Arbeitspapier

The Green Industrial Revolution – Investment Pathways to Decarbonize the Industrial Sector in Europe

The industrial sector is responsible for roughly one quarter of global greenhouse-gas (GHG) emissions. To align sector pathway developments with overarching net-zero transition goals in different industries, governments are required to understand sectoral reduction potentials to efficiently promote industry decarbonization using the instruments at their disposal (e.g. subsidies, carbon taxes). In our analysis we examine the state of various industries and employ different modelling frameworks to study investment pathways consistent with a net zero industry transformation. We find that a mix of measures, including energy efficiency improvements, using hydrogen and biomass as feedstock or fuel, producing heat through electric means and the adopting carbon-capture technologies can reduce a sector's carbon dioxide emissions to almost zero. Global investment efforts needed for a green transition of the analyzed sectors1 amount to EUR2.7trn until 2050 of which 8% or EUR210bn is invested in the EU. The largest single sector investments for the EU countries are required in the pulp & paper industry with EUR 78.4bn until 2050 - followed by iron & steel (EUR55.4bn) and cement (EUR37.6bn). The achievable emission reduction for the European industrial sector is estimated at 265 MtCO2 (-92%), which yields an average abatement investment of EUR790 per tCO2.

Language
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 10506

Classification
Wirtschaft
Exhaustible Resources and Economic Development
Investment; Capital; Intangible Capital; Capacity
Environmental Economics: Technological Innovation
Innovation and Invention: Processes and Incentives
Metals and Metal Products; Cement; Glass; Ceramics
Automobiles; Other Transportation Equipment; Related Parts and Equipment
Food; Beverages; Cosmetics; Tobacco; Wine and Spirits
Subject
decarbonization
industry sectors
industry investment
net zero

Event
Geistige Schöpfung
(who)
Zimmer, Markus
Hoffmann, Patrick
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2023

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Zimmer, Markus
  • Hoffmann, Patrick
  • Center for Economic Studies and ifo Institute (CESifo)

Time of origin

  • 2023

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