Does the price of carbon emissions within the EU ETS affect the level of exports from trading to non-trading countries?

Abstract: In recent years, the issue of the climate has aroused exponentially increasing interest and it is a common priority on the political agenda worldwide. The European Union Emissions Trading System (EU ETS) is the first and largest international system of trading with carbon emissions and it is sometimes described as the cornerstone in EU climate policy to combat climate change with its main objective to reduce carbon emissions. However, there are reasons to concern about topics related to competitiveness of firms included by the ETS. This thesis aims to examine the effects of the spot prices of EU allowances (EUAs) on the level of exports from trading countries to non-trading countries with the intention of drawing conclusions on the effects on competitiveness induced by the EU ETS. The research question is answered based on earlier research combined with an empirical analysis. My empirical analysis finds that the spot price levels of EUAs do have an impact on the level of exports from trading countries to non-trading countries.