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Paying the full price of steel – Perspectives on the cost of reducing carbon dioxide emissions from the steel industry

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  • Rootzén, Johan
  • Johnsson, Filip

Abstract

This study examines the impacts felt downstream of carbon pricing and investments made in CO2 abatement within the steel industry. Using the supply of steel to a passenger car as a case study, the effects of a steel price increase on cost structures and price at each step of the supply chain were assessed. Since the prices of emission allowances under the European Union Emissions Trading System fall well below those required to unlock investments in low-CO2 production processes in the integrated steelmaking industry this paper seeks to pave the way for a discussion on complementary policy options. The results of the analysis suggest that passing on the compliance costs of the steel industry would have only marginal impacts on costs and prices for the end-use sectors (e.g., on the production cost or selling price of the passenger car). Under the assumptions made herein, at a carbon price of 100 €/tCO2, the retail price of a mid-sized European passenger car would have to be increased by approximately 100–125 €/car (<0.5%) to cover the projected increases in steel production costs.

Suggested Citation

  • Rootzén, Johan & Johnsson, Filip, 2016. "Paying the full price of steel – Perspectives on the cost of reducing carbon dioxide emissions from the steel industry," Energy Policy, Elsevier, vol. 98(C), pages 459-469.
    • Handle: RePEc:eee:enepol:v:98:y:2016:i:c:p:459-469
    DOI: 10.1016/j.enpol.2016.09.021
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    References listed on IDEAS

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    Cited by:

    1. Yang, Honghua & Ma, Linwei & Li, Zheng, 2023. "Tracing China's steel use from steel flows in the production system to steel footprints in the consumption system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 172(C).
    2. Nwachukwu, Chinedu Maureen & Wang, Chuan & Wetterlund, Elisabeth, 2021. "Exploring the role of forest biomass in abating fossil CO2 emissions in the iron and steel industry – The case of Sweden," Applied Energy, Elsevier, vol. 288(C).
    3. Ye, Zhenhong & Yang, Jingye & Shi, Junye & Chen, Jiangping, 2020. "Thermo-economic and environmental analysis of various low-GWP refrigerants in Organic Rankine cycle system," Energy, Elsevier, vol. 199(C).
    4. Li, Chengzhe & Zhang, Libo & Wang, Qunwei & Zhou, Dequn, 2024. "Towards low-carbon steel: System dynamics simulation of policies impact on green hydrogen steelmaking in China and the European Union," Energy Policy, Elsevier, vol. 188(C).
    5. Peng Chen & Andrew Vivian & Cheng Ye, 2022. "Forecasting carbon futures price: a hybrid method incorporating fuzzy entropy and extreme learning machine," Annals of Operations Research, Springer, vol. 313(1), pages 559-601, June.
    6. Kimon Keramidas & Silvana Mima & Adrien Bidaud, 2024. "Opportunities and roadblocks in the decarbonisation of the global steel sector: A demand and production modelling approach," Post-Print hal-04383385, HAL.

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