Temporal change in India’s imbalance of carbon emissions embodied in international trade

In India, rapid industrialization and reorganization of the global supply chain are driving economic growth, accompanied by increasing exports and carbon emissions. India is poised to succeed China as the next world manufactory, which will lead to huge emissions in the country. To formulate appropriate emission mitigation measures, it is necessary to further understand the temporal change in India’s emissions at the sectoral level from both the production and consumption perspectives. However, existing studies that have estimated emissions in India have paid less attention to the link among original emitters, final producers and final consumers and to its temporal change. Based on an emission inventory compiled in this study, we trace emission flows from original emitters to final producers and then to final consumers through the international supply chain by using an environmentally extended multi-regional input-output model. This study finds that both production-based and consumption-based emissions in India increased constantly from 2000 to 2014, and production-based emissions had higher growth rates due to the increased coal share. The major receivers of India’s exported emissions were developed countries (e.g., the European Union and the United States), while the main sources of India’s imported emissions were developing countries (e.g., China and Russia). From 2011 to 2014, India’s net exported emissions increased by 29.2% because of the decrease of imported emissions. Moreover, intermediate products (63% and 73.7%) were the major contributors to exported and imported emissions, most of which were embodied in manufacturing products (48.8% and 65.7%, respectively). Therefore, international cooperation to optimize the energy and trade structure and to improve energy efficiency can be effective in mitigating carbon emissions in India

A European carbon border tax: much pain, little gain. Bruegel Policy Contribution Issue n˚5 | March 2020

The European Green Deal has set a target of reducing European Union carbon emissions by about 40 percent over the next ten years. Reaching this target is likely to involve a significant increase in carbon prices. Theoretically, higher carbon prices can lead to carbon leakage, or the relocation of industrial activity and its accompanying emissions out of economies with high carbon prices and into economies with low carbon prices. To address this perceived threat, the European Commission will consider the inclusion of a carbon border adjustment mechanism within the European Green Deal. This will apply a charge on goods imported into the EU, based on the emissions emitted during their production. The European Commission should not make the implementation of a carbon border adjustment mechanism into a must-have element of its climate policy. There is little in the way of strong empirical evidence that would justify a carbon-adjustment measure. Assessments of current carbon pricing schemes typically find no leakage, while ex-ante modelling tends to find limited leakage, with results highly sensitive to underlying assumptions. Energy price differentials – a proxy for carbon prices – do not necessarily result in a relocation of energy-intensive production. Furthermore, significant logistical, legal and political challenges will arise during the design of a carbon border mechanism. Choices would have to be made between more efficient but highly complex and politically risky approaches, and mainly symbolic but more easily implementable solutions. To simplify the design of a carbon border mechanism whilst maximising its benefits, the Commission has proposed focusing only on carbon-intensive and trade-exposed sectors. But it will be difficult to draw a strict line between covered and non-covered sectors. Trade deviation will potentially lead to lobbying and the temptation for ‘cascading protectionism,’ with tariffs extended to industries further along value chains. A strategy of tying future climate policy to the implementation of a border adjustment mechanism might therefore hinder rather than help EU climate policy. The EU should instead focus upon the implementation of measures to trigger the development of a competitive low-carbon industry in Europe

Mobilising the circular economy for energy-intensive materials

MOBILISING THE CIRCULAR ECONOMY FOR ENERGY-INTENSIVE MATERIALS Mobilising the circular economy for energy-intensive materials / Sartor, Oliver (Rights reserved) ( -

Imposing a unilateral carbon constraint on European energy-intensive industries and its impact on their international competitiveness - data & analysis

