• Energy Research

The target of zero emissions sets a new standard for industry and industrial policy. Industrial policy in the twenty-first century must aim to achieve zero emissions in the energy and emissions int...

The target of zero emissions sets a new standard for industry and industrial policy. Industrial policy in the twenty-first century must aim to achieve zero emissions in the energy and emissions int...

The energy intensive industry, producing basic materials, is responsible for 25 to 30% of today's global greenhouse gas emissions. The future supply of GHG neutral basic materials (e.g. steel, cement, aluminium, plastics, etc.) is a necessity for building a sustainable modern society. Deep decarbonisation of the energy intensive industries is technically possible but will require a major systemic shift in production processes and energy carriers used, which will require large public support in the form of subsidies and high carbon prices. A key barrier for implementing ambitious climate policies targeting energy intensive industries is the inherent conflict between the global nature of energy intensive industries and the existing climate policy framework that is based on nation states taking action according to the principle of “common but differentiated responsibilities”. This approach could lead to carbon leakage and the introduction of carbon trade measures has been the default proposition from academics to ameliorate these concerns. However, another way is to define the task of decarbonizing EIIs as a global task and not as a purely national matter and to cooperate internationally. In this paper we analyse what it takes to decarbonize energy intensive industry and what implications this transition can have for trade. From here we explore the opportunities for enhanced cooperation for deep decarbonisation for EIIs within the Paris Agreement. We argue for international cooperation by establishing a green materials club that would focus on long-term technology development. This could be a viable way to ease the current shortterm conflicts and mitigate the need for carbon tariffs. However, a green materials club should still be a part of a wider discussion around what is considered fair trade practices under the climate convention and how this relates to national interest and industrial policy for the decarbonisation of basic materials production. (Less)

The energy intensive industry, producing basic materials, is responsible for 25 to 30% of today's global greenhouse gas emissions. The future supply of GHG neutral basic materials (e.g. steel, cement, aluminium, plastics, etc.) is a necessity for building a sustainable modern society. Deep decarbonisation of the energy intensive industries is technically possible but will require a major systemic shift in production processes and energy carriers used, which will require large public support in the form of subsidies and high carbon prices. A key barrier for implementing ambitious climate policies targeting energy intensive industries is the inherent conflict between the global nature of energy intensive industries and the existing climate policy framework that is based on nation states taking action according to the principle of “common but differentiated responsibilities”. This approach could lead to carbon leakage and the introduction of carbon trade measures has been the default proposition from academics to ameliorate these concerns. However, another way is to define the task of decarbonizing EIIs as a global task and not as a purely national matter and to cooperate internationally. In this paper we analyse what it takes to decarbonize energy intensive industry and what implications this transition can have for trade. From here we explore the opportunities for enhanced cooperation for deep decarbonisation for EIIs within the Paris Agreement. We argue for international cooperation by establishing a green materials club that would focus on long-term technology development. This could be a viable way to ease the current shortterm conflicts and mitigate the need for carbon tariffs. However, a green materials club should still be a part of a wider discussion around what is considered fair trade practices under the climate convention and how this relates to national interest and industrial policy for the decarbonisation of basic materials production. (Less)

Abstract Global steel production is currently dependent on coal and capital-intensive production facilities with long economic lifetimes. While the Paris Agreement means carbon neutrality must be reached globally by 2050–2070, with negative emissions thereafter, coal-based steel production today accounts for around 8% of global energy-related CO2 emissions. Its production may stabilize or even decline in industrialized countries, but it will increase significantly in the emerging economies. In the past, the focus of CO2 reduction for steel has been on moderate emissions reductions through energy efficiency measures and on exploring carbon capture and storage. However, as (1) the cost of renewable electricity is declining rapidly, (2) carbon capture and storage has not materialized yet, and (3) and more and more countries set deep emission reduction targets, electricity- and hydrogen-based steelmaking has gathered substantial momentum over the past half-decade. Given the short time frame and the sector's deep carbon lock-in, there is an urgent need to understand the national climate and energy policy as well as the current implementation of low-CO2 and renewable electricity that would enable a shift from coal-based to electricity-based steelmaking. In this paper, we first identify the countries that are likely to be major steel producers in the future and thus major CO2-emitters. Then we map medium- and long-term CO2 reduction and renewable targets as well as the current share of low-CO2 and renewable electricity by country. Based on these data, we develop a set of indicators that map the readiness of steel-producing countries for a sustainable transition. Our findings show that although binding long-term CO2 reduction targets are being implemented, medium-term CO2 reduction do not yet affect coal based steel production. Overall, the global steel industry seems not be on track yet, though differences between steel producing countries are large. Common shortcomings across countries are a lack of access to renewable electricity and a lack of demanding medium-term CO2 reduction targets. The paper ends with recommendations on how to enable a low-carbon transition of the global steel industry in line with the Paris Agreement.

