A green COVID-19 recovery of the EU basic materials sector: identifying potentials, barriers and policy solutions

Abstract

This paper explores climate-friendly projects that could be part of the COVID-19 recovery while jump-starting the transition of the European basic materials industry. Findings from a literature review on technology options in advanced development stages for climate-friendly production, enhanced sorting, and recycling of steel, cement, aluminium, and plastics, are combined with insights from interviews with 31 European stakeholders in these sectors about the practical and economic feasibility of these technology options. Results indicate that with an estimated investment of 28.9 billion Euros, up to 20% of EU's basic materials could be produced through low-emission processes or additional recycling by 2025 with technologies that are commercially available or at pilot scale today. However, our stakeholder consultation also shows that in order to make these short-term investments viable, six main barriers need to be addressed, namely: (i) the lack of effective and predictable carbon pricing, (ii) the limited availability of affordable green electricity, (iii) the lack of a regulatory framework for circularity, (iv) low technology market readiness and funding, (v) the lack of infrastructure for hydrogen, CO 2 and power, and (vi) the lack of demand for climate-friendly and recycled materials. Based on these insights, the paper proposes elements of a policy package that can create a framework favourable for investments in these technologies; these policies should ideally accompany the recovery package to give credibility to investors that the business case will last beyond the recovery period. Key policy insights:. Technologies for climate-friendly materials production, sorting and recycling can be supported as part of the recovery package but require an enabling policy framework.

Restorative measures to diminish the covid-19 pandemic effects through circular economy enablers for sustainable and resilient supply chain

“…However, the performed analysis aims to obtain the enablers' ranking and all the enablers have obtained different values. Besides the topmost and the least, remaining enablers are ranked as E9 3 and Table 9), which establishes that; the inception of green innovations (E9) is a major projected demand to emerge from the concern of negative environmental issues which aligns with the framework projected by Chiappinelli et al (2021) and stands upfront to industrial symbiosis/synergy (E10).…”

Technology and material efficiency scenarios for net zero emissions in the UK steel sector

“…More detail is required on the design of industrial policies to determine whether recent commitments mark a substantively new approach. Strategic support will need to address decarbonisation alongside financial stability (Chiappinelli et al, 2021). There are several policy tools which could be pursued to strategically decarbonise the steel sector, falling under the following strands: 1) driving deployment of available and novel technologies; 2) promoting material efficiency across the value chain; 3) addressing embodied emissions through standards; 4) developing effective business models; 5) defining a regional approach to the sector; and 6) considering the value of sectoral carbon budgets.…”

Carbon contracts-for-difference: How to de-risk innovative investments for a low-carbon industry?

“…Energy-intensive industries, including iron and steel, cement, chemicals and petrochemicals, pulp and paper, and aluminium, account for 25–33% of carbon emissions and 38% of total final energy use worldwide ( Allwood et al., 2010 ; IEA, 2017 ). These basic material-producing industries are mostly considered hard to decarbonize ( Chiappinelli et al., 2021 ). Several innovative technologies already exist to significantly reduce emissions in these sectors ( Bataille et al., 2018 ; IEA, 2017 ), compatible with the net-zero pathways announced worldwide, including by the European Union.…”

“…Similarly, policies for renewable energies have demonstrated that de-risking such investments via revenue-stabilizing policy frameworks can lead to lower carbon mitigation costs, via better financing conditions ( Egli et al., 2018 , May and Neuhoff, 2021 ). Design options of CCfDs have been discussed in several policy reports ( Gerres and Linares, 2020 n.d.; Hauser et al., 2021 ; Lösch et al., 2021 ; Neuhoff et al., 2019 ; Sartor and Bataille, 2019 ), including in the form of a project-specific put option ( McWilliams and Zachmann, 2021 ), and several research articles reference CCfDs as a useful part of a policy toolbox ( Chiappinelli et al., 2021 ; Löfgren and Rootzén, 2021 ; Muslemani et al., 2021 ; Sutherland, 2020 ). Vogl.…”