Towards zero carbon emissions – Climate policy instruments for energy intensive industries, materials and products
Year: 2018
Type: conference-paper
Abstract: Energy intensive industries (EIIs), producing the basic materials and products needed in society, contributesignificantly to global emissions of greenhouse gases (GHGs). Motivated by the fear of carbon leakage, climatepolicy has so far treated the EIIs leniently with e.g. low carbon prices and/or free allocation of emissionallowances. This has not resulted in more than marginal emission abatement. However, the emissions from EIIshave to approach zero by 2050 to 2070, following the overall target of the Paris Agreement. It is therefore urgentto 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 emissionsand how they can be combined. In our analysis we acknowledge the specificities of the various EII sectors withregard to mitigation options (e.g. available technologies and potential for recycling), market situation, andfeedstock substitutability. The feasibility of specific policy instruments depends on these specificities and mighttherefore differ between subsectors of the EII.The analysis of instruments is structured through an extended typology that takes its starting point in theeconomic impact the instruments have on the actors. The types of instruments include the commonly usedsticks, carrots and sermons, as well as an additional type that we call “cushions” (Sticks, carrots and sermons areoften assumed to be equal to regulation, economic instruments and information but we have slightly adapted theconcepts to fit our “resource” perspective). These cushions can be flanking policies, that soften the negativeeffects on competitiveness that follow from implementing policy instruments, while climate policies betweencountries are not in pace. We also differentiate between instruments according to where along the value chainthey 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 totransform the EIIs. For this purpose a range of instruments can be used in different parts of the value chain andthe mix can change over time as technologies, markets and institutions change. New approaches to policyevaluation are needed to assess the combined and long term effects of such policy strategies.
Authors: Bengt Johansson, Max Åhman, Lars J Nilsson
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Award: G4937468798
OpenAlex ID: W2887860335