The Role of Industrial and Market Symbiosis in Stimulating CO2 Emission Reductions

Tine Compernolle () and Jacco J. J. Thijssen
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Tine Compernolle: University of Antwerp
Jacco J. J. Thijssen: University of York

Environmental & Resource Economics, 2022, vol. 83, issue 1, No 8, 197 pages

Abstract: Abstract An increasing concern for climate change puts pressure on industrial firms to achieve carbon emission reductions. These could be realized through cooperation among firms in industrial chains, which leads to industrial symbiosis. By taking a real options approach, we make the timing component of the investment decisions explicit. This is important in assessing the impact of carbon-reducing investment over a specific time-span. We show that a joint venture between a CO2 emitting firm and a firm that can use the CO2 will result in a higher probability that an investment in CO2 capture will take place within a specific time period, which reduces the amount of CO2 emitted substantially. We also show that, in addition to industrial symbiosis, cooperation between firms can benefit from “market symbiosis” as well, in the sense that investments are more likely to take place in markets that are positively correlated. This is an important result, given that the EU has set binding targets to its Member States for reducing their emissions.

Keywords: Real options; Two-factor uncertainty; Industrial symbiosis; Correlation; CO2 emission reduction (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10640-021-00616-3

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