Pursuing decarbonization and competitiveness: a narrow corridor for European green industrial transformation

Alice Di Bella, Toni Seibold, Tom Brown and Massimo Tavoni

Papers from arXiv.org

Abstract: This study analyzes how Europe can decarbonize its industrial sector while remaining competitive. Using the open-source model PyPSA-Eur, it examines key energy- and emission-intensive industries, including steel, cement, methanol, ammonia, and high-value chemicals. Two development paths are explored: a continued decline in industrial activity and a reindustrialization driven by competitiveness policies. The analysis assesses cost gaps between European green products and lower-cost imports, and evaluates strategies such as intra-European relocation, selective imports of green intermediates, and targeted subsidies. Results show that deep industrial decarbonization is technically feasible, led by electrification, but competitiveness depends strongly on policy choices. Imports of green intermediates can lower costs while preserving jobs and production, whereas broad subsidies are economically unsustainable. Effective policy should focus support on sectors like ammonia and steel finishing while maintaining current production levels.

Date: 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2510.08199

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