International evidence on the industrial affordability of deep decarbonization

Kang Hua Cao, Yuk-Shing Cheng, Han (steffan) Qi and Chi-Keung Woo

Journal of Energy Markets

Abstract: In connection to public policy design for achieving net zero, we assess the industrial affordability of deep decarbonization in the International Energy Agency (IEA) member countries. Our international assessment employs a newly developed formula to calculate an industry-specific index A, equivalent to the incremental energy cost due to deep decarbonization divided by the value added. If A ≤ α, where ˛ is a user-defined fractional threshold, industrial affordability is said to exist. Using carbon intensity data purchased from the IEA and effective carbon rates published by the Organisation for Economic Co-operation and Development, we find that industrial affordability declines with an industry’s carbon intensity, a country’s effective carbon rate and its deep decarbonization target. Further, mandating net zero sans mitigation is unaffordable at a relatively low α, such as 0.1, for the carbon-intensive industries of chemical products, coke and petroleum products, and basic metals. Hence, our recommendation in pursuance of the call for net zero by the United Nations is a politically feasible deep decarbonization strategy with public support enabled by gradual implementation, exemptions and subsidies.

References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.risk.net/node/7962157 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rsk:journ2:7962157

Access Statistics for this article

More articles in Journal of Energy Markets from Journal of Energy Markets
Bibliographic data for series maintained by Thomas Paine ().