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1、OCTOBER 2024Forging a Post-Carbon IndustryInsights from AsiaInstitut Montaigne is a leading independent think tank based in Paris.Our pragmatic research and ideas aim to help governments,industry and societies to adapt to our complex world.Institut Montaignes publications and events focus on major e

2、conomic,societal,technological,environmental and geopolitical changes.We aim to serve the public interest through instructive analysis on French and European public policies and by providing an open and safe space for rigorous policy debate.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA3REPORT-Oct

3、ober 2024Forging a Post-Carbon IndustryInsights from AsiaExplainerTo understand the world in which we operateReportDeep-dive analyses and long-term policy solutionsIssue PaperTo break down the key challenges facing societiesExclusive InsightsUnique data-driven analyses and practical scenario exercis

4、esPolicy PaperTo provide practical recommenda-tionsInstitut Montaignes reports are comprehensive analyses that result from collective reflection.They aim to put forward long-term solutions to todays most pressing public policy challenges.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA5Part 1Shaping

5、 a Clean Industrial Strategy for Europe6AuthorJoseph DellatteDr.Joseph Dellatte joined Institut Montaignes Asia Program in 2022 as Research Fellow for Climate,Energy,and Environment.He is also a Research Associate at Kyoto University(Japan)and a member of the Japanese Research Group on Renewable Ene

6、rgy Economics.He specializes in international climate policy and global climate governance,focusing on carbon pricing,industry decarbonization policy,transition finance and Asia-Europe relations on climate.7ForewordThis report is divided into three parts.Part 1 seeks to address the mul-tifaceted cha

7、llenge of decarbonizing industry through a comparative analysis of the policies and strategies employed by Europe,China,Japan,and South Korea.By examining how these major industrial powers are navigating the shift from carbon-intensive production to a greener,low-emissions future,the report explores

8、 the intricacies of transitioning key sectors such as steel,aluminum,chemicals,and cement toward car-bon neutrality.Parts 2 and 3 explore sector-specific issues in decarbonizing the steel,aluminum,and chemicals sectors.They assess how the global landscape will be affected by decarbonization and offe

9、r a comparative perspective on how relevant policy is implemented and support is provided in Europe and Asia,respectively.The reports first chapter provides a broad overview of what constitutes clean industrial policy,focusing on the experiences of Europe and Asia.The second chapter surveys the glob

10、al landscape of industrial decarboni-zation,exploring the key technologies and processes that are fundamen-tal to achieving this goal.Finally,the third chapter provides a comparative perspective on the risks,uncertainties,and opportunities that come with transitioning to a decarbonized industrial ec

11、onomy.It concludes by drawing on lessons from Asia to offer recommendations for how Europe can strengthen its clean industrial strategy while navigating competitive pressures from global industrial powers.By synthesizing policy insights and technological trends from both Europe and Asia,this report

12、aims to contribute to the development of a comprehensive and effective clean industrial strategy for the European Union.Through rigorous analysis,it seeks to set the stage for a deeper understanding of the critical elements required to decarbonize the most carbon-intensive sectors,thus ensuring thei

13、r competitiveness in a post-carbon world.8Table of contentsForeword .7Introduction .101 What Is Clean Industrial Policy?.161.1.European Industrial Policy .161.2.Chinas Industrial Policy .331.3.Japans Industrial Policy .411.4.South Koreas Industrial Policy .472 How to Decarbonize Industry Globally?.5

14、12.1.A Very Uneven Industry Geography to Decarbonize .512.2.Transition Technologies and Processes .552.3.Electrification .572.4.Clean Hydrogen .622.5.Raw Material Substitution .672.6.Carbon Capture,Utilization,and Storage .68FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA93 Clean Industrial Policy

15、Comparative Perspectives .823.1.Defining Clear Objectives .823.2.Different Types of Risks and Uncertainties .833.3.Mitigating the Risk of the Clean Transition .873.4.Innovation,Demonstration,and Scaling Up .1103.5.Green Standardization and Demand-Side Creation .1413.6.General Recommendations:Create

16、Sectoral-Based Streamlined Clean Industrial Strategies .158The EU should adopt a Clean Industrial Deal incorporating the following elements:.171Appendix .180List of All Interviewees and Stakeholders Consulted .189Acknowledgements .19810IntroductionThe industrial sector 1 is a major contributor to gl

17、obal greenhouse gas emissions,accounting for between a quarter and a third of all emis-sions,taking all gases,sources,and countries into consideration.It is,thus,evident that it will not be possible to reach carbon neutrality wit-hout first decarbonizing industry.2Globally,the industrial sector lags

18、 behind other sectors in several key areas of decarbonization.The pathway to carbon neutrality for the indus-trial sector is significantly less defined than it is for transportation or electricity,as decarbonization technologies are less advanced and decar-bonization policies are less developed for

19、industry than for other sectors.In spite of the growing coalition-building activity focused on indus-trial decarbonization,new and effective business models for decar-bonizing the industrial sector are only beginning to emerge.In the years since climate change became a matter of urgent international

20、 concern,little progress has been made in reducing industrial emissions.Industrial emissions have continued to rise in many regions over the past 1520 years,driven largely by increased production to meet the global demand for higher living standards.Addressing these gaps will require concerted effor

21、t and innovative approaches to bring the industrial sector in line with the fight against climate change.1 The industrial sector encompasses businesses involved in the manufacturing,processing,and production of goods,including heavy industries such as steel,chemicals,aluminum,cement,and machinery,as

22、 well as light industries such as food and electronics.2 Direct emissions,which are greenhouse gasses emitted directly from industrial processes,constitute about a quarter of global emissions.When including indirect emissions from electricity consumption,this figure comfortably exceeds a third.Other

23、 sectors indirect emissions are actually the industrial sectors direct(scope one and two)emissions.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA11THE COMING GREEN INDUSTRIAL REVOLUTIONThe world stands on the brink of a transformative green industrial revo-lution.As the global industrial landscape

24、 undergoes a profound trans-formation,the emergence of green industrial policies has become a pivotal element in steering the world toward a carbon-neutral future.This paper endeavors to analyze how several major industrial powers China,the European Union,South Korea,and Japan are naviga-ting the sh

25、ift from a carbon-intensive industrial base to carbon neutrality.The analysis focuses on the steel,aluminum,cement,and chemicals sectors,which are not only fundamental to modern civilization but also represent significant challenges in terms of decarbonization.For years,certain industrial sectors we

26、re considered too“trade-exposed”or“technologically immature”to be integrated into decarbonization objectives.Others were tagged as“hard to abate”due to significant technological and economic gaps that make low-carbon alternatives both less viable and more costly.The EU Emissions Trading System(ETS),

27、for example,provided free allocations to emissions-intensive trade-exposed(EITE)sectors most industries highlighting the policy accommodations made to buffer competitive industries from the full cost of carbon pricing.However,this is changing rapidly due to the necessity of speeding up efforts to ac

28、hieve carbon neutrality by 2050,and competitive indus-trial policies are emerging in many parts of the world.The importance of robust green industrial policies is underscored by their potential to significantly influence market transitions and reconfigure industrial value chains.This raises several

29、critical questions:What defines an industrial decarbonization policy?How are these policies being formulated and INSTITUT MONTAIGNE12implemented across the major industrial regions?How do these strate-gies align with the broader objective of achieving economic growth and carbon neutrality?The transi

30、tion toward green industrial policy is marked by varying approaches in different regions of the world.The European Union aims to integrate environmental concerns with market mechanisms and regu-latory policies using the Emissions Trading System and the European Green Deal.In contrast,China leverages

31、 substantial planning to achieve a state-driven industrial policy that also scales up green technology and infrastructure,reflecting its unique governance and economic model.Japan,one of the birthplaces of contemporary industrial policy,needs to maintain its protected industrial bases while slowly a

32、dvancing its decar-bonization goals despite geographical and resource constraints.Finally,South Korea,a major industrial hub with heavily concentrated powerful industrial actors,is trying to adapt its innovation-based industrial strategy to reduce emissions.The diversity of these strategies highligh

33、ts not only the complexity of glo-bal industrial transformation but also the disordered manner in which decarbonization is being approached worldwide.This prompts the following further questions:How effective are clean industrial policies in fostering a unified global market for green goods?What ste

34、ps can be taken to ensure these policies adequately support the rapid decarbonization of industrial goods?What are the risks and opportunities presented by the reorganization of industrial value chains,influenced by energy-cost considerations and geo-economic factors favoring more localized supply c

35、hains?FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA13EUROPE IN THE POST-CARBON WORLDFueled by a world-beating ambition,Europe is now entering a phase of intense reflection on its green industrial strategy.In response to the com-petitive pressures posed by Chinas continental scale industrial polic

36、ies and the United States Inflation Reduction Act(IRA),the European Union is considering formulating a Clean Industrial Deal 3 to address these challenges effectively.This strategic pivot raises crucial questions:What lessons can Europe draw from the policies implemented in China,Japan,and South Kor

37、ea,the Asian industrial powerhouses?What avenues are avai-lable for international cooperation,and what are the potential areas of friction?As Europe shapes its strategy,understanding these dynamics is critical for fostering a resilient and competitive green industrial sector that is aligned with Eur

38、opes climate goals and economic interests.MethodologyTo conduct this comprehensive analysis of industrial decarboni-zation across Europe,China,Japan,and South Korea,a rigorous academic methodology was applied,encompassing extensive documentary research,semi-structured interviews,and the orga-nizatio

39、n of an international policy dialogue.3 European Commission,“Statement at the European Parliament Plenary by President Ursula von der Leyen,”July 2024,https:/ec.europa.eu/commission/presscorner/detail/en/statement_24_3871.INSTITUT MONTAIGNE14Policy ReviewThe foundational data for this study were col

40、lected through an exhaus-tive review of policy instruments implemented in the targeted regions.For China,policies from the National Development and Reform Com-mission(NDRC),the Ministry of Ecology and Environment(MEE),the Ministry of Industry and Information Technology(MITT),and the Ministry of Fina

41、nce were examined,as well as the regulations of some provincial governments and industry associations.In South Korea,sources included the Ministry of Trade,Industry and Energy(MOTIE),the Ministry of Finance,the Presidential Committee on Net Zero,and the Ministry of Environment,among other government

42、al agencies.Japanese policy documents from the Ministry of Economy,Trade and Industry(METI)and the Ministry of the Environment were reviewed,along with policy documents from agencies such as the New Energy and Industrial Technology Development Organization(NEDO).Euro-pean policies from various Europ

43、ean Commission bodies,such as DG CLIMA,DG GROW,and DG TAXUD,and from national ministries in France and Germany were analyzed.Additionally,the ESG strategies of 154 companies across the steel,aluminum,chemicals,and cement sectors in the four jurisdictions were scrutinized with a view to understanding

44、 corporate approaches to industry decarbonization.Semi-Structured InterviewsTo enhance the understanding of the policy landscape,523 semi-struc-tured interviews were conducted with a diverse array of stakeholders in the four countries.Some of the interviews were conducted online,while others were co

45、nducted in-person in Europe,Japan,and South Korea,as well as at COP28 in Dubai.They included interactions with government officials from the relevant ministries,corporate stakeholders from the decarbonization and technology teams of industries in four sectors(steel,cement,chemicals,and aluminum),ind

46、ustry federation representatives,FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA15and delegates from international organizations such as the OECD,UNIDO,and the International Energy Agency(IEA).EUAsia Policy DialogueFurther enriching the data,a high-level EUAsia policy dialogue was organized in Janu

47、ary 2024 with Japans NEDO,featuring stakeholders from the EU,Japan,South Korea,China,and the OECD.This dialogue focused on discussing the four main challenges outlined in this paper:supporting decarbonization vectors,bridging the cost gap,standardi-zing green industrial goods,and analyzing the impac

48、t on international cooperation.INSTITUT MONTAIGNE161 What Is Clean Industrial Policy?1.1.EUROPEAN INDUSTRIAL POLICYThe European Union is at the forefront of the green transition,propelled by comprehensive strategies such as the European Green Deal and the Fit for 55 agenda.These initiatives aim to a

49、chieve a 55 percent reduction in CO2 emissions by 2030 and net-zero emissions by 2050,positioning Europe as a leader in the global shift to a sustainable economy.The new European Commission will need to implement this ambitious agenda and formulate a genuine Clean Industrial Deal,reconciling future

50、European competitiveness against the green objectives.Faced with the massive challenge of energy costs,Europe stands at a crossroads and must maximize its own potential for clean electricity generation.For industrial sectors such as steel,aluminum,and chemicals,soaring energy costs pose an existenti

51、al threat,compelling them to innovate and adopt green practices to remain relevant.Explainer:“The Clean Industrial Deal”A“Clean Industrial Deal”for Europe would be a comprehensive policy framework aimed at decarbonizing Europes industrial sector while ensuring its global competitiveness.It would be

52、aligned with overarching goals of the European Green Deal,fos-tering the transition to a low-carbon economy through innova-tion,investment in clean technologies,and the establishment of a circular economy.Such an initiative would emphasize the need FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA17f

53、or sustainable industrial transformation to ensure that European industries can reduce greenhouse gas emissions,utilize resources more efficiently,and create green jobs,all while maintaining their position in the global market.It would also include mechanisms for carbon pricing,support for green hyd

54、rogen,and measures to prevent carbon leakage to ensure that industries do not relocate to regions with lower environmental standards.a.Challenges Facing EuropeEurope initially approached its decarbonization efforts through a mar-ket-based lens,exemplified by the ETS,which incentivized companies to i

55、nternalize the cost of carbon emissions.This strategy has proven effec-tive in reducing European emissions and is set to accelerate decarboni-zation as free allocations are phased out.However,Europe lacks a comprehensive strategy to support the emer-gence of carbon-neutral technologies,processes,and

56、 industries.Although the current strategies reduce emissions,they do not sufficiently promote the rapid development of industrial alternatives,especially given the following factors:The emergency elsewhere of aggressive green industrial policies supporting clean technologies,particularly in the Unit

57、ed States and China.The lack of urgency in decarbonization policies imposed on ener-gy-intensive industries in other parts of the world.The timeliness of investing in Europes heavy industries,given that significant investment is essential as much of the existing conventio-nal capital stock is aging

58、and nearing the end of its investment cycle.4INSTITUT MONTAIGNE18Against this backdrop,decarbonizing Europes industrial sector is not only an environmental imperative but also a strategic necessity.Recent global shifts,exemplified by the US Inflation Reduction Act and Chinas aggressive cleantech tra

59、de strategies,highlight the growing com-petitiveness of global markets.These countries not only benefit from financial and legislative support for their industries but also create conditions that have the potential to isolate European products if they fail to innovate toward greener solutions.In thi

60、s context,European industry cannot undergo a clean transition wit-hout a comprehensive“verticalization”of industrial policy to financially support industrial sectors,promote their products,and shield them from“unfair”international competition that does not adhere to the same rules in terms of decarb

61、onization.Major industrialized countries are transitioning to this approach,which seeks to decarbonize while protecting their industries and enhancing strategic autonomy.This shift marks a paradigm change away from the previously dominant vision of liberalization and globalization,which prio-ritized

62、 economies of scale and efficiency at all costs.In this new industrial policy framework,political and geopolitical factors supplement eco-nomic rationality,with the goal of creating new economic projects and employment opportunities that are not subject to offshoring.4 On this point,please see Agora

63、 Industry,Wuppertal Institute,and Lund University,“Global Steel at a Crossroads:Why the Global Steel Sector Needs to Invest in Climate-Neutral Technologies in the 2020s,”2021,https:/static.agora-energiewende.de/fileadmin/Projekte/2021/2021-06_IND_INT_GlobalSteel/A-EW_236_Global-Steel-at-a-Crossroads

64、_WEB.pdf.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA19Explainer:“Vertical Industrial Policy”vs.“Horizontal Industrial Policy”Vertical industrial policy targets specific sectors or industries with tailored interventions such as subsidies,tax incentives,or regula-tions to promote their developmen

65、t,often with the goal of crea-ting competitive advantages or addressing market failures within those sectors.In contrast,horizontal industrial policy focuses on broad,cross-cutting measures that impact all sectors of the economy equally,such as improving infrastructure,education,or innovation system

66、s,with the aim of enhancing overall economic efficiency,productivity,and competitiveness across the entire economy.Both approaches are used to foster economic growth,but they differ in scope and focus.b.What Industrial Decarbonization Strategy for Europe?Europe stands at a crossroads in its industri

67、al history,confronted with the imperative to not only sustain its industrial base but also to transform it in response to the climate crisis.The path to decarbonization is fraught with significant challenges.The transition demands a profound overhaul of the industrial sector and particularly of carb

68、on-intensive industries,which are integral to Europes economy but detrimental to its environ-mental goals.Decarbonizing energy-intensive sectors such as steel,chemicals,cement,and aluminum is particularly challenging due to the complexity of their processes and significance of their energy requireme

69、nts.If Europe is unable to meet its decarbonization goals and produce or supply suf-ficient amounts of low-cost decarbonized energy,it may see entire INSTITUT MONTAIGNE20historic sectors relocate to regions with abundant decarbonized energy.For the European Union,this presents a complex economic dil

70、emma that calls for political decisions about the future of Europes industry.Should Europe strive to preserve at any cost energy-intensive indus-tries that will be difficult to decarbonize?Or should it take economic rationality into consideration and produce what can no longer be produced domestical

71、ly without support policies elsewhere?Implementing industrial policies,coupled with intelligent“protectionist”measures,could allow Europe to decarbonize its industries while shiel-ding them from competition by foreign products.This approach would be costly,and Europe must decide whether the benefits

72、 justify the expense,balancing economic autonomy and industrial rationality.What is certain is that the global resurgence of industrial strategies necessitates that Europe move beyond purely regulatory decarbo-nization policies.It must reconsider and develop industrial support strategies.However,the

73、 complexities of European governance further complicate this process.In response to the US Inflation Reduction Act(IRA),Europe has not adopted a unified large-scale investment strategy.Instead,it relaxed stringent single-market state aid rules,5 a solution that favors fiscally strong,highly industri

74、alized countries such as Germany 6 but creates significant disparities for smaller EU Member States lacking fiscal space to invest in industrial decarbonization.This disparity underscores the need for cohesive political choices.5 More precisely,the Commission extended exceptions that had been introd

75、uced during the COVID-19 crisis.6 It is worth noting that the decision by the German Federal Constitutional Court in November 2023 significantly constrained the German governments fiscal capabilities to support German industries.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA21The primary question

76、concerns the future composition of Europes indus-trial fabric.Will industry remain predominantly in traditional regions such as Germany or Czechia,or should Europe implement policies that promote a more balanced industrial distribution across the EU?Should Europe deliberately align industrial produc

77、tion with clean energy production capacities and situate heavy,energy-intensive industries near clean energy sources?While this issue is distinctly European,it reflects broader challenges in industrial decarbonization policies worldwide.It pertains to the essence of the industrial endeavor in the po

78、st-carbon era.Industrial activities require abundant raw materials and energy,which explains why indus-tries are often located either near these resources or in locations to which they can be easily transported in bulk,e.g.,seaports and near large rivers.Higher-value or specialized industries may be

79、 situated where access to human skills,proximity to clients,or synergies and“network effects”that have emerged through the clustering of adjacent industries outweigh the importance of raw materials or energy resources.For the European Union,as for other industrialized countries aiming for decarboniz

80、ation,it is,therefore,essential to reconsider the entire industrial fabric in light of the following new criteria imposed by decarbonization:Where is clean energy available?Where can we manufacture clean hydrogen cheaply?Where can CO2 be stored?Which locations are going to be economically efficient?

81、Which industries are too strategic to be left to economic efficiency?Thus,the states role in driving decarbonization and industrial policy must be redefined.The need for a clean industrial policy also arises from the necessity of addressing persistent market failures,particularly coor-dination failu

82、res,which are pervasive in heavy and complex industries.INSTITUT MONTAIGNE22Coordination failures occur when the profitability of individual firms depends on complementary actions by others,but no single entity has the incentive to act first.7 A clean industrial policy can correct these inef-ficienc

83、ies by aligning private incentives with broader social goals,thus ensuring the development of sustainable industries and technologies.Therefore,beyond market policies,the state must guide the emergence of the clean industrial revolution.Like its competitors implementing clean industrial policies,Eur

84、ope must redefine its trajectory to help its economy and industries decarbonize.This cannot be achieved without a mix of public policies.These must be market-based instruments,such as the ETS,the phasing out of free allocation,and the implementation of the Carbon Border Adjustment Mechanism,as well

85、as regulatory measures from the Green Deal.Addi-tionally,a more“directive”approach supporting specific sectors,par-ticularly energy-intensive ones,is necessary.c.Europes Current Clean Industrial Policy LandscapeAt face value,the European strategies are designed to not only spur tech-nological innova

86、tion but also secure the existing industrial base by making Europe a more competitive energy provider.This ambition extends beyond financial and regulatory adjustments it seeks to fun-damentally reshape market dynamics by empowering consumers to choose net-zero and circular products through transpar

87、ent environ-mental labeling and fostering a competitive but sustainable tax envi-ronment across Europe.7 For more on coordination failures,see:Rka Juhsz,Nathan Lane,and Dani Rodrik,“The New Economics of Industrial Policy,”Annual Review of Economics 16(2024):213242,https:/doi.org/10.1146/annurev-econ

88、omics-081023-024638.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA23One of the major challenges is coordinating the various levels of power.Industrial policies are enacted at the national,regional,and European levels,and actions taken by one government can significantly impact other areas.At the E

89、uropean Commission level,green industrial policies are primarily managed by the various directorates:GROW,Com-petition,Trade,Energy,Climate Action,and Research and Innovation.This creates a patchwork of policies at the European level that must be aligned with the various policies at the national and

90、 regional levels.8Most research and development support policies within the Euro-pean Union are led by Member States.The Horizon Europe project,with a budget of 95.5billion,allocates about 15.1billion to climate,energy,and mobility.9 This is supplemented by the Innovation Fund,financed by revenues f

91、rom the EU ETS.These revenues are expected to increase with the phasing out of free quotas,leading to more carbon revenue at the EU level.10These aids generally stop at the early stages of prototyping and demonstration projects and do not extend further.However,for indus-trial decarbonization polici

92、es to making it possible for green goods to compete with carbon-intensive goods,deployment,scaling up,and sometimes supporting operational costs are also critical.8 Reinhild Veugelers,Simone Tagliapietra,and Cecilia Trasi,“Green Industrial Policy in Europe:Past,Present,and Prospects,”Journal of Indu

93、stry,Competition and Trade 24,no.1(2024):122,https:/doi.org/10.1007/s10842-024-00418-5.9 European Climate,Infrastructure and Environment Executive Agency,“Horizon Europe:163.5Million Available to Fund Green,Smart,and Resilient Transport and Mobility,”May 7,2024,https:/cinea.ec.europa.eu/news-events/

94、news/horizon-europe-eu1635-million-available-fund-green-smart-and-resilient-transport-and-mobility-2024-05-07_en.10 The Directorate-General for Competition ensures that these R&D aids comply with single market rules and World Trade Organization regulations.INSTITUT MONTAIGNE24In addition to R&D supp

95、ort,European alliances create cross-border projects and decarbonization technology value chains that are central to the energy transition.Some projects become Important Projects of Common European Interest(IPCEIs),granting them access to substan-tial state aid,as seen with batteries and hydrogen.11

96、This system allows for state aid significantly larger than typically permitted under EU inter-nal rules.Development banks such as the European Investment Bank(EIB)also play a crucial role in supporting new sectors and cross-sectoral decarbonization projects that private finance actors find too risky

97、 to fund in their early stages.d.The Net Zero Industrial ActLike many other industrialized jurisdictions,Europe aims to couple decar-bonization with a resurgence of industry.At a minimum,it aims to protect its existing industrial fabric,which has been strained by the continents struggle to secure af

98、fordable energy.To advance this goal,the European Union has implemented the Net Zero Industrial Act(NZIA),12 considered an embryonic green industrial policy with specific targets for the produc-tion of green technology on European soil.The act is a statement of Europes intention of securing its indu

99、strial base by promoting the development and deployment of strategic net-zero technologies within its borders.By setting a target of EU domes-tic manufacturing being able to meet at least 40percent of the EUs annual clean tech deployment needs by 2030,the NZIA aims to bolster Europes technological s

100、overeignty while driving significant reductions in carbon emissions.11 European Commission,“Important Projects of Common European Interest(IPCEI),”accessed August 27,2024,https:/competition-policy.ec.europa.eu/state-aid/ipcei_en.12 European Commission,“Net Zero Industry Act,”March 16,2023,https:/sin

101、gle-market-economy.ec.europa.eu/publications/net-zero-industry-act_en.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA25The NZIA can be seen as an embryonic form of EU industrial policy because it marks a deliberate intervention by the EU to shape the direc-tion of economic development,emphasizing t

102、he need for state-driven support to build strategic industries.Traditionally,industrial policy in the EU has been a controversial subject due to concerns about market distortion and competition within the single market.However,the NZIA indicates a shift toward a more active role for governments in e

103、nsuring the competitiveness of European industries in the global green economy.Beyond establishing targets for domestic manufacturing capacities,it aims to provide streamlined permitting processes and to offer finan-cial incentives for green technologies.It also represents a theoretical move toward

104、a more coordinated and strategic industrial policy.Moreover,the NZIA reflects an acknowledgment that green technologies and industries are critical not only for achieving climate goals but also for maintaining Europes economic sovereignty in an era of increasing geopolitical competition.The NZIA rep

105、resents an attempt to respond to industrial strategies seen in other global powers,such as the US Inflation Reduction Act or Chinas industrial policies.It is the first EU recognition that state support is necessary to compete globally in these sectors.Hence,the NZIA serves as a foundation for what c

106、ould evolve into a more coherent and ambitious EU industrial policy focused on fostering green industries,jobs,and innovation.INSTITUT MONTAIGNE26PillarDescriptionBoosting Domestic ManufacturingIncrease EU capacity to produce clean technologies(e.g.,solar,wind,batteries,clean hydrogen)to reduce reli

107、ance on imports.Streamlining Permitting ProcessesSimplify and accelerate the approval process for clean technology projects to speed up infrastructure deployment.Financial Incentives and Investment SupportProvide subsidies and access to funding to encourage public and private sector investment in ne

108、t-zero technologies.Skills Development and Workforce TrainingFocus on reskilling and upskilling workers to meet the demands of the green economy and ensure a capable workforce.Strategic Resilience and DiversificationDiversify supply chains for critical technologies to reduce reliance on non-EU count

109、ries and foster innovation in green tech.Carbon Capture and Clean HydrogenPrioritize the deployment of CCS technologies and clean hydrogen production to help decarbonize heavy industries.Circular Economy and SustainabilityPromote sustainable materials,recycling,and environmentally friendly practices

110、 in manufacturing processes.Table 1:The Main Pillars of the Net-Zero Industry ActFORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA27Funding MechanismsRegulatory Instruments R&D ProjectsEU-Level*EU Green Deal(2019):Green Deal Industrial PlanEuropean Green Deal Investment Plan:10 bn of Invest EU Fund.1

111、7.5bn Just Transition Fund.Funded by ETS:Modernisation Fund.40 bn Innovation Fund.225 bn of unused EU Covid recovery loans(RRF).200 bn of Regional Development Fund(30%)&Cohesion Fund(37%).Framework Program:+15.1 bn Horizon for climate,energy.+European Investment Bank(EIB).+Connecting Europe Facility

112、.+LIFE Programme.Fit for 55 Package(2021):European Emissions Trading System(ETS).Carbon Border Adjustment Mechanism(CBAM).Renewable Energy(RED)&Energy Efficiency Directives(EED)&Industrial Emissions Directive.Circular Economy Action Plan.Horizon Europe:European Institute of Innovation and Technology

113、 Regulation.Knowledge and Innovation Communities(KICs)s.European Alliances.Important Projects of Common European Interest(IPCEI).European Battery Alliance.European Clean Hydrogen Alliance.*New types of instruments post-IRA and China deriskingReform of State aid rules for net-zero technologies:The Ge

114、neral Block Exemption Regulation(GBER).Temporary Crisis and Transition Framework(TCTF).Net Zero Industry Act.Critical Raw Materials Act.Strategic Technologies for Europe Platform(STEP).Helps channel funds from existing EU programmes towards cleantech(current budget allocated up to 2027).Selected Mem

115、ber StatesFunding mechanismRelevant Policy instruments R&DFrance20 bn France Relance plan green investments.49 projects representing 596million of investment in decarbonizing industry.French Strategy for Climate and Energy:Carbon budget for industry:65 Mt CO2eq(2024-2028).Climate and Resilience Law.

116、20m Investment for the Future Program(PIA 4).Table 2:Overview of Green Industrial Policy in EuropeINSTITUT MONTAIGNE28Germany49billion Climate and Transformation Fund 2024.17billion Green Bond Framework Expenditure(2023).Carbon Contracts for Difference(CCfD)mechanism.Renewable Energy Sources Act(EEG

117、):feed-in tariffs systems to achieve 80%green energy use by 2030,EEG Levy for fossil energy consuming enterprises.Exploration of hydrogen and electrification in steel,chemicals,aluminum,and cement.Billions in funding to convert steel production from coal to hydrogen,to implement the national hydroge

118、n strategy and for other important hydrogen projects(Budget 2024).NetherlandsNational Energy and Climate Plan(INECP):60million to 100million(as of 2023 and including green hydrogen)is available each year from the Climate Budget.SDE+schemeNational Climate Agreement:74.17 per tonne CO2 for industrials

119、.Additional CO2 levy(on top of ETS System).Research into electrification and hydrogen use in steel,chemicals,aluminum,and cement sectors.Investment in offshore wind farms.MIDDEN project(Manufacturing Industry Decarbonisation Data Exchange Network).ItalyNational Energy and Climate Plan(NECP):20billio

120、n(approx)by 2030 in large-scale solar and wind projects.Ecobonus 65%energy efficiency:Tax credits and grants for renewable energy projects.Exploration of carbon capture and storage(CCS)technologies in heavy industries.SpainNational Integrated Energy and Climate Plan:625,075 M for improvement of tech

121、nology in industrial equipment and processes;and implementation of energy management systems.Circular Economy Strategy(Espaa Circular 2030).Extensive solar and wind energy projects supplying clean electricity to steel,chemicals,aluminum,and cement sectors(ex:EDP Renewables).Nordic Countries7bn,Danis

122、h Green Investment Fund(Grn Investeringsfond).6,5 bn Climate investment Fund in Norway(not EU but in the single market).Enova program(Norway)Klimatklivet initiative(Sweden).Exploration of hydrogen use in steel,chemicals,aluminum,and cement production across Denmark,Finland,Norway,and Sweden.PolandPo

123、lish Energy Policy until 2040.Green Technologies Project(Poland).Hydrogen Valley(Poland).FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA29EU Policy/DirectiveSpecific Targets/RequirementsDescriptionEU Emissions Trading System(ETS)reformed by the Green Deal and the Carbon Border Adjustment Mechanism,

124、2023 13Gradual reduction in the cap on emissions allowances by 2.2%annually.End of free allocations on the EU ETS for emissions-intensive trade-exposed sectors.Introduction of Carbon Border Adjustment Mechanism(CBAM).Applies to all energy-intensive sectors,setting a framework for emissions reduction

125、s and preventing carbon leakage.Energy Efficiency Directive(EED),2023 14Improve energy efficiency by 32.5%by 2030.+further increase its energy efficiency ambition by at least 11.7%in 2030 compared to the level of efforts under the 2020 EU Reference Scenario.Targets improvements in energy efficiency.

126、Most industries are obliged to implement a system of energy management.Renewable Energy Directive(RED III),2023 15Increase the share of renewable energy in the EUs energy mix to 42.5%by 2030 in all sectors.Annual increase in the share of renewable energy in each sector by 1.6%until 2030.Circular Eco

127、nomy Action Plan,2020 16The plan aims to increase the recycling rate from 33%in 2020 to over 50%by 2050.Applies to all sectors,promoting sustainable product design,increased recycling rates,and reduced waste.Industrial Emissions Directive(IED),2022 17Reduce industrial emissions through the applicati

128、on of Best Available Techniques(BAT).Applies to all sectors,ensuring the application of Best Available Techniques to reduce emissions.Strategic Energy Technology Plan(SET Plan),2023 18Accelerate the development and deployment of low-carbon technologies.Focuses on innovation in renewable energy,energ

129、y storage,CCUS,and coordination among Member States.Table 3:EU Regulations Applying to all Industrial Sectors13 European Commission,“EU Emissions Trading System(ETS),”2024,http:/web.archive.org/web/20240321235259/https:/climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en.14 European

130、 Commission,“EU Energy Policy,”accessed September 9,2024,https:/energy.ec.europa.eu/index_en.15 European Union,“Directive(EU)2023/2413 of the European Parliament and of the Council of 18 October 2023,”https:/eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202302413.16 European Commission,“Circular

131、Economy Action Plan,”accessed September 9,2024,https:/environment.ec.europa.eu/strategy/circular-economy-action-plan_en.INSTITUT MONTAIGNE30e.Three Issues:Coordination,Financing,and Technology GuidanceIn essence,the EUs present industrial policy resembles a patchwork of national climate and energy p

132、olicies rather than a long-term strategy.Foundational documents such as the Green Deal Industrial Plan 19 and the NZIA were introduced late in the legislative process and lacked sufficient political momentum to address the finance issue the crux of the challenge for Europe and the coordination issue

133、 between Member States industrial policies.The present European strategys main weakness is the lack of new com-mon European funds to achieve its decarbonization goals.The Strate-gic Technologies for Europe Platform(STEP),20 with 10billion,is the only real fund established to stimulate investment in

134、this nascent EU green industrial policy.The NZIA does,however,permit actions typically prohi-bited by European rules,allowing Member States to provide more support to green technology sectors,fund entrepreneurs through tax rebates and loans,and finance OPEX where there is a funding gap.This situatio

135、n represents a novel development at the EU level.17 European Commission,“Industrial and Livestock Rearing Emissions Directive(IED 2.0),”accessed September 9,2024,https:/environment.ec.europa.eu/topics/industrial-emissions-and-safety/industrial-and-livestock-rearing-emissions-directive-ied-20_en.18 E

136、uropean Union,“Communication from the Commission to the European Parliament,the Council,the European Economic and Social Committee and the Committee of the Regions,”October 20,2023,https:/eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023DC0634&qid=1698315020718.19 European Commission,“The Gr

137、een Deal Industrial Plan,”accessed September 9,2024,https:/commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan_en.20 European Union,“Strategic Technologies for Europe Platform(STEP),”accessed September 9,2024,https:/strategic-technologies.euro

138、pa.eu/index_en.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA31The NZIA also includes provisions to accelerate permit issuance and administrative procedures and coordinate private financing,aiming for 92billion in investments,with about 80percent coming from pri-vate funds.21 Furthermore,it promot

139、es the use of public procurement and auction systems with sustainability criteria.Overall,the other major issue with current European industrial strategy is the lack of coordination among different power levels,combined with the lack of European-level decision-making on funding.Cur-rently,industry f

140、unding is heavily focused on the national level,with sometimes contradictory goals and policies between different levels and countries.The NZIA is more focused on promoting various national approaches than on creating a strategic European agenda.This lack of common decision-making in financing creat

141、es inequalities within the single market,risking fragmentation due to different fiscal capacities among countries.Another significant weakness frequently highlighted by industrial stakeholders is that the European industrial strategy is not agnostic with respect to technology.It tends to prematurely

142、 favor certain decar-bonization technologies while excluding others,which hampers fair com-petition among different approaches to determine the most effective solutions.Industries would prefer greater freedom to choose their own paths to carbon neutrality and to be evaluated based on their outco-mes

143、.In this regard,the US Inflation Reduction Act is often seen as more“flexible”and favorable to industry.It is true that the EU has made historical choices in favor of certain tech-nologies for example,prioritizing green hydrogen over low-carbon alternatives and excluding options like nuclear power o

144、r blue hydrogen.21 European Commission,“Commission Staff Working Document:Investment Needs Assessment and Funding Availabilities to Strengthen EUs Net-Zero Technology Manufacturing Capacity,”2023,p.26,https:/single-market-economy.ec.europa.eu/system/files/2023-03/SWD_2023_68_F1_STAFF_WORKING_PAPER_E

145、N_V4_P1_2629849.PDF.INSTITUT MONTAIGNE32However,as this study suggests,the Chinese example may indicate that the success of an industrial policy could be closely tied to a firm commitment to specific key technologies,executed without wave-ring or hesitation.With this in mind,the real issue in Europe

146、 is not so much the lack of technology agnosticism but rather the lack of flexibility to adapt to technological advancements and allow new technologies to enter the market quickly enough.f.How Much Protection Is Needed?The EU has lacked the political momentum to address the crucial issue of financin

147、g.It also lacked the momentum and,perhaps,the willingness to address the broader question of what kind of industrial policy it aims to pursue.This includes determining the level of protection Europe intends to provide to its low-carbon industries during the transition period,during which carbon-inte

148、nsive and low-carbon industrial practices will coexist internationally.Addressing these challenges requires a dual approach:Europe must foster innovation while ensuring that it does not cede its production capabilities.The Antwerp Declaration for a European Industrial Deal 22 starkly emphasizes the

149、necessity of a robust and clear industrial policy that not only encourages innovation but also supports the retention and expansion of industrial production capabilities within the continent.The declaration advocates for Open Strategic Autonomy,emphasizing the need to maintain and grow Europes found

150、ational industries both basic and energy-intensive within its borders to prevent overdepen-dence on external sources for essential goods and technologies.22 “The Antwerp Declaration for a European Industrial Deal,”February 20,2024,https:/antwerp-declaration.eu/.FORGING A POST-CARBON INDUSTRYINSIGHTS

151、 FROM ASIA33Against this backdrop,and given the strategies implemented by indus-trial competitors and partners,the European Clean Industrial Deal should foster both decarbonization and the survival of the European industrial sector,which is no easy task.This is especially true because Europe itself

152、is a big exporter and benefits from the open market in many segments of its economy.Balancing industrial competitiveness against security concerns presents a complex challenge,particularly when considering the need to protect strategic industries as a safeguard against disruptions in international t

153、rade.While it may be necessary to maintain certain uncompetitive plants as an“insurance”policy,the cost of sustaining these opera-tions must be acknowledged.The key question is determining the minimum number of such plants required to serve as a nucleus for scaling up production in an emergency.Howe

154、ver,there is a significant risk that these uncompetitive foundational industries could drag down the competitiveness of downstream indus-tries,potentially undermining Europes overall competitiveness.This could lead to a scenario in which industries within the EU are protec-ted and are only competiti

155、ve within the single market and struggle to compete globally.Such an outcome would be particularly detrimental to export-oriented economies in the EU,jeopardizing their ability to thrive in the global marketplace.1.2.CHINAS INDUSTRIAL POLICYa.Chinas Gigantic Industrial BaseChinas industrial policy h

156、as evolved significantly over the decades as it has transitioned from a Soviet-style planned economy to a highly strategic and technology-driven economic framework.This policy shift INSTITUT MONTAIGNE34has transformed China into the worlds largest manufacturer.However,although Chinas industrial sect

157、ors have propelled economic growth,they have also contributed heavily to environmental degradation,mar-king China as the worlds largest net exporter of embodied carbon.Chinas colossal industrial base is crucial to any discussion about decarbo-nizing industry globally.As the worlds largest producer o

158、f steel,cement,aluminum,and chemicals,China accounts for about 51percent of global cement production,23 57percent of steel production,24 and 56percent of primary aluminum production.25 Its chemicals industry also makes up about 44percent of the global total.26 These sectors are not only pivotal to t

159、he global supply chain but are also among the most carbon intensive,contributing substantially to the 28percent share of global emissions that originates from China.27Given that it is the largest global emitter of greenhouse gases,Chinas pace of decarbonization is critically important.Thus,the count

160、rys“dual carbon”goals,which aim for a carbon peak by 2030 and carbon neu-trality by 2060,are central to global climate action.However,achieving these targets presents complex challenges.The sheer scale of Chinas industrial activity and its centrality in Chinas economic strategy compli-cate rapid tra

161、nsformation,and unless its pace of decarbonization can be accelerated,there is a risk that global climate objectives will be derailed.23 International Cement Review,The Global Cement Report,14th ed.(Tradeship,2023),https:/ World Steel Association,Steel Statistical Yearbook 2023(2023),https:/worldste

162、el.org/publications/bookshop/ssy_subscription-2023/.25 International Aluminium Institute,“Primary Aluminium Production Statistics,”accessed September 9,2024,https:/international-aluminium.org/statistics/primary-aluminium-production/.26 Cefic,“The European Chemical Industry:A Vital Part of Europes Fu

163、ture,Facts and Figures 2023,”December 2023,https:/cefic.org/app/uploads/2023/12/2023_Facts_and_Figures_The_Leaflet.pdf.27 International Energy Agency,“CO2 Emissions in 2022,”March 2023,https:/www.iea.org/reports/co2-emissions-in-2022.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA35b.The Architectu

164、re of Chinas Industrial PolicyChinas approach to industrial decarbonization is intricately linked to its hierarchical governance structure,which mirrors the general organi-zation of its industrial structure.The central government establishes overarching rules and objectives,while the provincial and

165、munici-pal governments are tasked with their implementation.As a result of this multitiered arrangement,industrial policies in China,including those aimed at decarbonization,are implemented unevenly across diffe-rent regions.Variations in adherence to central directives by provincial authorities can

166、 significantly affect the consistency and effectiveness of these policies.At the national level,several key agencies play pivotal roles in shaping and enforcing Chinas industrial decarbonization efforts.The National Development and Reform Commission(NDRC),which oversees the countrys broad economic p

167、lanning,takes the lead in drafting most eco-nomic policies and endorsing stringent decarbonization measures.The Ministry of Ecology and Environment(MEE)focuses on establishing and implementing environmental regulations that also target industrial emissions.It collaborates closely with the Ministry o

168、f Industry and Information Technology(MIIT),which manages the specific industrial sectors.Additionally,the Ministry of Finance and the Ministry of Com-merce indirectly influence decarbonization policies through their roles in fiscal and trade matters,respectively.Industry associations,which counteri

169、ntuitively are government agencies,also play an important role in enforcing the rules in the various sectors.The national structure is mirrored at the provincial and municipal levels through local departments such as the Provincial Development and Reform Commissions and local environmental and indus

170、try agen-cies.However,these local bodies often reflect the unique economic and industrial landscapes of their respective regions,along with differing local interests that may not always align with central directives.Each provincial INSTITUT MONTAIGNE36government strives to attract economic growth,a

171、priority that has his-torically overshadowed environmental concerns despite recent shifts in policy emphasis.This pursuit of growth is coupled with the imperative to maintain energy security,which in China often means continued reliance on abundant coal resources.Despite the increasing importance at

172、tached to environmental policies and decarbonization among local officials,there is a noticeable disparity between Beijings ambitions and those of some local governments and companies.Nonetheless,some provinces,leveraging competi-tive advantages such as renewable energy production or technological a

173、dvancements,exhibit higher levels of ambition in this regard.This dynamic creates a competitive economic landscape among pro-vinces,significantly influencing the manner and capacity of both central and provincial governments to enact effective industrial decarbonization policies.Understanding this c

174、omplex interplay is crucial for assessing Chi-nas overall strategy toward reducing industrial carbon emissions and its implications for global environmental goals.SectorSpecialized Province Steel IndustryHebei,Jiangsu,Shandong Buildings Material Industry(including cement)Fujian,Guangdong,Jiangsu,Anh

175、ui,ShandongTextile IndustryZhejiang,Jiangsu,Shandong,HenanPetrochemical and chemical industry Shandong,Jiangsu,Hebei,TianjinTable 4:Example of“decarbonization specialization”between Chinese provincesFORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA37c.Chinas Strategic Planning and Government Interven

176、tionTo discuss Chinese industrial policy,it is necessary to acknowledge the extensive role of government intervention in industrial affairs,a feature that markedly distinguishes the Chinese system from those of liberal democracies.In China,both national and local governments(provinces and municipali

177、ties)play pivotal roles in industrial affairs and make interventions that are far more pronounced than in any other major economy.However,due to the sensitive nature of the topic for the Chinese regime,it is very difficult to know how much actual support China is providing to industries.Such numbers

178、 as are available are massive.In 2020,the financial sup-port provided to industries through subsidies,tax credits,and other mechanisms such as government procurement and various forms of indi-rect support may have been as high as RMB 6,402billion(813billion),constituting about 5percent of Chinas GDP

179、.28 The total financial com-mitment to industry indicates a level of state involvement in the economy that is deeply woven into the fabric of national economic strategies.These financial commitments are aimed at fostering domestic innova-tion and self-sufficiency,a goal that has become increasingly

180、pronounced under the leadership of Xi Jinping.The“Made in China 2025”initiative and the recent emphasis on the“dual circulation”strategy reflect a deliberate focus on reducing dependency on foreign technology and enhancing internal capacity in strategic sectors.29 This strategy also encompasses the

181、greening of Chinas industry,which is perceived as a substrategy of both Chinas economic independence and Chinas 28 OECD,“Measuring Distortions in International Markets:Below-Market Finance,”OECD Trade Policy Papers,no.247(2021),https:/www.oecd.org/publications/measuring-distortions-in-international-

182、markets-below-market-finance-a1a5aa8a-en.htm.29 State Council of the Peoples Republic of China,“Made in China 2025 Plan,”2016,accessed September 9,2024,https:/ MONTAIGNE38strategy for future growth.Furthermore,the expansive scale of govern-ment intervention underscores the Chinese authorities capaci

183、ty to steer industrial sectors toward major policy goals,including those related to decarbonization.d.The“Dual Carbon”Objectives:Greening Chinas IndustryThe introduction of the 14thFive-Year Plan underscored a strategic pivot toward prioritizing technological innovation across a broad spec-trum of i

184、ndustries in China.30 This plan is the first to prioritize green and environmentally friendly products,at least on paper.This aligns with the broader vision encapsulated in the“1+N”policy framework,Chinas flagship climate objective,which was established to find a pathway for the country to peak its

185、emissions in 2030.31 While the“1+N”framework sets overarching climate goals,it lacks specific emissions reduction tar-gets for individual industrial sectors.Regarding industry decarbonization,the 14thFive-Year Plan yielded broader strategic initiatives to optimize and adjust the industrial struc-tur

186、e,notably aiming to address issues of overcapacity and enhance energy efficiency.These initiatives notably promote recycling,improve energy conservation measures,and establish a robust green manufac-turing system through diverse policy instruments from the national to the provincial and local levels

187、.Additionally,this set of policies intro-duces benchmarks that industries are expected to meet by 2025 and 2030,with the goal of aligning with international efforts for energy 30 State Council of the Peoples Republic of China,中華人民共和國國民經濟和社會發展第十四個五年規劃和2035年遠景目標綱要 Outline of the 14th Five-Year Plan fo

188、r National Economic and Social Development of the Peoples Republic of China and the Long-Range Objectives for 2035,March 13,2021,https:/ “Working Guidance for Carbon Dioxide Peaking and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy,”Xinhua News Agency,Octobe

189、r 24,2021,http:/ A POST-CARBON INDUSTRYINSIGHTS FROM ASIA39conservation and carbon intensity.The approach includes promoting“pioneers”(industry leaders)and gradually expanding these standards to other sectors as technological maturity and economic viability evolve.The Chinese government,through the

190、Ministry of Ecology and Environ-ment,classifies steel,nonferrous metal smelting(aluminum),and chemicals and petrochemicals as“dual-high”industries due to their high energy consumption and high emissions.Local environmental authorities are instructed to tighten the approval,pollution control,and moni

191、toring of these projects.Since 2021,key environmental and climate authorities,including the NDRC,MEE,MIIT,and China Energy Enginee-ring Corporation(CEEC),have been directed to“strictly contain the blind development of the dual-high industries.”Chinas Nascent Clean Industrial StrategyDespite this set

192、 of policies,Chinas path to industrial decarbonization is still in its infancy.The countrys heavy industries are not only mas-sive in scale but also among the most carbon intensive globally.In 2020,Chinas CO2 emissions per unit of GDP were more than double the global average,with profound disparitie

193、s across provinces.This is exacerbated by the ongoing issue of overcapacity in industries such as steel and che-micals,which threatens to undermine efforts to reduce carbon intensity by creating economic incentives to maintain high levels of production.Nevertheless,recent developments have seen a ti

194、ghtening of poli-cies around high-emissions and high-energy-consumption industries.Since 2021,China has been more assertive in containing what are ter-med“dual-high”projects,with stringent controls over new projects and enhanced monitoring of existing ones.This included suspending numerous projects

195、that failed to meet dual-energy control targets and initiating provincial pilots for carbon impact assessments in 2023.32 INSTITUT MONTAIGNE40The national government also leverages interprovincial competition by fiscally rewarding local administrations that have good results in terms of decarbonizat

196、ion.33Although Chinas manufacturing strength is declining relative to its GDP,it remains a critical driver of both economic growth and environmental impact.34 The tension between industrial growth and environmental sustainability is a significant policy challenge for China,reflecting the broader dil

197、emmas faced globally.The shift toward electrification in indus-try and increasing demand for energy,particularly from coal-fired power generation,highlight the complex dynamics at play in Chinas industrial and environmental policies.As such,Chinas decarbonization strategy is not just a national issu

198、e but a critical component of global efforts to com-bat climate change.When analyzing Chinas prospects for a turn toward clean industrial policy,it is essential to maintain a speculative outlook for key industries,as they face significant shifts in terms of both domestic demand and glo-bal competiti

199、on.In sectors such as steel and cement,which have histori-cally catered to a robust domestic construction industry,the recent real estate slump has led to a sharp decline in demand.This oversupply has already prompted a moratorium on new steel plants,highlighting the challenges of excess capacity.35

200、32 Ministry of Ecology and Environment of the Peoples Republic of China,關于加強高耗能、高排放建設項目生態環境源頭防控的指導意見 Guiding Opinions on Strengthening Source Control of Ecological and Environmental Protection for High Energy Consumption and High Emission Construction Projects,May 31,2021,https:/ State Council of th

201、e Peoples Republic of China,財政支持做好碳達峰碳中和工作的意見 Opinions on Financial Support for Achieving Carbon Peak and Carbon Neutrality,May 31,2022,https:/ Qing Na,“Chinas Manufacturing Growth Hits Three-Year Peak,Caixin PMI Shows,”Caixin Global,July 1,2024,https:/ Bank,“Manufacturing,Value Added(%of GDP)China,

202、”accessed September 9,2024,https:/data.worldbank.org/indicator/NV.IND.MANF.ZS?locations=CN.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA41Similarly,overcapacity looms large in many of the countrys green tech industries,such as the solar photovoltaic and battery industries.36 This could result in

203、falling prices,followed by a wave of cancellations,mergers,and potentially bankruptcies in Chinas industrial sector.The global res-ponse to overcapacity,particularly from China,will be critical.China cur-rently seems to engage in aggressive market dumping rather than taking steps to retire some of i

204、ts excess capacity.How these deve-lopments unfold will be pivotal in shaping the future landscape of industries in the country and setting an ambitious industrial decar-bonization agenda.1.3.JAPANS INDUSTRIAL POLICYJapan has a rich history of industrial policy that facilitated its status as the firs

205、t Asian country to industrialize.Historically,this policy has supported the maintenance of robust capacities in energy-intensive sectors,despite geographic and energetic constraints that are generally unfavorable for industrial manufacturing.Japans traditional industrial policy has been closely link

206、ed to providing cheap energy which is highly valued by industrial producers and a long-standing focus on innovation.However,sectors requiring high energy density,such as primary aluminum,have needed to relocate overseas to regions with accessible low-cost energy.35 Ministry of Industry and Informati

207、on Technology of the Peoples Republic of China,工業和信息化部辦公廳關于暫停鋼鐵產能置換工作的通知 Notice from the General Office of the Ministry of Industry and Information Technology on Suspending Steel Capacity Replacement Work,August 22,2024,https:/ Recent data,such as those from Bloomberg New Energy Finance,suggest that

208、 the planned gigafactory expansions far surpass even the most optimistic demand projections.See:Yayoi Sekine,“Energy Storage:10 Things to Watch in 2024,”BloombergNEF,January 25,2024,https:/ MONTAIGNE42Japan emits approximately 1billion tons of greenhouse gases annually,37 with the industrial sector

209、accounting for about 36.5percent of these emissions.The steel industry alone contributes around 55percent of these industrial emissions,followed by the chemi-cals industry at 14.6percent and the cement industry at about 8percent.38 Despite a globally competitive market that sometimes surpasses the c

210、ompetitiveness of local production,Japan maintains a significant steel industry,which supports its automotive and machinery sectors.It also boasts major players in the chemicals industry and produces cement for both domestic use and export within the Pacific region.Since the 1990s,Japanese industria

211、l policy has been protective and sup-portive but much less intrusive than that of its neighbor,China.Japan is implementing various strategies to test its options for decarboniza-tion,and the countrys industrial future will be strongly impacted by the turn to a post-carbon world.The Japanese governme

212、nt establishes guidelines and coordinates policies with industrialists who co-construct the rules imposed or sometimes voluntarily adopted to encourage compliance without coercion.As Japan prepares to unveil a new natio-nal decarbonization strategy by the end of 2024,this paper will provide insights

213、 into the potential pathways and challenges facing the country in an increasingly diverse global landscape of industrial decarbonization.37 Ministry of the Environment,Japan,“Japans National Greenhouse Gas Emissions and Removals in Fiscal Year 2022,”April 12,2024,https:/www.env.go.jp/en/press/press_

214、02707.html#:text=Greenhouse%20gas%20(GHG)%20emissions%20of,is%20the%20reduced%20energy%20consumption.38 Ministry of the Environment,Japan,“Japans National Greenhouse Gas Emissions and Removals in Fiscal Year 2022:Executive Summary,”2022,https:/www.env.go.jp/content/000216745.pdf.FORGING A POST-CARBO

215、N INDUSTRYINSIGHTS FROM ASIA43a.The Shift toward Decarbonization:Policies and InnovationsLike other developed nations with energy-intensive industries,Japan needs to make low-carbon products competitive against their carbon-in-tensive alternatives.It must also foster research and development and imp

216、lement innovations that achieve industrial decarbonization at the national level.Until recently,Japanese industrialists viewed decarbonization as a bur-den.This perspective is slowly shifting as the countrys energy security becomes increasingly fragile due to unstable fossil resources.The tran-sitio

217、n to less energy-intensive or decarbonized processes is increasingly seen by some industry leaders as a policy of good management.Howe-ver,the pace of the decarbonization of energy-intensive industry,particu-larly if triggered by international pressure(such as the EU CBAM),is often considered too fa

218、st by Japanese stakeholders.Despite its claim to have an industry that is less carbon intensive than that of some of its competitors,particularly China,Japan was relatively late among developed nations in deploying decarbonization tools.It only implemented binding climate policies on its industry ve

219、ry recently.The timeline of Japans industrial decarbonization strategy started around 2017,notably with work on the Basic Hydrogen Strategy,which was com-pleted in 2023.39 This was followed by a pledge from the Cabinet for Car-bon Neutrality by 2050,40 the Green Growth Strategy in December 2020,41 3

220、9 Ministry of Economy,Trade and Industry,Japan,“Basic Hydrogen Strategy,”June 6,2023,https:/www.meti.go.jp/shingikai/enecho/shoene_shinene/suiso_seisaku/pdf/20230606_5.pdf.40 Prime Minister of Japan and His Cabinet.“Policy Speech by the Prime Minister to the 203rd Session of the Diet,”October 28,202

221、0,https:/japan.kantei.go.jp/99_suga/statement/202010/_00006.html.41 Ministry of Economy,Trade and Industry,Japan,“Green Growth Strategy through Achieving Carbon Neutrality in 2050,”updated October 17,2022,https:/www.meti.go.jp/english/policy/energy_environment/global_warming/ggs2050/index.html.INSTI

222、TUT MONTAIGNE44the Green Innovation Fund 42 and the 6thBasic Energy Plan in 2021,43 and the Basic Hydrogen Strategy in 2023.44 The Green Innovation Fund,handled by the New Energy and Development Organization(Japans industrial funding agency),is the centerpiece of the Japanese Research and Innovation

223、 architecture;it manages JPY 2.9billion(18billion)to support industrial decarbonization R&D projects in the country.45b.The GX StrategyThe first comprehensive decarbonization strategy for the industrial sec-tor in Japan,the GX League,46 was announced in 2022.It combines“growth-oriented”carbon pricin

224、g with industry support to enhance the competitiveness of the Japanese economy.This policy aims to drive the countrys transition to carbon neutrality by fostering a collabo-rative framework among businesses.Initially,the GX League included 568 companies that account for over 50percent of Japans gree

225、nhouse gas emissions.These companies have set voluntary emissions reduction targets for 2025 and 2030,aiming to reduce emissions by 620million tons and 480million tons,respectively.In 2024,a decision was made to establish a mandatory national Emis-sions Trading Scheme to be implemented by 202628,ali

226、gning with the official EU CBAM implementation.42 Ministry of Economy,Trade and Industry,Japan,“Green Innovation Fund,”updated February 3,2023,https:/www.meti.go.jp/english/policy/energy_environment/global_warming/gifund/index.html.43 Ministry of Economy,Trade and Industry,Japan,“Outline of Strategi

227、c Energy Plan,”October 2021,https:/www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/6th_outline.pdf.44 Ministry of Economy,Trade and Industry,Japan,“Basic Hydrogen Strategy.”45 Ministry of Economy,Trade and Industry,Japan.(n.d.).“Basic Policies for Green Innovation Fund(Summary),”https:/www.m

228、eti.go.jp/english/policy/energy_environment/global_warming/gifund/pdf/20230111_000.pdf.46 Ministry of Economy,Trade and Industry,Japan,運営事業費 Green Transformation League Operational Project Costs,March 22,2024,https:/www.meti.go.jp/policy/energy_environment/global_warming/GX-league/legalissuesofets.p

229、df.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA45A substantial financial component of the GX policy is the issuance of GX Transition Bonds.47 Japan plans to invest approximately JPY 150bil-lion(995billion)over the next decade,funded by issuing around JPY 20billion(136billion)in GX bonds.This app

230、roach leverages one yen of public money to generate seven yen in private investment.The GX bonds will be reimbursed using revenues from the carbon pricing mechanisms implemented in the country.This investment plan will support various initiatives,including the deve-lopment of hydrogen,renewable ener

231、gy,and industrial decarbonization.The industrial strategy involves the initial funding of R&D projects,followed by financing deployment projects later in the decade using GX funds.In June 2024,the first GX bonds were issued,raising JPY 700billion(4.4billion),with the majority two-thirds earmarked fo

232、r industrial R&D projects.This legislative act came alongside the Basic Policy for the Realization of GX,which aims to promote thorough energy efficiency and to make renewable energy a major power source,with the target of achieving 3638percent of renewables in the power generation mix by 2030.The J

233、apanese government also updated its Basic Hydrogen Strategy in June 2023.This strategy seeks to cultivate Japans industrial technological advantage on hydrogen,allowing it to reach 3million tons per year of hydrogen consumption by 2030,12million tons per year(including ammonia)by 2040,and 20million

234、tons per year by 2050.The government has pledged to support the launch of CCS projects by 2030 and to achieve 612million tons of annual CO2 storage by 2030.47 Ministry of Economy,Trade and Industry,Japan,“Japan Climate Transition Bond Framework,”November 2023,https:/www.meti.go.jp/policy/energy_envi

235、ronment/global_warming/transition/climate_transition_bond_framework_eng.pdf.INSTITUT MONTAIGNE46c.The Reality of Decarbonization and Economic SecurityJapan is implementing supportive policies and innovations aimed at decarbonization,influenced by policies in Europe and the Inflation Reduc-tion Act i

236、n the United States.The GX League,in particular,represents a dual approach of carbon pricing and support for innovation and industry decarbonization.The Japanese industrial policy is also closely linked to its energy policy,framed by the“3 Es”:energy security,economic secu-rity,and environmental sus

