• Energy Research
• 8. Economic growth close

On the path to climate neutrality, global production and trade of basic materials might change due to the heterogeneous availability of renewable electricity. Here we estimate the “renewables pull”, i.e. the energy-cost savings associated with such relocation, for varying depths of relocation for three key tradable energy-intensive industrial commodities: steel, urea, and ethylene. Assuming an electricity-price difference of 40 EUR/MWh, we find respective relocation savings of 19%, 33%, and 38%, which might, despite soft factors in the private sector, lead to green relocation. Conserving today's production patterns by importing hydrogen is substantially costlier, whereas imports of intermediate products could be almost as cost-efficienct, while keeping substantial value creation in importing regions. A societal debate on macroeconomic, industrial, and geopolitical implications is needed, potentially resulting in selective policies of green-relocation protection.

Abstract Given their historic emissions and economic capability, we analyze a leadership role for representative industrialized regions (EU, US, Japan, and Australia) in the global climate mitigation effort. Using the global integrated assessment model REMIND, we systematically compare region-specific mitigation strategies and challenges of reaching domestic net-zero carbon emissions in 2050. Embarking from different emission profiles and trends, we find that all of the regions have technological options and mitigation strategies to reach carbon neutrality by 2050. Regional characteristics are mostly related to different land availability, population density and population trends: While Japan is resource limited with respect to onshore wind and solar power and has constrained options for carbon dioxide removal (CDR), their declining population significantly decreases future energy demand. In contrast, Australia and the US benefit from abundant renewable resources, but face challenges to curb industry and transport emissions given increasing populations and high per-capita energy use. In the EU, lack of social acceptance or EU-wide cooperation might endanger the ongoing transition to a renewable-based power system. CDR technologies are necessary for all regions, as residual emissions cannot be fully avoided by 2050. For Australia and the US, in particular, CDR could reduce the required transition pace, depth and costs. At the same time, this creates the risk of a carbon lock-in, if decarbonization ambition is scaled down in anticipation of CDR technologies that fail to deliver. Our results suggest that industrialized economies can benefit from cooperation based on common themes and complementary strengths. This may include trade of electricity-based fuels and materials as well as the exchange of regional experience on technology scale-up and policy implementation.