability exceeding 0.5% of firm value-added. Firms that satisfy the threshold criteria are considered electro-intensive. This paper exploits a Differences-in-Differences (DiD) event study specification to estimate the effect of the tax cut relative to ineligible firms. On average, electro-intensive firms experienced a relative 11.4 percentage point (pp) drop in average electricity costs in the post-reform period. Graphical results suggest a lack of pre-trends during the pre-reform years. Further evidence does not indicate that the reform had a significant or robust impact on either energy use input choice or economic performance.