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The renewables pull effect : How regional differences in renewable energy costs could influence where industrial production is located in the future

Samadi, Sascha ; Fischer, Andreas and Lechtenböhmer, Stefan LU (2023) In Energy Research and Social Science 104.
Abstract

To combat climate change, it is anticipated that in the coming years countries around the world will adopt more stringent policies to reduce greenhouse gas emissions and increase the use of clean energy sources. These policies will also affect the industry sector, which means that industrial production is likely to progressively shift from CO2-emitting fossil fuel sources to renewable energy sources. As a result, a region's renewable energy resources could become an increasingly important factor in determining where energy-intensive industries locate their production. We refer to this pull factor as the “renewables pull” effect. Renewables pull could lead to the relocation of some industrial production as a consequence of... (More)

To combat climate change, it is anticipated that in the coming years countries around the world will adopt more stringent policies to reduce greenhouse gas emissions and increase the use of clean energy sources. These policies will also affect the industry sector, which means that industrial production is likely to progressively shift from CO2-emitting fossil fuel sources to renewable energy sources. As a result, a region's renewable energy resources could become an increasingly important factor in determining where energy-intensive industries locate their production. We refer to this pull factor as the “renewables pull” effect. Renewables pull could lead to the relocation of some industrial production as a consequence of regional differences in the marginal cost of renewable energy sources. In this paper, we introduce the concept of renewables pull and explain why its importance is likely to increase in the future. Using the examples of direct reduced iron (DRI) and ammonia production, we find that the future costs of climate-neutral production of certain products is likely to vary considerably between regions with different renewable energy resources. However, we also identify the fact that many other factors in addition to energy costs determine the decisions that companies make in term of location, leaving room for further research to better understand the future relevance of renewables pull.

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author
; and
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Climate change mitigation, Industry relocation, Industry transformation, International trade, Renewable energy potential, Renewables pull
in
Energy Research and Social Science
volume
104
article number
103257
publisher
Elsevier
external identifiers
  • scopus:85170034463
ISSN
2214-6296
DOI
10.1016/j.erss.2023.103257
language
English
LU publication?
no
additional info
Funding Information: This work was developed within the research project SCI4climate.NRW which is funded by the Ministry of Economic Affairs, Industry, Climate Action and Energy of the State of North Rhine-Westphalia . Publisher Copyright: © 2023 The Author(s)
id
4bf8c2c7-32bd-439a-bef1-7637a431bc48
date added to LUP
2023-11-06 10:47:58
date last changed
2023-11-07 12:53:18
@article{4bf8c2c7-32bd-439a-bef1-7637a431bc48,
  abstract     = {{<p>To combat climate change, it is anticipated that in the coming years countries around the world will adopt more stringent policies to reduce greenhouse gas emissions and increase the use of clean energy sources. These policies will also affect the industry sector, which means that industrial production is likely to progressively shift from CO<sub>2</sub>-emitting fossil fuel sources to renewable energy sources. As a result, a region's renewable energy resources could become an increasingly important factor in determining where energy-intensive industries locate their production. We refer to this pull factor as the “renewables pull” effect. Renewables pull could lead to the relocation of some industrial production as a consequence of regional differences in the marginal cost of renewable energy sources. In this paper, we introduce the concept of renewables pull and explain why its importance is likely to increase in the future. Using the examples of direct reduced iron (DRI) and ammonia production, we find that the future costs of climate-neutral production of certain products is likely to vary considerably between regions with different renewable energy resources. However, we also identify the fact that many other factors in addition to energy costs determine the decisions that companies make in term of location, leaving room for further research to better understand the future relevance of renewables pull.</p>}},
  author       = {{Samadi, Sascha and Fischer, Andreas and Lechtenböhmer, Stefan}},
  issn         = {{2214-6296}},
  keywords     = {{Climate change mitigation; Industry relocation; Industry transformation; International trade; Renewable energy potential; Renewables pull}},
  language     = {{eng}},
  publisher    = {{Elsevier}},
  series       = {{Energy Research and Social Science}},
  title        = {{The renewables pull effect : How regional differences in renewable energy costs could influence where industrial production is located in the future}},
  url          = {{http://dx.doi.org/10.1016/j.erss.2023.103257}},
  doi          = {{10.1016/j.erss.2023.103257}},
  volume       = {{104}},
  year         = {{2023}},
}