International evidence on industrial affordability of deep decarbonization

H. Qi (), K. H. Cao, Y. S. Cheng and C. K. Woo
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H. Qi: Audencia Business School

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Abstract: In connection to the public policy design for achieving net zero, we assess 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 ≡ incremental energy cost due to deep decarbonization ÷ value added. If A ≤ = user-defined fractional threshold, industrial affordability is said to exist. Using the carbon intensity data purchased from the IEA and effective carbon rates published by the Organization for Economic Cooperation and Development, we find industrial affordability declines with an industry's carbon intensity, a country's effective carbon rate, and a country's deep decarbonization target. Further, mandating net zero sans mitigation is unaffordable at a relatively low like 0.1 for the carbon-intensive industries of chemical products, coke and petroleum products, and basic metals. Hence, our recommendation in pursuance of the United Nations' call for net zero is a politically feasible deep decarbonization strategy with public support enabled by gradual implementation, exemptions, and subsidies.

Keywords: Deep decarbonization; net zero; industrial affordability; carbon intensity; effective carbon rate; IEA member countries (search for similar items in EconPapers)
Date: 2025-09
Note: View the original document on HAL open archive server: https://hal.science/hal-05287384v1
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Published in Journal of Energy Markets, 2025, 17 (3), pp.21-38. ⟨10.21314/JEM.2025.001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05287384

DOI: 10.21314/JEM.2025.001

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