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Journal Article

Impact of global heterogeneity of renewable energy supply on heavy industrial production and green value chains

Authors
/persons/resource/philipp.verpoort

Verpoort,  Philipp       
Potsdam Institute for Climate Impact Research;

Gast,  Lukas
External Organizations;

Hofmann,  Anke
External Organizations;

/persons/resource/Falko.Ueckerdt

Ueckerdt,  Falko       
Potsdam Institute for Climate Impact Research;

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https://zenodo.org/doi/10.5281/zenodo.8253822
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29811oa.pdf
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Citation

Verpoort, P., Gast, L., Hofmann, A., Ueckerdt, F. (2024): Impact of global heterogeneity of renewable energy supply on heavy industrial production and green value chains. - Nature Energy, 9, 491-503.
https://doi.org/10.1038/s41560-024-01492-z


Cite as: https://publications.pik-potsdam.de/pubman/item/item_29811
Abstract
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’, which is 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 MWh−1, 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.