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The climate implications of government support in aluminium smelting and steelmaking: An Empirical Analysis

Author

Listed:
  • Grégoire Garsous
  • Donal Smith
  • Dylan Bourny

Abstract

This report combines multiple novel datasets to provide evidence that government support has contributed to increased carbon emissions from aluminium and steelmaking activities through an increase in production output and by shifting production to more emission intensive plants. While improvements in technology have driven overall emissions downward, there is no evidence that government support in this sector has been targeted at, or has contributed to, developing techniques that improve environmental performance. Removing such support could therefore contribute to a cost-effective decarbonisation strategy. For example, removing government support to aluminium smelting and steel making worldwide would reduce carbon emissions by 75% more than the reduction observed in 2020 resulting from COVID-related restrictions. In addition, the removal of such support would free up scarce public resources for alternative uses.

Suggested Citation

  • Grégoire Garsous & Donal Smith & Dylan Bourny, 2023. "The climate implications of government support in aluminium smelting and steelmaking: An Empirical Analysis," OECD Trade Policy Papers 276, OECD Publishing.
    • Handle: RePEc:oec:traaab:276-en
    DOI: 10.1787/178ed034-en
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    More about this item

    Keywords

    Emissions-intensive industries; Greenhouse gas emissions;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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