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

Author

Listed:
  • Chiappinelli, Olga
  • Gerres, Timo
  • Neuhoff, Karsten
  • Lettow, Frederik
  • de Coninck, Heleen
  • Felsmann, Balázs
  • Joltreau, Eugénie
  • Khandekar, Gauri
  • Linares, Pedro
  • Richstein, Jörn
  • Śniegocki, Aleksander
  • Stede, Jan
  • Wyns, Tomas
  • Zandt, Cornelis
  • Zetterberg, Lars

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, CO2 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.

Suggested Citation

  • Chiappinelli, Olga & Gerres, Timo & Neuhoff, Karsten & Lettow, Frederik & de Coninck, Heleen & Felsmann, Balázs & Joltreau, Eugénie & Khandekar, Gauri & Linares, Pedro & Richstein, Jörn & Śniegocki, A, 2021. "A green COVID-19 recovery of the EU basic materials sector: identifying potentials, barriers and policy solutions," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 21(10), pages 1328-1346.
    • Handle: RePEc:zbw:espost:266341
    DOI: 10.1080/14693062.2021.1922340
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    References listed on IDEAS

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    1. Karsten Neuhoff & Robert A. Ritz, 2019. "Carbon cost pass-through in industrial sectors," Working Papers EPRG1935, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Jörn Richstein, 2017. "Project-Based Carbon Contracts: A Way to Finance Innovative Low-Carbon Investments," Discussion Papers of DIW Berlin 1714, DIW Berlin, German Institute for Economic Research.
    3. Nemet, Gregory F. & Zipperer, Vera & Kraus, Martina, 2018. "The valley of death, the technology pork barrel, and public support for large demonstration projects," Energy Policy, Elsevier, vol. 119(C), pages 154-167.
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    Cited by:

    1. Angela Köppl & Margit Schratzenstaller, 2022. "Macroeconomic Effects of Green Recovery Programmes. Conceptual Framing and a Review of the Empirical Literature," WIFO Working Papers 646, WIFO.
    2. Olga Chiappinelli & Gyula Seres, 2021. "Optimal Discounts in Green Public Procurement," Discussion Papers of DIW Berlin 1983, DIW Berlin, German Institute for Economic Research.
    3. Xi Sun, 2023. "The Role of Carbon Pricing in Promoting Material Recycling: A Model of Multi-Market Interactions," Discussion Papers of DIW Berlin 2034, DIW Berlin, German Institute for Economic Research.
    4. Honma, Satoshi & Ushifusa, Yoshiaki & Okamura, Soyoka & Vandercamme, Lilu, 2023. "Measuring carbon emissions performance of Japan's metal industry: Energy inputs, agglomeration, and the potential for green recovery reduction," Resources Policy, Elsevier, vol. 82(C).
    5. Han-Sol Lee & Ekaterina A. Degtereva & Alexander M. Zobov, 2021. "The Impact of the COVID-19 Pandemic on Cross-Border Mergers and Acquisitions’ Determinants: New Empirical Evidence from Quasi-Poisson and Negative Binomial Regression Models," Economies, MDPI, vol. 9(4), pages 1-13, November.
    6. Wilde, Kerstin & Hermans, Frans, 2024. "Transition towards a bioeconomy: Comparison of conditions and institutional work in selected industries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 50, pages 1-1.
    7. Chiappinelli, Olga & Giuffrida, Leonardo M. & Spagnolo, Giancarlo, 2023. "Public procurement as an innovation policy: Where do we stand?," ZEW Discussion Papers 23-002, ZEW - Leibniz Centre for European Economic Research.
    8. Jeddi, Samir & Lencz, Dominic & Wildgrube, Theresa, 2021. "Complementing carbon prices with Carbon Contracts for Difference in the presence of risk - When is it beneficial and when not?," EWI Working Papers 2021-9, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 16 Aug 2022.

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    More about this item

    Keywords

    Green COVID-19 recovery; Industrial decarbonization; Basic materials; Policy package; EU green deal; Technology readiness;
    All these keywords.

    JEL classification:

    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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