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

Johansson, Bengt LU ; Åhman, Max LU and Nilsson, Lars J LU (2018) ECEEE Industrial Efficiency 2018. p.33-42
Abstract (Swedish)
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... (More)
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.
(Less)
Abstract
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... (More)
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. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Chapter in Book/Report/Conference proceeding
publication status
published
subject
host publication
Eceee Industrial Summer Study Proceedings
volume
2018
pages
33 - 42
publisher
European Council for an Energy Efficient Economy (ECEEE)
conference name
ECEEE Industrial Efficiency
conference location
Berlin, Germany
conference dates
2018-06-11 - 2018-06-13
external identifiers
  • scopus:85049910631
ISBN
978-919838782-7
language
English
LU publication?
yes
id
aa96d878-2998-4ee2-9c7d-d005cf193181
date added to LUP
2018-06-18 16:39:14
date last changed
2019-01-06 14:01:26
@inproceedings{aa96d878-2998-4ee2-9c7d-d005cf193181,
  abstract     = {Energy intensive industries (EIIs), producing the basic materials and products needed in society, contribute<br/>significantly to global emissions of greenhouse gases (GHGs). Motivated by the fear of carbon leakage, climate<br/>policy has so far treated the EIIs leniently with e.g. low carbon prices and/or free allocation of emission<br/>allowances. This has not resulted in more than marginal emission abatement. However, the emissions from EIIs<br/>have to approach zero by 2050 to 2070, following the overall target of the Paris Agreement. It is therefore urgent<br/>to develop policy strategies for a deep decarbonisation of EIIs.<br/>In this study we explore the role of various policy instruments in the transformation of EIIs to zero emissions<br/>and how they can be combined. In our analysis we acknowledge the specificities of the various EII sectors with<br/>regard to mitigation options (e.g. available technologies and potential for recycling), market situation, and<br/>feedstock substitutability. The feasibility of specific policy instruments depends on these specificities and might<br/>therefore differ between subsectors of the EII.<br/>The analysis of instruments is structured through an extended typology that takes its starting point in the<br/>economic impact the instruments have on the actors. The types of instruments include the commonly used<br/>sticks, carrots and sermons, as well as an additional type that we call “cushions” (Sticks, carrots and sermons are<br/>often assumed to be equal to regulation, economic instruments and information but we have slightly adapted the<br/>concepts to fit our “resource” perspective). These cushions can be flanking policies, that soften the negative<br/>effects on competitiveness that follow from implementing policy instruments, while climate policies between<br/>countries are not in pace. We also differentiate between instruments according to where along the value chain<br/>they are applied. How different instruments affect the competitiveness of industry is a key consideration.<br/>We conclude that both energy and material efficiency, emissions-free processes and clean energy are needed to<br/>transform the EIIs. For this purpose a range of instruments can be used in different parts of the value chain and<br/>the mix can change over time as technologies, markets and institutions change. New approaches to policy<br/>evaluation are needed to assess the combined and long term effects of such policy strategies.},
  author       = {Johansson, Bengt and Åhman, Max and Nilsson, Lars J},
  isbn         = {978-919838782-7},
  language     = {eng},
  location     = {Berlin, Germany},
  pages        = {33--42},
  publisher    = {European Council for an Energy Efficient Economy (ECEEE)},
  title        = {Towards zero carbon emissions – Climate policy instruments for energy intensive industries, materials and products},
  volume       = {2018},
  year         = {2018},
}