Neuhoff, K. et al. (2018). Filling gaps in the policy package to decarbonise production and use of materials. Climate Strategies-DIW Berlin.
In the wake of the Paris Climate Agreement, companies in Europe’s materials sector are looking to innovate making their investments and business models future- proof. To do so, they will need a sufficiently credible policy framework and set of incentives.
Efforts targeting deep decarbonisation, however, have so far been limited in the materials sector. Policymakers have been operating with limited knowledge of climate friendly alternatives, and incomplete perspectives over a possible package of policies and incentives that could drive the low-carbon transformation of these industries. Instead, much of the policy debate is focusing on carbon leakage risks, which inhibited implementation of stringent policy despite the availability of robust solutions.
This paper has identified a list of seven categories of mitigation options for the materials sector and mapped a broad portfolio of policy instruments that could unlock these options. Many of these policy instruments already exist. Decarbonising the materials industry, therefore, does not require “re-inventing the wheel”. However, with some exceptions, the application of many of these policies to the materials sector is limited (if not completely absent) and not climate- focused. As a result, some policies may need to be recalibrated or reinforced, while others may need to be replicated on the basis of successful experiences in other sectors.
To help narrowing down the options for discussion, this paper identified three main policy gaps that currently prevent substantial progress:
1. Partial and incomplete incentives to enhance recycling
2. Missing short- and long-term markets for climate-friendly options
3. Missing policy signals that carbon- intensive production will be phased out
