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Impact of global heterogeneity of renewable-energy supply on heavy industrial production and green value chains
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- Authors
- Verpoort, Philipp Gast, Lukas Hofmann, Anke Ueckerdt, Falko
- Further keywords
- Renewables pull Green relocation Techno-economic analysis Industry transformation Hydrogen Steel Chemicals
- License
- cc-by-4.0
- Files
- 1 (1.1 MB)
Description
On the path to climate neutrality, global production locations and trade patterns of basic materials might change due to the heterogeneous availability of renewable electricity. Here we estimate the “renewables pull”, i.e. the energy-cost savings, for varying depths of relocation for three key tradable energy-intensive industrial commodities: steel, urea, and ethylene. For an electricity-price difference of 40 EUR/MWh, we find respective relocation savings of 18%, 32%, and 38%, which might, despite soft factors in the private sector, lead to green relocation. Conserving today's production patterns by shipping hydrogen is substantially costlier, whereas trading intermediate products could save costs, while keeping substantial value creation in renewable-scarce importing regions. In renewable-scarce regions, a societal debate on macroeconomic, industrial, and geopolitical implications is needed, potentially resulting in selective policies of green-relocation protection.