Pursuing decarbonization and competitiveness: a narrow corridor for European green industrial transformation
🤖 AI Summary
This study addresses the dual challenge of deep decarbonization and maintaining industrial competitiveness in Europe, focusing on energy-intensive sectors—including steel, cement, methanol, ammonia, and high-value chemicals. Using the open-source PyPSA-Eur model, it quantifies system-level costs and carbon mitigation potential under an electrification-dominant pathway, comparing scenarios of reindustrialization versus offshoring. The study innovatively proposes a targeted policy package: selective importation of green intermediate goods coupled with precision sectoral subsidies—designed to avoid fiscal unsustainability from broad-based support—and identifies ammonia production and steel finishing as critical intervention nodes. Results demonstrate that deep decarbonization is technically feasible, yet industrial competitiveness hinges critically on policy design fidelity. Optimized interventions can concurrently advance net-zero objectives and enhance industrial resilience, providing empirical grounding for the EU’s Net-Zero Industry Act. (149 words)
Application Category
📝 Abstract
This study analyzes how Europe can decarbonize its industrial sector while remaining competitive. Using the open-source model PyPSA-Eur, it examines key energy- and emission-intensive industries, including steel, cement, methanol, ammonia, and high-value chemicals. Two development paths are explored: a continued decline in industrial activity and a reindustrialization driven by competitiveness policies. The analysis assesses cost gaps between European green products and lower-cost imports, and evaluates strategies such as intra-European relocation, selective imports of green intermediates, and targeted subsidies. Results show that deep industrial decarbonization is technically feasible, led by electrification, but competitiveness depends strongly on policy choices. Imports of green intermediates can lower costs while preserving jobs and production, whereas broad subsidies are economically unsustainable. Effective policy should focus support on sectors like ammonia and steel finishing while maintaining current production levels.
Problem
Research questions and friction points this paper is trying to address.
Europe decarbonizes industry while maintaining global competitiveness
Analyzes cost gaps between green products and cheaper imports
Evaluates relocation, selective imports and subsidy strategies
Innovation
Methods, ideas, or system contributions that make the work stand out.
Uses PyPSA-Eur model for industrial decarbonization analysis
Evaluates relocation, imports, and subsidies as strategies
Focuses electrification and selective support for competitiveness
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