Innovation and use policies required to realize investment and emission reductions in the materials sector

The report argues that achieving the EU's 2050 climate targets requires a broad portfolio of innovative production processes, material substitution, and efficiency gains. It proposes an integrated policy approach combining EU ETS reform—specifically the 'inclusion of consumption' to ensure carbon price pass-through—with public procurement and targeted innovation support, such as carbon contracts for differences, to overcome investment risks and the 'technology valley of death'.

• Primary production of basic materials like steel, cement, and aluminium is highly carbon-intensive, accounting for 16% of total greenhouse gas emissions in Europe.
• To meet the EU's 2050 target of 80-95% emission reductions or climate neutrality, a diverse portfolio of options is necessary, as further efficiency gains from existing technologies are modest.
• Key climate-friendly options include hydrogen-based steelmaking, carbon capture and storage/use (CCS/CCU), bio-based chemicals, and the development of low-carbon concrete that could potentially reduce emissions by 50%.
• The report proposes 'inclusion of consumption' in the EU ETS as a mechanism to ensure full carbon price pass-through to materials, which would create incentives for low-carbon production and efficient material use while protecting against carbon leakage.
• Public procurement can act as a lead market for climate-friendly materials by incorporating environmental parameters and life-cycle cost analysis into tenders, moving away from the 'lowest bidder' approach.
• Private investment in radical innovation is hindered by the 'technology valley of death', high capital requirements, and regulatory uncertainty regarding future carbon prices.
• The report suggests using project-based carbon contracts for differences (CCfD) to provide a guaranteed reference carbon price, making investments in low-carbon technologies more bankable and reducing the need for direct public grants.
• Effective innovation support should prioritize learning over immediate production costs, encourage a diversity of technologies to avoid lock-in, and utilize iterative upscaling rather than immediate full-scale commercialization.

APA

Neuhoff, K., Chiappinelli, O., Baron, R., Barrett, J., Bukowski, M., Duscha, V., Fleiter, T., Haussner, M., Ismer, R., Kok, R., Nemet, G. F., Pollitt, H., Richstein, J., Vakhitova, T., Wyns, T., & Zetterberg, L. (2017). Innovation and use policies required to realize investment and emission reductions in the materials sector. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2017/01/Policies-for-Climate-Friendly-Innovation-and-Investment-in-Materials-Initial-Findings.pdf

Chicago

Neuhoff, Karsten, Olga Chiappinelli, Richard Baron, John Barrett, Maciej Bukowski, Vicki Duscha, Tobias Fleiter, et al. Innovation and use policies required to realize investment and emission reductions in the materials sector. Climate Strategies, 2017. https://climatestrategies.org/wp-content/uploads/2017/01/Policies-for-Climate-Friendly-Innovation-and-Investment-in-Materials-Initial-Findings.pdf.

Wikipedia

{{cite report |last1=Neuhoff |first1=Karsten |last2=Chiappinelli |first2=Olga |last3=Baron |first3=Richard |last4=Barrett |first4=John |last5=Bukowski |first5=Maciej |last6=Duscha |first6=Vicki |last7=Fleiter |first7=Tobias |last8=Haussner |first8=Manuel |last9=Ismer |first9=Roland |display-authors=etal |title=Innovation and use policies required to realize investment and emission reductions in the materials sector |publisher=Climate Strategies |date=January 2017 |url=https://climatestrategies.org/wp-content/uploads/2017/01/Policies-for-Climate-Friendly-Innovation-and-Investment-in-Materials-Initial-Findings.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{neuhoff2017innovation, author = {Neuhoff, Karsten and Chiappinelli, Olga and Baron, Richard and Barrett, John and Bukowski, Maciej and Duscha, Vicki and Fleiter, Tobias and Haussner, Manuel and Ismer, Roland and Kok, Robert and Nemet, Gregory F. and Pollitt, Hector and Richstein, Jörn and Vakhitova, Tatiana and Wyns, Tomas and Zetterberg, Lars}, title = {{Innovation and use policies required to realize investment and emission reductions in the materials sector}}, institution = {Climate Strategies}, year = {2017}, month = jan, url = {https://climatestrategies.org/wp-content/uploads/2017/01/Policies-for-Climate-Friendly-Innovation-and-Investment-in-Materials-Initial-Findings.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }