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Analyzing investment strategies under changing energy and climate policies: an interdisciplinary bottom-up approach regarding German metal industries

Author

Listed:
  • Patrick Breun

    (French-German Institute for Environmental Research (DFIU), Karlsruhe Institute of Technology (KIT))

  • Magnus Fröhling

    (Technische Universität Bergakademie Freiberg)

  • Konrad Zimmer

    (French-German Institute for Environmental Research (DFIU), Karlsruhe Institute of Technology (KIT))

  • Frank Schultmann

    (French-German Institute for Environmental Research (DFIU), Karlsruhe Institute of Technology (KIT))

Abstract

German metal producers face an intense international competition. The comparably high domestic energy and production costs additionally challenge the producers. Beside this, German energy intensive industries (GEII) are embedded in a complex regulatory framework induced by energy and climate policies. These policies consist of different economic political instruments which are regularly changed to incentivize greenhouse gas (GHG) emission reductions. Therefore, future investment decisions in energy efficiency increasing technologies (EEIT) have to be evaluated dependent on these changing political conditions. Thus, actors in the metal industry need decision support in developing sustainable investment strategies which withstand different political developments. Given these circumstances, we develop an actor-oriented simulation model which simulates the optimal future investment decisions of all German iron, steel and aluminum producing plants under different political conditions based on a detailed plant-specific technical process description. Thereby, economic and engineering parameters are combined in an interdisciplinary approach to derive future investment strategies for the metal producing plants facing probable political changes. This approach closes the scientific gap between top-down oriented studies which usually are not capable of representing detailed plant-specific aspects and solely technical oriented studies which are often limited to a single plant or facility.

Suggested Citation

  • Patrick Breun & Magnus Fröhling & Konrad Zimmer & Frank Schultmann, 2017. "Analyzing investment strategies under changing energy and climate policies: an interdisciplinary bottom-up approach regarding German metal industries," Journal of Business Economics, Springer, vol. 87(1), pages 5-39, January.
    • Handle: RePEc:spr:jbecon:v:87:y:2017:i:1:d:10.1007_s11573-016-0829-1
    DOI: 10.1007/s11573-016-0829-1
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    References listed on IDEAS

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    Cited by:

    1. Andreas Schiessl & Richard Müller & Rebekka Volk & Konrad Zimmer & Patrick Breun & Frank Schultmann, 2020. "Integrating site-specific environmental impact assessment in supplier selection: exemplary application to steel procurement," Journal of Business Economics, Springer, vol. 90(9), pages 1409-1457, November.
    2. Raoul Voss & Roh Pin Lee & Magnus Fröhling, 2023. "A consequential approach to life cycle sustainability assessment with an agent‐based model to determine the potential contribution of chemical recycling to UN Sustainable Development Goals," Journal of Industrial Ecology, Yale University, vol. 27(3), pages 726-745, June.

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    More about this item

    Keywords

    Energy intensive industries; Metal industry; Climate policy; Bottom-up approach; Investment decision; Greenhouse gas emissions;
    All these keywords.

    JEL classification:

    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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