We examine the implications of EU climate policy for energy intensive industries by calculating, for a range of energy-intensive processes and products, the product price increases that would be required to maintain unit profits at present levels, based on likely values of allowance prices in the European Union Emissions Trading Scheme up to 2020. We also investigate in how far it would be possible for the affected activities to pass through cost increases to their clients, by analysing their exposure to domestic and international competition. It concludes that the sectors analysed are typically relatively highly concentrated (sometimes even at the world level) and form parts of vertically integrated and locally-clustered value chains. This tends to increase market entry and exit barriers and, thus, to reduce the risk of large output losses and delocalisation.climate change, competitiveness, energy-intensive industries, emissions trading, bergmann, schmitz, hayden, gerday, kosonen

Imposing a unilateral carbon constraint on European energy-intensive industries and its impact on their international competitiveness - data & analysis

This paper investigates the implications of EU climate change policy for energy intensive industries. Specifically, it calculates, for a range of energy-intensive processes and products, the product price increases that would be required to maintain unit profits at present levels, based on likely values of allowance prices in the European Union Emissions Trading Scheme up to 2020. For most of the energy- and carbon-intensive products considered here, an allowance price of €20 per tonne of carbon dioxide would require price increases of between 0.1 to 5% to maintain profits, assuming full pass-through of the allowance price along the value chain. Doubling the allowance price to €40/tonne would double the required increase. The activities that risk being most challenged by the carbon constraint appear to be container glass production using virgin inputs, primary aluminium production, primary steel production based on the basic oxygen furnace process, and some basic chemicals production. However, the analysis has also shown that for many of these cases alternative production processes exist, based on recycled inputs, for example. The cement sector, although very energy- and carbon-intensive, is relatively little exposed to international competition. Indeed, the paper also investigates in how far it would be possible for the affected activities to pass through cost increases to their clients, by analysing their exposure to domestic and international competition. It concludes that the sectors analysed are typically relatively highly concentrated (sometimes even at the world level) and form parts of vertically integrated and locally-clustered value chains. This tends to increase market entry and exit barriers and, thus, to reduce the risk of large output losses and delocalisation.climate change, competitiveness, energy-intensive industries, emissions trading

Carbon Border Adjustment Mechanisms and Their Economic Impact on Finland and the EU

In this report, we address an EU carbon border adjustment mechanism (CBAM) and its economic implications. While a CBAM is proposed as a solution to the EU’s carbon leakage problem, we acknowledge that there are several ways to implement CBAMs, with varying combinations of technical difficulties, administrative burden, legal risks, and risks of political backlash. We construct scenarios in which the CBAM is designed based on feasibility considerations and compare them with broader, but also more complex, alternatives. Based on our analysis, the CBAM may face major implementation hurdles in its deployment going forward. Thus, the likeliest approach would be to test its use with a narrow set of imported products that are emission intensive which would limit administrative challenges. After considering a feasible alternative, we find that the economic and environmental impact of such a narrow tariff would most likely be small, and such a CBAM would serve more as a signal of the EU’s determination to resolve the carbon leakage problem rather than as a true solution to it. More ambitious CBAMs will inevitably face difficulties in terms of data collection and administration. Moreover, China in particular will be strongly affected by such CBAMs. Countermeasures could nullify the economic benefits of CBAMs. To avoid the countermeasures, the EU should focus on designing the CBAM in a manner that aims at strengthening multilateral cooperation on climate change

Decarbonization of construction supply chains - Achieving net-zero carbon emissions in the supply chains linked to the construction of buildings and transport infrastructure

Sweden has committed to reducing greenhouse gas (GHG) emissions to a net-zero level by Year 2045. In Sweden, about 20% of its annual CO2 emissions are from the manufacture, transport and processing of materials for both the construction and refurbishment of buildings and transport infrastructure. Cement and steel, together with diesel use in construction processes and material transport account for the majority of the CO2 emissions associated with building and infrastructure construction.This thesis assesses the challenges associated with reducing CO2 emissions from the supply chains for buildings and transport infrastructure construction. The main aim is to determine the extent to which abatement technologies across the supply chain can reduce the GHG emissions associated with construction if combined to exploit their full potential, while identifying key barriers towards their implementation.The work takes its starting point from material, energy and emissions flow analyses conducted across the construction supply chain, followed by the development of stylized models, which are subsequently used for scenario analysis. This quantitative analysis work is integrated with a participatory process that involves relevant stakeholders in the assessment process. The participatory process serves to identify the main abatement options, as well as to adjust decisions and assumptions regarding abatement portfolios and timelines, so as to make these as realistic and feasible as possible. Supported by a comprehensive literature review, a detailed inventory of abatement options in the supply chain of building and transport infrastructure construction is developed. This includes technologies and practices that are currently available and that are deemed available on a timescale up to Year 2045.The results show that on a national level, it is possible to reduce GHG emissions associated with the construction of buildings and transport infrastructure by 50% up to Year 2030, through applying already available measures. Moreover, it will be feasible to reach close-to-zero emissions by Year 2045, with this requiring comprehensive measures across-the-board, including breakthrough technologies for heavy vehicles, cement and steel production. Attaining the full abatement potential of measures that are already available would rely on sufficient availability of sustainably produced second-generation biofuels, requiring accelerated implementation of alternative abatement measures, involving optimization of material use, mass handling and transport systems, as well as the use of alternative materials and designs, with focus on circularity and material efficiency measures. To realize the potential linked to applying measures across the supply chain, there is a need for extensive collaboration along the whole value chain. Policy measures and procurement strategies should be aligned to support these measures with a clear supply chain focus, so as to enable balanced risk sharing and the involvement of contractors early in the planning and design process.The results also illustrate the importance of intensifying efforts to identify and manage both soft and hard barriers to implementation and the importance of acting promptly to implement available measures (e.g., material efficiency, recycling and material/fuel substitution measures) while actively planning for long-term measures (electrification of heavy vehicles and low-CO2 steel or cement). There are immediate and clear needs to prepare for deeper abatement and associated transformative shifts and to consider carefully the pathway towards these goals while avoiding pitfalls along the way, such as an over-reliance on biofuels or cost optimizations that cannot be scaled up to the levels required to reach deep emissions reductions.Therefore, strategic planning must be initiated as early as possible, as lead times related to planning, securing permits and construction of the support infrastructure (renewable electricity supply, electricity grid expansion, hydrogen storage, CCS infrastructure) and piloting and upscaling to commercial scale of the actual production units will all influence the speed of change

Gestion durable des ressources dans la chaîne de valeur européenne de l’acier

The present thesis delved into the current and future interactions within the European Steel Industry and of it with the environment it is a part of, with the main objective of supporting decision- and policy-making efforts oriented towards sustainability and circularity, helping to shape the future of steel in the European Community. The thesis used the European Steel Industry as a case study to explore the potential benefits of integrating Life Cycle Assessment (LCA) into System Dynamics (SD) under the scopes of Circular Economy and Industrial Ecology. A model representative of the European Steel Industry was built modularly in Stella Architect, following ILCD and ISO guidelines and standards for LCA. Throughout 4 of the 5 articles developed for the present thesis, 21 simulation runs were performed on the aforementioned model: 12 on identifying potential constraints and benefits of End-of-Life policies; 5 assessing the advantages and disadvantages of different Supply Chain Integration (SCI) strategies along European steel supply chains; and 4 addressing the interactions between biophysical and economic dynamics in the steel market. An additional article was developed using the methodologies of Circles of Sustainability and Sustainable Urban Metabolism to appraise the challenges and contributions of steel as part of servitization initiatives in urban environments. Overall results indicated that integrating LCA into SD was not only feasible and capable of reproducing results, trends and behaviors from previous scientific studies, but also of contributing to both methodologies in different levels. This approach has potential to interest policy-makers who seek more granularity within the European Steel Industry as well as decision-makers searching for a broader understanding of their operation’s dynamics beyond the gates, notably regarding raw material scarcity, resource self-sufficiency, and resource ownership retention. From the results of each article it was observed that, (a) pushing for recycling and reuse could generate interesting medium- to long-term results for circularity, transitioning away from fossil fuels and developing a whole new market around end-of-life services; (b) different SCI approaches can be environmentally and strategically promising; (c) six key biophysical variables can distinctively affect spot prices, future prices, EBITDA margins, capacity utilization, dividend payouts, and costs of steelmaking; and (d) servitization can provide significant benefits to sustainable cities, while also being able to substantially alter the supply-side dynamics of steelmaking, highlighting how important it is for steelmakers to pay close attention to the service-providing initiatives that may concern their clients and products.La présente thèse entend examiner les interactions présentes et futures entre l'industrie sidérurgique européenne et son environnement, avec pour objectifs principaux, l’amélioration de la prise de décision et l'élaboration de politiques industrielles en matière de durabilité et de circularité. La thèse contribue à l’émergence de propositions contribuant à façonner l'avenir de l'acier dans l’Union Européenne. L'industrie sidérurgique européenne est utilisée ici comme un cas d’école, visant à explorer les avantages potentiels pour l’économie circulaire et l’écologie industrielle, d’une intégration d’un outil (Analyse du Cycle de Vie – ACV) dans une méthodologie (Dynamique des Systèmes – SD). Un modèle modulaire pour l’industrie sidérurgique européenne a été construit et, pour 4 des 5 articles développés dans la thèse, 21 simulations ont été effectuées. 12 simulations ont permis d’identifier les contraintes potentielles et les avantages des stratégies de fin de vie; 5 d’évaluer les avantages et les inconvénients des différentes stratégies d’intégration de la chaîne d’approvisionnement (SCI) dans la filière européenne de l’acier; et 4 de traiter des interactions entre les dynamiques biophysiques et économiques sur le marché de l'acier. Le dernier article s’appuie sur une nouvelle méthodologie – les Cercles de Durabilité et le Métabolisme Urbain Durable – pour évaluer les défis et les contributions de l'acier dans le cadre de l’éco-fonctionnalité en milieu urbain. Les résultats ont montré que l’intégration de l’ACV dans les stratégies de développement durable permettait de reproduire assez fidèlement les résultats et les scénarios d’études scientifiques antérieures, tout en suggérant des apports méthodologiques relativement novateurs. Cette recherche opérationnelle est susceptible d'intéresser les managers et des chefs d’entreprises qui s’attachent aux questions d’efficience et de résilience de l’outil industriel, ainsi que les décideurs politiques qui souhaitent cerner les enjeux d’une pénurie de matières premières ou d’une politique de recyclage de l’acier à l’échelle européenne. D'après les résultats de chaque article, il a été observé que (a) le recyclage et la réutilisation pourraient générer des résultats intéressants à moyen et à long terme en matière de circularité, en abandonnant notamment les combustibles fossiles et en développant un tout nouveau marché autour des services de fin de vie; (b) différentes approches en matière de chaine logistique intégrée semblent être prometteuses d'un point de vue environnemental et stratégique; (c) six variables biophysiques clés peuvent avoir une incidence notoire sur les cours au comptant, les cours à terme, les marges d'EBITDA, l'utilisation des capacités de production, la distribution des dividendes et les coûts de fabrication de l'acier; et (d) la dynamique servicielle dans le cadre de l’éco-fonctionnalité peut apporter des avantages significatifs aux villes durables, tout en modifiant considérablement la structure de l’offre sur le marché de l’acier

Raw materials scoreboard

The raw materials scoreboard is an initiative of the European Innovation Partnership (EIP) on Raw Materials. Its purpose is to provide quantitative data on the EIP's general objectives and on the raw materials policy context. It presents relevant and reliable information that can be used in policymaking in a variety of areas. The scoreboard will, for example, contribute to monitoring progress towards a circular economy, a crucial issue on which the European Commission recently adopted an ambitious action plan. The scoreboard will be published every two years