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Effects on the manufacturing, utility and construction industries of decarbonization of the energy-intensive and natural resource-based industries

Andersson, Fredrik N G LU (2020) In Sustainable Production and Consumption 21. p.1-13
Abstract
Decarbonizing the energy-intensive and natural resource-based industries is possible but may sub-stantially increase the cost of production. Whether such cost increases will reduce economic welfare depends on how the downstream industries respond to the higher cost for intermediate goods. In this paper, we explore how downstream industries in the EU15 responded to upstream carbon technology shocks and prices shocks during the period 1998–2014. Our results show that downstream industries do not respond to technology shocks directly but that they do respond to price shocks. A 5 percent upstream price increase is followed by a 4 percent increase in capital investments, 3 percent increase in productivity and a 4 percent reduction in the carbon... (More)
Decarbonizing the energy-intensive and natural resource-based industries is possible but may sub-stantially increase the cost of production. Whether such cost increases will reduce economic welfare depends on how the downstream industries respond to the higher cost for intermediate goods. In this paper, we explore how downstream industries in the EU15 responded to upstream carbon technology shocks and prices shocks during the period 1998–2014. Our results show that downstream industries do not respond to technology shocks directly but that they do respond to price shocks. A 5 percent upstream price increase is followed by a 4 percent increase in capital investments, 3 percent increase in productivity and a 4 percent reduction in the carbon intensity among manufacturing industries. The utilities and construction industries respond primarily by increasing prices and reducing wages. Prices increase by approximately by 1 percent and real wages fall by approximately 2 percent following a five percent upstream price increase. (Less)
Abstract (Swedish)
Decarbonizing the energy-intensive and natural resource-based industries is possible but may substantially increase the cost of production. Whether such cost increases will reduce economic welfare depends on how the downstream industries respond to the higher cost for intermediate goods. In this paper, we explore how downstream industries in the EU15 responded to upstream carbon technology shocks and prices shocks during the period 1998–2014. Our results show that downstream industries do not respond to technology shocks directly but that they do respond to price shocks. A 5 percent upstream price increase is followed by a 4 percent increase in capital investments, 3 percent increase in productivity and a 4 percent reduction in the carbon... (More)
Decarbonizing the energy-intensive and natural resource-based industries is possible but may substantially increase the cost of production. Whether such cost increases will reduce economic welfare depends on how the downstream industries respond to the higher cost for intermediate goods. In this paper, we explore how downstream industries in the EU15 responded to upstream carbon technology shocks and prices shocks during the period 1998–2014. Our results show that downstream industries do not respond to technology shocks directly but that they do respond to price shocks. A 5 percent upstream price increase is followed by a 4 percent increase in capital investments, 3 percent increase in productivity and a 4 percent reduction in the carbon intensity among manufacturing industries. The utilities and construction industries respond primarily by increasing prices and reducing wages. Prices increase by approximately by 1 percent and real wages fall by approximately 2 percent following a five percent upstream price increase. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
decarbonization, climate change, value chain, innovation, energy intensive, manufacturing, prices
in
Sustainable Production and Consumption
volume
21
pages
1 - 13
external identifiers
  • scopus:85074263439
ISSN
2352-5509
DOI
10.1016/j.spc.2019.10.003
language
English
LU publication?
yes
id
dca64559-bfec-4286-90b4-d3887e8a25bc
date added to LUP
2019-10-28 08:05:06
date last changed
2020-01-13 02:29:23
@article{dca64559-bfec-4286-90b4-d3887e8a25bc,
  abstract     = {Decarbonizing the energy-intensive and natural resource-based industries is possible but may sub-stantially increase the cost of production. Whether such cost increases will reduce economic welfare depends on how the downstream industries respond to the higher cost for intermediate goods. In this paper, we explore how downstream industries in the EU15 responded to upstream carbon technology shocks and prices shocks during the period 1998–2014. Our results show that downstream industries do not respond to technology shocks directly but that they do respond to price shocks. A 5 percent upstream price increase is followed by a 4 percent increase in capital investments, 3 percent increase in productivity and a 4 percent reduction in the carbon intensity among manufacturing industries. The utilities and construction industries respond primarily by increasing prices and reducing wages. Prices increase by approximately by 1 percent and real wages fall by approximately 2 percent following a five percent upstream price increase.},
  author       = {Andersson, Fredrik N G},
  issn         = {2352-5509},
  language     = {eng},
  pages        = {1--13},
  series       = {Sustainable Production and Consumption},
  title        = {Effects on the manufacturing, utility and construction industries of decarbonization of the energy-intensive and natural resource-based industries},
  url          = {http://dx.doi.org/10.1016/j.spc.2019.10.003},
  doi          = {10.1016/j.spc.2019.10.003},
  volume       = {21},
  year         = {2020},
}