Competition/competitiveness impact

Recognizing the central importance of competitiveness concerns, in 2004 the Carbon Trust conducted a pioneering study on the competitiveness impacts of the ELF ETS.1 Building upon this work, in 2005 the Carbon Trust sponsored an international collaborative study with the European research network Climate Strategies, led by our Chief Economist, Michael Grubb. The work aimed both to build upon our earlier study, and add to this much deeper analysis of the issues surrounding allowance allocation, costs and incentives. The full results are presented in this special issue of Climate Policy. 

Grubb, M., Sato, M., Cust, J., Chan, K.L., Korppoo, A., Ceppi, P., 2006. Differentiation and dynamics of competitiveness impacts from the EU ETS. Climate Policy 6, forthcoming. 

If, conversely, the allowance allocation system is similar to output-based allocation for an allowance allocation ratio of 90% of historic unitary emissions, neither the production level nor the EBITDA is significantly impacted, even for a very high C02 price ( 50 per tonne). Only if the allocation ratio were to drop below 75% of historic unitary emissions (a very unlikely policy choice) would competitiveness impacts (on production and EBITDA) be severe (above 5%). For any allocation ratio, abatement is reduced compared with auctioning or grandfathering, but so is leakage, and finally world emissions are almost the same. 

Finally the allocation method - notably the updating criteria, the treatment of new entrants and the closure rules - turns out to be a variable of importance to determine the competitiveness impacts and the C02 emissions reduction achieved at the world level under the EU ETS. 

Demailly, D., Quirion, R, 2005a. The Competitiveness Impacts of C02 Emissions Reductions in the Cement Sector. Report for the OECD, SMASH/CIRED. 

The consultants recommendations were to use a two-stage distribution based on recent historic emissions, first allocating to economic sectors and then to installations, to allocate to known planned developments (KPD) from within the sectoral allocation and not to make adjustments for competitiveness impacts or early action. Recent years had the advantage of accounting for recent economic growth and provided transparency through verification, something that could not be achieved by the use of projections. 

Hourcade, J.C., Demailly, D., Neuhoff, K., Sato, M., 2D07, Differentiation and Dynamics ofEUETS Industrial Competitiveness Impacts, Climate Strategies Report. 

Morgenstern, R.D., Aldy, J.E., Herrnstadt, E.M., Ho, M., Pizer, W.A., 2007, Competitiveness Impacts of Carbon Dioxide Pricing on Manufacturing, RFF Backgrounder, September. 

This situation has recently arisen in the UK where competition for gas sales has been encouraged. Gas producers can enter into direct agreements with consumers (ranging from power stations to domestic users), using the national distribution grid if necessary. The impact of this change on gas price has been significant a reduction of around 60% in the period of a year. 

Growth in the use of acetylene for the production of 1,4-butanediol is projected to continue at the rate of about 5% per year. However, competition from a new technology based on maleic anhydride may impact the use of acetylene in this market. 

Minimills and other EAF plants ate expanding iato flat-roUed steel products which, by some estimates, requite 50—75% low residual scrap or alternative raw material. Up to 16 million t of new capacity are expected to be added ia the United States between 1994 and 2000 (18). Developments ia other parts of the world also impact scrap use and supply. Possible scrap deficiencies of several million tons have been projected for EAFs ia East Asia and ia parts of Europe. This puts additional strains on the total scrap supply, particularly low residual scrap (19,20). The question of adequate supply of low residual scrap is always a controversial one. Some analysts see serious global shortages ia the first decade of the twenty-first century others are convinced that the scrap iadustry has the capabiUty to produce scrap ia the quantities and quaUty to meet foreseeable demand. This uncertainty ia combination with high scrap prices has led to iacreased use of scrap alternatives where the latter is price competitive with premium scrap. Use of pig iroa has iacreased ia EAF plants and mote capacity is being iastaHed for DRI and HBI outside the United States. 

The impact of a knowledge-based application may appear in many ways improved competitive position, quality improvement, improvement in efficiency, cost reduction, and reduction in downtime, to name a few. Some of these benefits may be hard to quantify others may not be quantifiable at all. For example, the actual benefit derived from a diagnostic advisory system may not be apparent if the process behaves normally. To quantify the benefits, a careful post-audit may have to be done, taking into account the number of faults averted, and comparing the frequency of faults before and after implementation. 

EVA polymers have been important for film manufacture. They are not competitive with normal film because of the high surface tack and friction which make them difficult to handle on conventional processing machinery. However, because of their somewhat rubbery nature, gloss, permeability, and good impact... 

Perhaps the greatest resistance to development with these materials is the strong competition offered by the clear impact-modified grades of unplasticised PVC which are generally less expensive. 

In recent years general purpose polystyrene and high-impact polystyrenes have had to face intensive competition from other materials, particularly polypropylene, which has been available in recent years at what may best be described as an abnormally low price. Whilst polystyrene has lost some of it markets it has generally enjoyed increasing consumption and the more pessimistic predictions of a decline have as yet failed to materialise. Today about 75% of these materials are injection moulded whilst the rest is extruded and/or thermoformed. 

The use of ABS has in recent years met considerable competition on two fronts, particularly in automotive applications. For lower cost applications, where demands of finish and heat resistance are not too severe, blends of polypropylene and ethylene-propylene rubbers have found application (see Chapters 11 and 31). On the other hand, where enhanced heat resistance and surface hardness are required in conjunction with excellent impact properties, polycarbonate-ABS alloys (see Section 20.8) have found many applications. These materials have also replaced ABS in a number of electrical fittings and housings for business and domestic applications. Where improved heat distortion temperature and good electrical insulation properties (including tracking resistance) are important, then ABS may be replaced by poly(butylene terephthalate). 

Acetal resins find a number of applications in gears, where they come into competition with the nylons. Acetal gears are superior to those made from nylon in fatigue resistance, dimensional stability and stiffness, whereas nylon gears in conditions of average humidity have greater resistance to impact fatigue and abrasion. 

The requirements of the automotive industry are more demanding than some other industries. Automotive products have to be safe, reliable, and maintainable, protect the occupants, and have minimal impact on the environment in their manufacture, use, and disposal. The automotive sector is a very competitive market and as a consequence costs have to be optimized. There is little margin for excessive variation, as variation causes waste and waste costs money and time. Therefore several methods have evolved to reduce variation. Among them are SPC, FMEA, MSA, and many other techniques The automotive industry believes that the more their suppliers adopt such variation reduction techniques the more likely it will be that the resultant product will be brought to the market more quickly and its production process be more efficient. 

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