Abstract Global steel production is currently dependent on coal and capital-intensive production facilities with long economic lifetimes. While the Paris Agreement means carbon neutrality must be reached globally by 2050–2070, with negative emissions thereafter, coal-based steel production today accounts for around 8% of global energy-related CO2 emissions. Its production may stabilize or even decline in industrialized countries, but it will increase significantly in the emerging economies. In the past, the focus of CO2 reduction for steel has been on moderate emissions reductions through energy efficiency measures and on exploring carbon capture and storage. However, as (1) the cost of renewable electricity is declining rapidly, (2) carbon capture and storage has not materialized yet, and (3) and more and more countries set deep emission reduction targets, electricity- and hydrogen-based steelmaking has gathered substantial momentum over the past half-decade. Given the short time frame and the sector's deep carbon lock-in, there is an urgent need to understand the national climate and energy policy as well as the current implementation of low-CO2 and renewable electricity that would enable a shift from coal-based to electricity-based steelmaking. In this paper, we first identify the countries that are likely to be major steel producers in the future and thus major CO2-emitters. Then we map medium- and long-term CO2 reduction and renewable targets as well as the current share of low-CO2 and renewable electricity by country. Based on these data, we develop a set of indicators that map the readiness of steel-producing countries for a sustainable transition. Our findings show that although binding long-term CO2 reduction targets are being implemented, medium-term CO2 reduction do not yet affect coal based steel production. Overall, the global steel industry seems not be on track yet, though differences between steel producing countries are large. Common shortcomings across countries are a lack of access to renewable electricity and a lack of demanding medium-term CO2 reduction targets. The paper ends with recommendations on how to enable a low-carbon transition of the global steel industry in line with the Paris Agreement.

Abstract The Swedish steel industry stands before a potential transition to drastically lower its CO2 emissions using direct hydrogen reduction instead of continuing with coke-based blast furnaces. Previous studies have identified hydrogen direct reduction as a promising option. We build upon earlier efforts by performing a technological innovation system study to systematically examine the barriers to a transition to hydrogen direct reduction and by providing deepened quantitative empirics to support the analysis. We also add extended paper and patent analysis methodology which is particularly useful for identifying actors and their interactions in a technological system. We conclude that while the innovation system is currently focused on such a transition, notable barriers remain, particularly in coordination of the surrounding technical infrastructure and the issue of maintaining legitimacy for such a transition in the likely event that policies to address cost pressures will be required to support this development.

Abstract The Swedish steel industry stands before a potential transition to drastically lower its CO2 emissions using direct hydrogen reduction instead of continuing with coke-based blast furnaces. Previous studies have identified hydrogen direct reduction as a promising option. We build upon earlier efforts by performing a technological innovation system study to systematically examine the barriers to a transition to hydrogen direct reduction and by providing deepened quantitative empirics to support the analysis. We also add extended paper and patent analysis methodology which is particularly useful for identifying actors and their interactions in a technological system. We conclude that while the innovation system is currently focused on such a transition, notable barriers remain, particularly in coordination of the surrounding technical infrastructure and the issue of maintaining legitimacy for such a transition in the likely event that policies to address cost pressures will be required to support this development.