Environmental policy measures are often accompanied by the fear that they will entail negative competitiveness effects and lead to financial losses of domestic firms or in the worst case a relocation of „dirty“ industries to countries with less stringent environmental regulation. Especially with the ongoing process of globalisation, characterised (among other factors) by increasing international trade flows, the interaction between environmental policies and international competitiveness is becoming more important, and needs to be analysed. In this context, the energy system has an important role to play in terms of improving the competitiveness of European enterprises. This task investigated how the energy issue can be dealt with in an adequate analytical framework. The aim was to show how economy/environment models can be used for a comprehensive analysis of competitiveness effects of relevant policy measures, and to develop such models. This requires an analysis of the link between macro-economic and trade models that are able to assess competitiveness effects, e.g. via the channel of international trade on an international level and sectoral models that focus more on the detailed effects on the sectoral level. Such a comprehensive analysis has to take into account the different national and international aspects of competitiveness, considering thus impacts of international and national policies that induce internal and external imbalances.

• The derivation of meaningful competitiveness indicators and a corresponding assessment regarding which models are especially fitted to deal with these indicators.
• The assessment of analysis tools for policies aimed to improve the position of the EU economy in combination with the development of sustainable energy strategies; e.g. market for renewables, market-based energy policies, etc.
• The assessment of the performance of models that can address the issues crucial for competition and sustainability.

• Competitiveness and sustainability
• Competitiveness in Unilateral Climate Policy: Border Tax Adjustment or Integrated Emission Trading?
• The Competitiveness Effect of EU Climate Policy

ZEW (lead), IfW