{"id":12582,"date":"2026-01-15T08:55:40","date_gmt":"2026-01-15T07:55:40","guid":{"rendered":"https:\/\/insights.ieseg.fr\/?p=12582"},"modified":"2026-01-15T09:25:19","modified_gmt":"2026-01-15T08:25:19","slug":"eu-emissions-trading-system-workforce","status":"publish","type":"post","link":"https:\/\/insights.ieseg.fr\/en\/resource-center\/eu-emissions-trading-system-workforce\/","title":{"rendered":"In brief: how the EU Emissions Trading System is reshaping the workforce"},"content":{"rendered":"\n

The EU\u2019s Emissions Trading system was created in 2005 to force polluters to pay for their greenhouse gas (GHG) emissions. It is based on a \u201ccap and trade\u201d principle. The cap<\/a> refers to the limit set on the amount of GHG that can be emitted by companies in specified sectors including industrial manufacturing and electricity. Companies may also trade their allowances. If a company has spare emissions, they can either sell the spare allowances and\/or store them to use in the future.<\/p>\n\n\n\n

While the ETS is a cornerstone of EU Climate policy, concerns have been raised by some business stakeholders about some of the (unintended) consequences of this scheme on Europe\u2019s economic landscape, notably in terms of the impact on the cost of their operations and ultimately on employment. For instance, steel manufacturers urged the EU not to burden them further with carbon costs<\/a>, arguing that it would make them uncompetitive against foreign rivals and raise the risk of job losses and plant closures. Cembureau, representing the European cement industry, also estimated thousands of job losses under current climate targets.<\/p>\n\n\n\n

\u201cAlthough such industry concerns have taken center stage in the European climate policy debate, there has been little hard evidence and research to back those claims\u2014until now,\u201d explains Jana BOECKX, Professor of Finance at I\u00c9SEG School of Management.  <\/p><\/blockquote>\n\n\n\n

While the first years of the EU ETS were characterized by underwhelming emission prices, this changed in February 2017 when the European Council made a significant intervention in the system. This set of measures was designed to tighten the supply of emission allowances and thus raise the carbon price. As a result, the emission price increased markedly, doubling between January 1, 2017, and January 1, 2018.<\/p>\n\n\n\n

\u201cIn a recent study<\/a>, carried out with my co-authors Professors STRUYFS (Open Universiteit) and TORSIN (HEC Li\u00e8ge), we analyzed 2,337 European companies, accounting for approximately 35% of all emissions covered by the EU ETS, and their responses to the surge in carbon prices in post-intervention period. We find that enterprises covered by the EU ETS were more likely to downsize after 2017,\u201d the expert adds.<\/p><\/blockquote>\n\n\n\n

Delving deeper into this increased downsizing finding, the researchers show that emission-intensive private (non-listed) firms, particularly those with financial constraints, were more likely to downscale \u2013 reducing both employees and production assets (for example, closing a factory).  These downscaling practices are accompanied by reduced GHG emissions, and increased post-downsizing efficiency.<\/p>\n\n\n\n

Smaller, cash-strapped listed firms were also more likely to downsize employees, however, while maintaining emission output and asset levels.  Even though these cash-strapped listed enterprises only reduce their employee headcount, similar to the private firms, they experienced an increase in post-downsizing productivity (meaning they were able to produce sales with less resources).<\/p>\n\n\n\n

\u201cWe uncover a clear link between the rising carbon prices and firms cutting jobs and reducing assets,\u201d adds Jana BOECKX. \u201cPrivate companies operating under the EU ETS were 5.2% more likely to downsize their workforce than their peers (being similar enterprises in terms of financial characteristics and operating in the same industry and country) with workforce reductions reaching up to 3.5% in the most highly polluting firms. \u201c<\/p><\/blockquote>\n\n\n\n

In a follow-up study<\/a> of more than 60 ETS-covered companies in Belgium (involving around 25,000 employees), the researchers then sought to analyze the impact on workforce composition in more depth.<\/p>\n\n\n\n

\u201cWe found that more vulnerable employment segments \u2013 such as lesser educated blue-collar workers, and those on part time contracts, were disproportionately affected by these job cuts. White-collar employees, women, and those with a higher education, were not affected in a statistically significant manner by the rise in carbon prices following the EU\u2019s policy intervention in 2017,\u201d explains Professor BOECKX.<\/p><\/blockquote>\n\n\n\n

Implications of the research findings<\/h1>\n\n\n\n

These are important findings for policymakers in the context of discussions on the skills that European business will need to facilitate Europe\u2019s green transition. \u201cWhile our findings show that lower-educated, blue-collar workers are most at risk of job loss in the green transition, new green jobs tend to demand highly educated employees,\u201d she adds.<\/p>\n\n\n\n

In Belgium, for instance, a ManpowerGroup survey with 510 Belgian employers, identified that finding qualified workers was the single biggest challenge firms face when integrating green profiles into their workforce (ManpowerGroup 2023<\/a>).<\/p>\n\n\n\n

\u201cThis mismatch in education level might potentially create a disbalance in the labor market, underscoring the need for better training and reskilling initiatives. Our findings highlight the importance of targeted policies to support vulnerable workers and ensure a just and inclusive transition to a low-carbon economy.\u201d<\/p>

\u201cWhile emissions need to fall \u2013 a fair transition policy should leave no one behind,\u201d notes Professor BOECKX.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

New research sheds light on some of the unintended consequences of the EU\u2019s Emission Trading System (ETS) on European companies \u2013 notably in terms downsizing of workforces or reducing assets.<\/p>\n","protected":false},"author":3,"featured_media":11848,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[483,484],"tags":[318,1968,321,1966,324,1390],"article-type":[12],"acf":[],"yoast_head":"\nHow the EU Emissions Trading System is reshaping the workforce<\/title>\n<meta name=\"description\" content=\"Research sheds light on some of the unintended consequences of the EU\u2019s Emissions Trading System (ETS) on European companies...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/insights.ieseg.fr\/en\/resource-center\/eu-emissions-trading-system-workforce\/\" \/>\n<meta property=\"og:locale\" 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