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A Scenario Analysis of the Potential Effects of Decarbonization on the Profitability of the Energy-Intensive and Natural-Resource-Based Industries

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The decarbonization of the energy-intensive and natural-resourced-based industries is associated with large economic costs. In this paper, I explore how decarbonization may affect the profitability and market value of these industries and their ability to attract capital to fund their decarbonization. I also discuss the possibility of compensating for the investment costs through higher prices and enhanced productivity. I answer these questions using scenario analysis with a focus on the industries in the European Union and the United States. I find that the effects on profitability are likely to be modest despite relatively high investment costs.

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  • Andersson, Fredrik N. G., 2021. "A Scenario Analysis of the Potential Effects of Decarbonization on the Profitability of the Energy-Intensive and Natural-Resource-Based Industries," Working Papers 2021:18, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2021_018
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    More about this item

    Keywords

    decarbonization; energy-intensive; industry; profitability; investment;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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