Towards zero carbon emissions – Climate policy instruments for energy intensive industries, materials and products

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Energy intensive industries (EIIs), producing the basic materials and products needed in society, contribute
significantly to global emissions of greenhouse gases (GHGs). Motivated by the fear of carbon leakage, climate
policy has so far treated the EIIs leniently with e.g. low carbon prices and/or free allocation of emission
allowances. This has not resulted in more than marginal emission abatement. However, the emissions from EIIs
have to approach zero by 2050 to 2070, following the overall target of the Paris Agreement. It is therefore urgent
to develop policy strategies for a deep decarbonisation of EIIs.
In this study we explore the role of various policy instruments in the transformation of EIIs to zero emissions
and how they can be combined. In our analysis we acknowledge the specificities of the various EII sectors with
regard to mitigation options (e.g. available technologies and potential for recycling), market situation, and
feedstock substitutability. The feasibility of specific policy instruments depends on these specificities and might
therefore differ between subsectors of the EII.
The analysis of instruments is structured through an extended typology that takes its starting point in the
economic impact the instruments have on the actors. The types of instruments include the commonly used
sticks, carrots and sermons, as well as an additional type that we call “cushions” (Sticks, carrots and sermons are
often assumed to be equal to regulation, economic instruments and information but we have slightly adapted the
concepts to fit our “resource” perspective). These cushions can be flanking policies, that soften the negative
effects on competitiveness that follow from implementing policy instruments, while climate policies between
countries are not in pace. We also differentiate between instruments according to where along the value chain
they are applied. How different instruments affect the competitiveness of industry is a key consideration.
We conclude that both energy and material efficiency, emissions-free processes and clean energy are needed to
transform the EIIs. For this purpose a range of instruments can be used in different parts of the value chain and
the mix can change over time as technologies, markets and institutions change. New approaches to policy
evaluation are needed to assess the combined and long term effects of such policy strategies.
Original languageEnglish
Title of host publicationEceee Industrial Summer Study Proceedings
PublisherEuropean Council for an Energy Efficient Economy (ECEEE)
ISBN (Print)978-919838782-7
Publication statusPublished - 2018
EventECEEE Industrial Efficiency: Leading the low-carbon transition - Die Kalkscheune, Berlin, Germany
Duration: 2018 Jun 112018 Jun 13


ConferenceECEEE Industrial Efficiency
Internet address

Subject classification (UKÄ)

  • Civil Engineering


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