Policies for Climate Friendly Innovation and Investment in Materials

Basic materials such as steel, cement or aluminium are important inputs to our economies. However their production is responsible for the dominant share of industrial emissions and 16% of European greenhouse gas emissions (GHGs). This report illustrates the portfolio of options available to reduce these emissions with climate friendly production, efficient material use and re-use, and lower-carbon materials. With this portfolio, Europe’s 80-95% emission reduction targets for 2050 and climate neutrality as agreed in the Paris Agreement can be achieved in the materials sector.

The report outlines policy developments that can allow all actors in Europe to benefit from climate friendly choices on producing, using, and re-using basic materials. This requires a consistent policy framework of effective policies for innovation and for use of climate friendly options. Both are closely interlinked: Firms will, for example, only co-invest in innovation,if the investment framework makes large scale applications commercially viable.

The report outlines a set of elements for the refinement of today’s policy framework, to support innovation and investment in climate friendly material options. These include:

  • Aligning the EU ETS cap and linear reduction factor with long term climate objectives, including timely response to accumulated allowance surplus with market stability reserve.
  • Ensuring a full carbon price passes through to include in the policy framework all actors that can take forward climate friendly options and to ensure incremental costs can be recovered.
  • Refining sector roadmaps in public-private cooperation to reflect technology learning, as basis for innovation funding decisions and to facilitate developments of policies and codes.
  • Providing training and funding arrangements to support public procurement authorities in considering climate externalities – so as to create lead markets for climate friendly choices.

Download the full report, including a 2-page policy summary, by clicking on the link on the left hand side of this page.

Author: K. Neuhoff et al.
Year: 2017
Type: Working papers
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