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Socio-technical scenarios for energy-intensive industries: the future of steel production in Germany

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Abstract

Relocating energy-intensive industries to another country may help to meet national greenhouse gas reduction targets. However, this can lead to rising global emissions if production in the country that receives the shifted industries is associated with higher specific emissions (“carbon leakage”). The relocation of industries and thus the possible emergence of carbon leakage depends largely on cost advantages in the country of destination and the level of transport costs. In this study, we consider the example of relocations in the iron and steel industries of China and Germany in order to ascertain effects on CO2-emissions. We develop different scenarios for 2030 using a multilevel cross-impact-balance (CIB) approach and analyse these scenarios in a technology-based cost model. Since all scenarios show high specific cost for reducing global CO2-emissions by preferring crude steel produced in Germany to steel from China, we conclude that avoiding carbon leakage is not necessarily a cost-efficient measure for reducing global CO2-emissions.

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Notes

  1. See Tab. A in Supplementary Material for details.

  2. See Weimer-Jehle et al. (submitted) for details.

  3. Usually, the list of descriptors is limited to approximately 20 descriptors for avoiding overly large and complicated CIB matrices.

  4. For further information, see Appendix H in the Supplementary Material.

  5. For selecting the clusters, we employed the Euclidean distance as measure for the identification of similarities between scenarios (see e.g. Carlsen et al. 2016).

  6. See Appendix C in the Supplementary Material for additional information.

  7. For further information, see Appendix G in the Supplementary Material and Godet (1994).

  8. Differences in the cost of production of crude steel between Germany and China have been elaborated by, e.g. [CEPS, 2013], [Moya & Boulamanti 2016] and [Ecofys et al. 2016]. Using similar cost models, the results for the reference year are comparable.

  9. Following Ecofys (2015), we assume that in 2030, the steel industry will get 52% of the emissions allowances for free.

  10. As described in Supplementary Material, “moderate increase” means an increase by 5%, “strong increase” an increase by 10% and “very strong increase” an increase by 15% in energy efficiency (from 2015 to 2030). The assumption of the potential for energy efficiency improvements bases on calculations of The Boston Consulting Group/Steel Institute VDEh (2013).

  11. In the Supplementary Material, we provide results of a sensitivity analyses taking the uncertainties the specifications of the state of descriptors are linked with, into consideration.

  12. In China, the cost of EAF significantly exceeds the cost for BF-BOF. In Germany, the differences are less significant ((Hasanbeigi et al. 2016), (CEPS 2013)).

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Correspondence to Stefan Vögele.

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This article is part of a Special Issue on “Integrated Scenario Building in Energy Transition Research” edited by Witold-Roger Poganietz and Wolfgang Weimer-Jehle

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Vögele, S., Rübbelke, D., Govorukha, K. et al. Socio-technical scenarios for energy-intensive industries: the future of steel production in Germany. Climatic Change 162, 1763–1778 (2020). https://doi.org/10.1007/s10584-019-02366-0

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  • DOI: https://doi.org/10.1007/s10584-019-02366-0

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