Building blocks for a climate-neutral European industrial sector

The report argues that current carbon pricing and innovation funds are insufficient to transform the basic materials sector. It proposes a five-part policy package: a Climate Contribution to ensure full carbon cost internalisation, project-based Carbon Contracts for Difference (CCfDs) to hedge investment risks, Contracts for Difference (CfDs) for renewables to lower electricity costs, Green Public Procurement (GPP) to create lead markets, and long-term Product Carbon Requirements to phase out carbon-intensive materials.

• The production of basic materials, including cement, iron, steel, paper, aluminium, chemicals, and petrochemicals, accounts for approximately 25% of global CO2 emissions and around 16% of EU greenhouse gas emissions.
• A proposed 'Climate Contribution' as part of the EU Emissions Trading System would charge domestic and imported materials sold for final use in Europe based on conventional process benchmarks, ensuring full carbon cost internalisation without triggering carbon leakage.
• Project-based Carbon Contracts for Difference (CCfDs) can reduce the expected CO2 price required for breakthrough technologies to break even from approximately 115 Euro/tonCO2 to around 75 Euro/tonCO2, a reduction of about 35%, by lowering financing costs through increased debt capacity.
• Publicly guaranteed Contracts for Difference (CfDs) for renewables can reduce the overall cost of delivering renewable power to consumers by approximately 30% by hedging investors against regulatory risks and reducing financing costs.
• Green Public Procurement (GPP) can create lead markets for low-carbon practices; evidence from the Netherlands, Sweden, and the UK shows that substantial emission reductions of up to 50% can be achieved in infrastructure procurement, sometimes without increasing costs.
• Product Carbon Requirements, which would ban the sale of products made with carbon-intensive processes, are proposed as a long-term 'sunset clause' likely feasible from the mid-2030s once sufficient clean production capacity exists.
• The report identifies five primary technological mitigation options for the materials sector: sharing, repairing and reusing; improving material efficiency; substituting materials with lower lifecycle emissions; adopting low-carbon production processes (such as electrolysis or carbon capture); and increasing the purity and rate of recycling.

APA

Neuhoff, K., Chiappinelli, O., Gerres, T., Haussner, M., Ismer, R., May, N., Pirlot, A., & Richstein, J. (2019). Building blocks for a climate-neutral European industrial sector. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2019/10/Building-Blocks-for-a-Climate-Neutral-European-Industrial-Sector.pdf

Chicago

Neuhoff, Karsten, Olga Chiappinelli, Timo Gerres, Manuel Haussner, Roland Ismer, Nils May, Alice Pirlot, and Jörn Richstein. Building blocks for a climate-neutral European industrial sector. Climate Strategies, 2019. https://climatestrategies.org/wp-content/uploads/2019/10/Building-Blocks-for-a-Climate-Neutral-European-Industrial-Sector.pdf.

Wikipedia

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BibTeX

@techreport{neuhoff2019building, author = {Neuhoff, Karsten and Chiappinelli, Olga and Gerres, Timo and Haussner, Manuel and Ismer, Roland and May, Nils and Pirlot, Alice and Richstein, Jörn}, title = {{Building blocks for a climate-neutral European industrial sector}}, institution = {Climate Strategies}, year = {2019}, month = oct, url = {https://climatestrategies.org/wp-content/uploads/2019/10/Building-Blocks-for-a-Climate-Neutral-European-Industrial-Sector.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }