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Hunting "brown zombies" to reduce industry's carbon footprint

Author

Listed:
  • Gert Bijnen

    (National Bank of Belgium, Research Department, and KU Leuven, Department of Economics.)

  • Carine Swartenbroekx

    (National Bank of Belgium, Economics and Research Department)

Abstract

This paper provides a first estimate of the potential greenhouse gas mitigation from the intra-sector reallocation of economic activity by the European manufacturing industry away from carbon-inefficient – or "brown zombie" – firms to more carbon-efficient firms. Using techniques from the literature on productivity, we find a potential reduction of 38% based on a limited reallocation of production, without the need for new technologies. Therefore, when designing emission reduction plans, policymakers should not focus solely on improvements and innovation within existing firms but must also encourage the reallocation of economic activity from "brown zombies" to more carbon-efficient enterprises.

Suggested Citation

  • Gert Bijnen & Carine Swartenbroekx, 2024. "Hunting "brown zombies" to reduce industry's carbon footprint," Working Paper Research 454, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:202409-454
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    File URL: https://www.nbb.be/nl/articles/hunting-brown-zombies-reduce-industrys-carbon-footprint
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    More about this item

    Keywords

    climate policy; carbon emission reduction; carbon-intensive industries; reallocation; brown zombies;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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