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An industrial policy framework for transforming energy and emissions intensive industries towards zero emissions
Open accessAbstract
The target of zero emissions sets a new standard for industry and industrial policy. Industrial policy in the twenty-first century must aim to achieve zero emissions in the energy and emissions intensive industries. Sectors such as steel, cement, and chemicals have so far largely been sheltered from the effects of climate policy. A major shift is needed, from contemporary industrial policy that mainly protects industry to policy strategies that transform the industry. For this purpose, we draw on a wide range of literatures including engineering, economics, policy, governance, and innovation studies to propose a comprehensive industrial policy framework. The policy framework relies on six pillars: directionality, knowledge creation and innovation, creating and reshaping markets, building capacity for governance and change, international coherence, and sensitivity to socio-economic implications of phase-outs. Complementary solutions relying on technological, organizational, and behavioural change must be pursued in parallel and throughout whole value chains. Current policy is limited to supporting mainly some options, e.g. energy efficiency and recycling, with some regions also adopting carbon pricing, although most often exempting the energy and emissions intensive industries. An extended range of options, such as demand management, materials efficiency, and electrification, must also be pursued to reach zero emissions. New policy research and evaluation approaches are needed to support and assess progress as these industries have hitherto largely been overlooked in domestic climate policy as well as international negotiations.Key policy insights Energy and emission intensive industries can no longer be complacent about the necessity of zero greenhouse gas (GHG) emissions.Zero emissions require profound technology and organizational changes across whole material value chains, from primary production to reduced demand, recycling and end-of-life of metals, cement, plastics, and other materials.New climate and industrial policies are necessary to transform basic materials industries, which are so far relatively sheltered from climate mitigation.It is important to complement technology R&D with the reshaping of markets and strengthened governance capacities in this emerging policy domain.Industrial transformation can be expected to take centre stage in future international climate policy and negotiations.
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“Examples include the set-aside provisions in the EU ETS, a prime source of funding for low-carbon industrial innovation, and growing attention to CCfDs, which guarantee a value for the carbon savings from low-carbon industrial projects, relative to an assumed carbon price on incumbent, high-carbon producers (142).”
From Carbon Leakage, Consumption, and Trade (2022) · cites this paper as [142]
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Metadata
- Authors
- Nilsson, L. J., Bauer, F., Åhman, M., Andersson, F. N. G., Bataille, C., de la Rue du Can, S., Ericsson, K., Hansen, T., Johansson, B., Lechtenböhmer, S., van Sluisveld, M., & Vogl, V.
- Affiliations
- Lund University (SE)
- Institut du Développement Durable et des Relations Internationales (FR)
- International Energy Analysis Department, Lawrence Berkeley National Laboratory, Berkeley, USA
- SINTEF (NO)
- Wuppertal Institute for Climate, Environment and Energy (DE)
- Corresponding author
- Bauer, Fredric
- ORCID
- Venue
- Climate Policy
- Publisher
- Informa UK Limited
- Published
- 2021-07-30
- Volume
- 21
- Issue
- 8
- Pages
- 1053-1065
- ISSN
- 1469-3062 (ISSN-L)
- 1752-7457
- OpenAlex
- W3187676489
- Cited by
- 172
- References
- 88
- Citations by year
- 2026: 32 · 2025: 30 · 2024: 36 · 2023: 40 · 2022: 28 · 2021: 5
- FWCI
- 20.81
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Climate Policy (publishedVersion, cc-by)
- OSTI OAI (U.S. Department of Energy Office of Scientific and Technical Information) (submittedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Publication Server of the Wuppertal Institute (Wuppertal Institute) (submittedVersion, cc-by)
- eScholarship (California Digital Library) (submittedVersion, cc-by-nc)
- Lund University Publications (Lund University) (submittedVersion)
- Funders
- European Commission (730053)
- Swedish Energy Agency (38271-1)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
- Physical Sciences › Environmental Science › Global and Planetary Change › Sustainability and Climate Change Governance
- Physical Sciences › Environmental Science › Management, Monitoring, Policy and Law › Sustainable Development and Policies
- Keywords
- industrial policy, zero emissions, energy-intensive industries, industrial transformation, steel industry, cement industry, chemical industry, basic materials sector, governance capacity, climate change negotiations, demand management, material efficiency, electrification, recycling, carbon pricing, greenhouse gas emissions reduction, value chain
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