{
  "title": "Mitigating Climate Change at the Firm Level: Mind the Laggards",
  "publication": "IMF Working Papers, November 24, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/11/22/mitigating-climate-change-at-the-firm-level-mind-the-laggards-541713",
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  "summary": "We document significant within-industry heterogeneity in environmental performance across firms globally and across sectors. We find that this heterogeneity is in part driven by newer capital-embedded technologies and intangible investments that raise productivity.",
  "sections": [
    {
      "heading": "Overview and authorship",
      "content": "- Authors: Damien Capelle, Divya Kirti, Nicola Pierri, Germán Villegas-Bauer\n- Publication: IMF Working Papers, Working Paper No. 2023/242\n- Date: November 24, 2023\n- Pages: 81\n- Volume: 2023\n- Issue: 242\n- DOI: https://doi.org/10.5089/9798400258541.001\n- ISBN: 9798400258541\n- ISSN: 1018-5941\n- Subjects: Carbon tax, Consumption, Environment, Financial institutions, Greenhouse gas emissions, National accounts, Stocks, Taxes\n- Keywords: capital vintage, Capital Vintages, Carbon tax, Climate Change, Consumption, emission intensity, emission Intensity, Emissions, Global, Greenhouse gas emissions, management practice, Productivity, R&D expenditure, Stocks, Technology Adoption"
    },
    {
      "heading": "Key findings",
      "content": "- Significant within-industry heterogeneity in environmental performance exists across firms globally and across sectors.\n- Part of this heterogeneity is driven by newer capital-embedded technologies and intangible investments that raise productivity.\n- Adoption of newer capital-embedded technologies lowers the costs of mitigation policies, as shown by calibrated simulations for several countries.\n- There is a trade-off between short-term costs and long-term benefits of subsidies for capital upgrading."
    },
    {
      "heading": "Model and methodology",
      "content": "- Proposed framework: a multi-sector heterogeneous-firm general equilibrium model.\n- Novel elements: the model endogenizes capital-embedded technology adoption and intangible investments as determinants of firm heterogeneity.\n- Calibration: simulations calibrated for several countries to match the extent and drivers of firm heterogeneity and to evaluate mitigation policy effects."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Policies that facilitate adoption of newer capital-embedded technologies can reduce mitigation costs.\n- Subsidies for capital upgrading involve a trade-off: higher short-term fiscal or private costs versus long-term benefits through lower mitigation costs and productivity gains.\n- Mitigation policy design should account for firm-level heterogeneity and the role of intangible investments in shaping environmental performance.\n\nIMF Working Paper No. 2023/242\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/11/22/mitigating-climate-change-at-the-firm-level-mind-the-laggards-541713"
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    "Authors: Damien Capelle, Divya Kirti, Nicola Pierri, Germán Villegas-Bauer",
    "Published: November 24, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400258541.001",
    "Authors: Damien Capelle, Divya Kirti, Nicola Pierri, Germán Villegas-Bauer",
    "Publication: IMF Working Papers, Working Paper No. 2023/242",
    "Date: November 24, 2023",
    "Pages: 81",
    "Volume: 2023",
    "Issue: 242",
    "DOI: https://doi.org/10.5089/9798400258541.001",
    "ISBN: 9798400258541",
    "ISSN: 1018-5941",
    "Subjects: Carbon tax, Consumption, Environment, Financial institutions, Greenhouse gas emissions, National accounts, Stocks, Taxes",
    "Keywords: capital vintage, Capital Vintages, Carbon tax, Climate Change, Consumption, emission intensity, emission Intensity, Emissions, Global, Greenhouse gas emissions, management practice, Productivity, R&D expenditure, Stocks, Technology Adoption",
    "Significant within-industry heterogeneity in environmental performance exists across firms globally and across sectors.",
    "Part of this heterogeneity is driven by newer capital-embedded technologies and intangible investments that raise productivity.",
    "Adoption of newer capital-embedded technologies lowers the costs of mitigation policies, as shown by calibrated simulations for several countries.",
    "There is a trade-off between short-term costs and long-term benefits of subsidies for capital upgrading.",
    "Proposed framework: a multi-sector heterogeneous-firm general equilibrium model.",
    "Novel elements: the model endogenizes capital-embedded technology adoption and intangible investments as determinants of firm heterogeneity.",
    "Calibration: simulations calibrated for several countries to match the extent and drivers of firm heterogeneity and to evaluate mitigation policy effects.",
    "Policies that facilitate adoption of newer capital-embedded technologies can reduce mitigation costs.",
    "Subsidies for capital upgrading involve a trade-off: higher short-term fiscal or private costs versus long-term benefits through lower mitigation costs and productivity gains.",
    "Mitigation policy design should account for firm-level heterogeneity and the role of intangible investments in shaping environmental performance.",
    "**Working Paper**"
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