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

Stefan Nabernegg, Birgit Bednar-Friedl, Fabian Wagner, Thomas Schinko, Janusz Cofala and Yadira Mori Clement
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Stefan Nabernegg: Wegener Center for Climate and Global Change, University of Graz, 8010 Graz, Austria
Birgit Bednar-Friedl: Wegener Center for Climate and Global Change, University of Graz, 8010 Graz, Austria
Fabian Wagner: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Thomas Schinko: Wegener Center for Climate and Global Change, University of Graz, 8010 Graz, Austria
Janusz Cofala: International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
Yadira Mori Clement: Wegener Center for Climate and Global Change, University of Graz, 8010 Graz, Austria

Energies, 2017, vol. 10, issue 3, 1-26

Abstract: Industrial processes currently contribute 40% to global CO 2 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% CO 2 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.

Keywords: energy intensive industry; decarbonization; computable general equilibrium analysis; international trade; rebound effect (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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