Policies for a climate-neutral industry

Abstract

This paper was approved and declassified by written procedure by the Committee for Industry, Innovation and Entrepreneurship (CIIE) on 2 April 2021 and prepared for publication by the OECD Secretariat.

Innovation and industrial policies for green hydrogen

“…Therefore, hydrogen can also help to deal with high levels of variability in renewable electricity production, by storing this energy into hydrogen, and thereby accelerating the large-scale deployment of renewable electricity. Nevertheless, several studies claim that the conversion factor of the power-to-hydrogen-to-power chain is low: 25% to 35% depending on the assumptions (Ademe, 2020 [16]; France Stratégie, 2021 [17]). A 25 % conversion factor means that one needs an input of 4GWh of electricity to retrieve 1GWh at the end of the cycle.…”

A framework to decarbonise the economy

“…These data repositories use harmonised methodologies that are conducive to cross-country comparisons and benchmarking and thus are suitable for assessing a country's current policy mix. Available data include qualitative and quantitative information on environmental taxation and subsidies (OECD, 2020 [35]; OECD, 2021 [36]), effective carbon rates, fossil-fuel subsidies (OECD, 2021 [37]), selected regulations, and R&D and infrastructure expenditure (IEA, 2020 [38]; IEA, 2020 [39]).…”

“…1 Fossil fuel subsidies mentioned here include direct budgetary support; tax code provisions; and support for fossil fuel use or production via government provisions of auxiliary goods or services for no cost or at below-market prices, requiring non-government entities to provide some services to fossil fuel producers at below-market rates or purchase from them services at above-market quantities. For an overview of the support measures for fossil fuels in Indonesia and other G20 or OECD countries, see the OECD Inventory of Support Measures for Fossil Fuels (2021 [37]). Source: (OECD; IEA; World Bank; IISD-GSI; GIZ Indonesia; Members of the Peer Review Team: China, Germany, Italy, Mexico, New Zealand, 2019 [172]; Durand-Lasserve et al, 2015 [173]).…”

“…Their involvement usually takes place via consultation (initiated by policymakers or lobbying groups), and is likely to boost their support for the final version of the suggested policies (OECD, 2021 [80]; Mueller, 2003[225]; OECD, 2012 [74]). 11  Gradual and transparent increases in climate change policy stringency, which lower uncertainty, thus allowing stakeholders and households to plan ahead and change behaviour (Coady, Parry and Shang, 2018 [226]; IMF, 2019 [227]). A notable example is the annual carbon price increase introduced by the Pan-Canadian Framework (PCF) in 2019, planned to reach full capacity in 2022.…”

An industrial policy framework for OECD countries

“…Yet, while "within" instruments typically feature in both types of policies, "between" instruments are more likely horizontal. Demand-side instruments are more likely targeted, in particular as part of transformative industrial strategies that aim to promote sustainable production and consumption simultaneously (Altenburg and Rodrik, 2017 [63]; OECD, 2021 [12]).…”