The Deployment of Low Carbon Technologies in Energy Intensive Industries: A Macroeconomic Analysis for Europe, China and India

Nabernegg, S., Bednar-Friedl, B., Wagner, F. ORCID:, Schinko, T. ORCID:, Cofala, J., & Clement, Y.M. (2017). The Deployment of Low Carbon Technologies in Energy Intensive Industries: A Macroeconomic Analysis for Europe, China and India. Energies 10 (3) p. 360. 10.3390/en10030360.

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Industrial processes currently contribute 40% to global CO2 emissions and therefore substantial increases in industrial energy efficiency are required for reaching the 2 C target. We assess the macroeconomic effects of deploying low carbon technologies in six energy intensive industrial sectors (Petroleum, Iron and Steel, Non-metallic Minerals, Paper and Pulp, Chemicals, and Electricity) in Europe, China and India in 2030. By combining the GAINS technology model with a macroeconomic computable general equilibrium model, we find that output in energy intensive industries declines in Europe by 6% in total, while output increases in China by 11% and in India by 13%. The opposite output effects emerge because low carbon technologies lead to cost savings in
China and India but not in Europe. Consequently, the competitiveness of energy intensive industries is improved in China and India relative to Europe, leading to higher exports to Europe. In all regions, the decarbonization of electricity plays the dominant role for mitigation. We find a rebound effect in China and India, in the size of 42% and 34% CO2 reduction, respectively, but not in Europe. Our
results indicate that the range of considered low-carbon technology options is not competitive in the European industrial sectors. To foster breakthrough low carbon technologies and maintain industrial competitiveness, targeted technology policy is therefore needed to supplement carbon pricing.

Item Type: Article
Uncontrolled Keywords: energy intensive industry; decarbonization; computable general equilibrium analysis; international trade; rebound effect
Research Programs: Air Quality & Greenhouse Gases (AIR)
Risk & Resilience (RISK)
Mitigation of Air Pollution (MAG)
Risk, Policy and Vulnerability (RPV)
Depositing User: Romeo Molina
Date Deposited: 16 Mar 2017 15:38
Last Modified: 27 Aug 2021 17:28

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