Brick by brick: Governing industry decarbonization in the face of uncertainty and risk

Basic materials such as steel and cement have been instrumental to modern society, but the production requires high energy inputs and is associated with significant CO2 emissions. Long investment cycles, slow turnover rate of the capital stock, and high capital intensity mean that basic materials industries are among the economic activities that will be the most difficult to decarbonize. Although the importance of addressing industrial emissions has been increasingly recognized, the development of measures and technologies that could deliver deeper emissions cuts has been relatively slow. In this paper, we present a conceptual framework focusing on four categories of barriers-market, technology, regulatory, and coordination-that hamper deep decarbonization in the basic materials industries. We use the Swedish basic materials industries and policy context to illustrate how the proposed framework can be understood and applied and broadly discuss policies that can facilitate the climate transition.

Automated summary

Basic materials industries, such as steel and cement production, play a critical role in modern society, but are difficult to decarbonize due to high energy inputs and significant CO2 emissions. Addressing industrial emissions and developing technologies for deeper emissions cuts have been slow, with barriers in market, technology, regulatory, and coordination hindering progress. Policy measures that can facilitate the climate transition are crucial in addressing these challenges.