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Energies 2017, 10(3), 360; doi:10.3390/en10030360

The Deployment of Low Carbon Technologies in Energy Intensive Industries: A Macroeconomic Analysis for Europe, China and India

1
Wegener Center for Climate and Global Change, University of Graz, 8010 Graz, Austria
2
Department of Economics, University of Graz, 8010 Graz, Austria
3
International Institute for Applied Systems Analysis, 2361 Laxenburg, Austria
4
Andlinger Center for Energy and the Environment, Princeton University, Princeton, NJ 08540, USA
5
Woodrow Wilson School of Public and International Affairs, Princeton University, Princeton, NJ 08540, USA
*
Author to whom correspondence should be addressed.
Academic Editor: John Barrett
Received: 30 September 2016 / Revised: 9 February 2017 / Accepted: 2 March 2017 / Published: 14 March 2017
(This article belongs to the Special Issue Low Carbon Economy)
View Full-Text   |   Download PDF [3200 KB, uploaded 15 March 2017]   |  

Abstract

Industrial processes currently contribute 40% to global CO2 emissions and therefore substantial increases in industrial energy efficiency are required for reaching the 2 °C target. We assess the macroeconomic effects of deploying low carbon technologies in six energy intensive industrial sectors (Petroleum, Iron and Steel, Non-metallic Minerals, Paper and Pulp, Chemicals, and Electricity) in Europe, China and India in 2030. By combining the GAINS technology model with a macroeconomic computable general equilibrium model, we find that output in energy intensive industries declines in Europe by 6% in total, while output increases in China by 11% and in India by 13%. The opposite output effects emerge because low carbon technologies lead to cost savings in China and India but not in Europe. Consequently, the competitiveness of energy intensive industries is improved in China and India relative to Europe, leading to higher exports to Europe. In all regions, the decarbonization of electricity plays the dominant role for mitigation. We find a rebound effect in China and India, in the size of 42% and 34% CO2 reduction, respectively, but not in Europe. Our results indicate that the range of considered low-carbon technology options is not competitive in the European industrial sectors. To foster breakthrough low carbon technologies and maintain industrial competitiveness, targeted technology policy is therefore needed to supplement carbon pricing. View Full-Text
Keywords: energy intensive industry; decarbonization; computable general equilibrium analysis; international trade; rebound effect energy intensive industry; decarbonization; computable general equilibrium analysis; international trade; rebound effect
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Nabernegg, S.; Bednar-Friedl, B.; Wagner, F.; Schinko, T.; Cofala, J.; Clement, Y.M. The Deployment of Low Carbon Technologies in Energy Intensive Industries: A Macroeconomic Analysis for Europe, China and India. Energies 2017, 10, 360.

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