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Hunting "brown zombies" to reduce industry's carbon footprint

Gert Bijnen () and Carine Swartenbroekx ()
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Gert Bijnen: National Bank of Belgium, Research Department, and KU Leuven, Department of Economics.
Carine Swartenbroekx: National Bank of Belgium, Economics and Research Department

No 454, Working Paper Research from National Bank of Belgium

Abstract: This paper provides a first estimate of the potential greenhouse gas mitigation from the intra-sector reallocation of economic activity by the European manufacturing industry away from carbon-inefficient – or "brown zombie" – firms to more carbon-efficient firms. Using techniques from the literature on productivity, we find a potential reduction of 38% based on a limited reallocation of production, without the need for new technologies. Therefore, when designing emission reduction plans, policymakers should not focus solely on improvements and innovation within existing firms but must also encourage the reallocation of economic activity from "brown zombies" to more carbon-efficient enterprises.

Keywords: climate policy; carbon emission reduction; carbon-intensive industries; reallocation; brown zombies (search for similar items in EconPapers)
JEL-codes: D22 L23 L52 L60 O14 Q58 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2024-09
New Economics Papers: this item is included in nep-ene and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:202409-454

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