237、tainability.The key government players in decarbonization include the Ministry of Economy,Trade,and Industry(METI)and the Ministry of the Environment(MOEJ),along with other ministries such as the Ministry of Finance and the Ministry of Information,which manage the decarbonization of the Japanese eco

238、nomy.Japans path to industry decarbonization is particularly complex,given the current technologies available.Consequently,Tokyo is adopting a highly technology-agnostic approach,which is prudent but may not always align with the goal of achieving carbon neutrality by 2050.Japans policy approach all

239、ows the use of gas to replace more polluting activities that rely on resources such as coal and heavy oil,with ongoing evalua-tions of when these transitional policies will shift toward effective car-bon neutrality.Crucially,Japans ambitious hydrogen policy is not only focused on domestic production

240、 but also,significantly,on importing decarbonized hydrogen,48 which is essential given Japans insular nature and lack of sufficient local production potential.48 It is important to note that Japans vision for clean hydrogen entails blue hydrogen and even non-clean hydrogen options to“launch the mark

241、et.”FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA471.4.SOUTH KOREAS INDUSTRIAL POLICYThe Republic of Korea is an industrial behemoth,hosting major corpora-tions in sectors including steel(POSCO)and chemicals(SK)that compete on the global stage alongside other prominent technology and machinery co

242、rporations(Samsung and LG).The South Korean industrial sector is cha-racterized by its high energy intensity,with a substantial dependence on coal for both industrial processes and electricity production.Similar to Japan,the principal architects of South Koreas industrial decar-bonization policy are

243、 the Ministry of Trade,Industry,and Economy(MOTIE)and the Ministry of the Environment(MOEK).In addition,the Korean Presidential Committee on Net Zero plays a pivotal role,functio-ning as a consultative and coordinating body for the presidential action.Industrial conglomerates in South Korea,known as

244、 chaebols which are perceived as controlling greater wealth than the state itself have intricate connections with the government.This relationship enables them to exert considerable influence on industrial policies.Politically,advocating for substantial industrial strategies that would provide finan

245、cial support for decarbonization efforts within these corporations has proven difficult.The South Korean economy is notably driven by exports,with significant steel exports distributed among Europe(approximately 10percent),the United States(approximately 10percent),and Southeast Asia(20percent).49 C

246、onsequently,international demand significantly influences South Koreas industrial activities.The development of a global market for decarbonized products is considered crucial for South Korea.Rapid progression or inadequate adaptation to global market demands could lead to a substantial decrease in

247、its industrial market share.49 Korea Institute for Industrial Economics&Trade,Strategies and Policy Tasks for Promoting Carbon Neutrality in the Steel Industry,April 12,2022,https:/www.kiet.re.kr/research/paperView?paper_no=774.INSTITUT MONTAIGNE48a.A Slow Shift toward DecarbonizationOverall,the gov

248、ernment of South Korea remains disorganized in its approach to industry decarbonization,lacking comprehensive flagship legislation and integrated strategies for each sector.Additionally,much of the impetus for industry decarbonization comes from abroad,with the EUs Carbon Border Adjustment Mechanism

249、 being a key incentive driving the government toward more action.Historically,South Koreas primary industrial policy has focused on provi-ding low-cost energy to support its export sectors.Industrial decarboni-zation policy is still a very new concept in the country.To date,support for decarbonizati

250、on has largely been confined to research and deve-lopment,with comprehensive policies that mandate decarbonization remaining under deliberation.South Koreas approach to industrial decarbonization is trailing behind comparable initiatives in countries such as Japan and,to an even great extent,the EU.

251、In 2012,South Korea introduced the Emission Trading System(SK ETS),inspired by the European model and established with assistance from the European Union.Despite the system encompassing over 88.5percent of national emissions,its efficacy in reducing these emissions has been limited.50 This limitatio

252、n can be attributed to its foundational design around a“business as usual”trajectory,compoun-ded by the ineffectual internalization of carbon costs by the industries it covers.A significant challenge identified within South Korea involves the reform of the electricity sector.Similar to Japan,securin

253、g an adequate sup-ply of decarbonized energy whether through increased reliance on 50 International Carbon Action Partnership(ICAP),“Korea Emissions Trading Scheme,”accessed September 9,2024,https:/ A POST-CARBON INDUSTRYINSIGHTS FROM ASIA49nuclear and renewable energy sources,or even through hydrog

254、en remains a critical concern.In this respect,the two last administrations have established hydrogen strategies that seek to stimulate demand for decarbonized hydrogen and facilitate policies concerning its production and importation,with prospective imports from Australia and the Gulf countries.Dur

255、ing the administration of President Moon(20172022),South Korea initiated a renewable energy strategy 51 and a national plan to reduce greenhouse gas emissions by 99million tons through innovation and technology by 2030 compared to the 2019 level.52 In 2019,a comprehen-sive roadmap for the hydrogen e

256、conomy was launched,underscoring the role of hydrogen in industrial decarbonization.53 This policy sup-ported the utilization,importation,and production of hydrogen,irres-pective of its source,aiming to establish a supply chain that would later be decarbonized.In 2020,South Korea pledged to achieve

257、carbon neutrality by 2050.54 In the wake of the COVID-19 pandemic,a Green New Deal and green finance initiatives were introduced to support business transitions across various sectors.55 In March 2022,the Carbon Neutrality Act was enacted to pro-mote green growth.56 This legislation aimed to reduce

258、carbon emissions 51 Ministry of Trade,Industry and Energy,South Korea,“Koreas Renewable Energy 3020 Plan,”October 2018,https:/gggi.org/site/assets/uploads/2018/10/Presentation-by-Mr.-Kyung-ho-Lee-Director-of-the-New-and-Renewable-Energy-Policy-Division-MOTIE.pdf.52 Ministry of Environment,Republic o

259、f Korea,2030 20182020 Revised 2030 Greenhouse Gas Reduction Roadmap and Finalization of the Emissions Allowance Allocation Plan for 20182020,July 24,2018,http:/www.me.go.kr/home/web/board/read.do?menuId=286&boardMasterId=1&boardCategoryId=39&boardId=886420.53 Netherlands Enterprise Agency(RVO),“Hydr

260、ogen Economy Plan in Korea,”January 18,2019,https:/www.rvo.nl/sites/default/files/2019/03/Hydrogen-economy-plan-in-Korea.pdf.54 Sohn Ji-ae,“Net Zero by 2050,”Korean Culture and Information Service(KOCIS),December 2020,https:/www.kocis.go.kr/eng/webzine/202012/sub08.html.55 Government of South Korea,

261、“The Korean New Deal:National Strategy for a Great Transformation,”July 2020,https:/content.gihub.org/dev/media/1192/korea_korean-new-deal.pdf.INSTITUT MONTAIGNE50by 35percent by 2030 relative to 2018 levels and to enhance the natio-nal ETS,which had been operational since 2012 and covered 73percent

262、 of national emissions.Following the election of the conservative President Yoon,there was a notable pivot in decarbonization policy,especially with an expanded endorsement of nuclear energy.The inaugural National Plan for Carbon Neutrality and Green Growth was adopted,revising down the green-house

263、gas reduction targets to an 11.4percent decrease by 2030 com-pared to 2018.57 Nevertheless,financial incentives for growth,particularly within green industries,have continued under the new administration.Finally,in response to the European Unions Carbon Border Adjustment Mechanism(EU CBAM),Korea has

264、 committed to reforming its national carbon market to enhance the rigorousness and effectiveness of its industrial decarbonization efforts,aligning with European CBAM policies.56 Korea Legislation Research Institute,“Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis,

265、”September 24,2021,https:/elaw.klri.re.kr/eng_mobile/viewer.do?hseq=59958&type=part&key=39.57 2050 Carbon Neutrality Commission,Republic of Korea,()National Carbon Neutrality and Green Growth Basic Plan(Draft),March 2023,https:/www.2050cnc.go.kr/download/BOARD_ATTACH?storageNo=1936.FORGING A POST-CA

266、RBON INDUSTRYINSIGHTS FROM ASIA512 How to Decarbonize Industry Globally?2.1.A VERY UNEVEN INDUSTRY GEOGRAPHY TO DECARBONIZEChinaJapanSouth KoreaEuropean UnionSourcesProduction1,019,080 kt86,999 kt66,683 kt126,316 kt All(2023)Carbon Emissions2,100 Mt150 Mt221 MtChina(2020),Japan(2019),EU(2021)Carbon

267、IntensityBF-BOF 2.1 t-CO2/t,EAF 1.3 t-CO2/t1.796 t-CO2/t crude steel1.15 t-CO2/tChina(2023),Japan(2019),EU(2022)Production2,390billion 227billion 139billion 760billion All(2022)Carbon Emissions500 Mt of CO2CO2,CH4,and N20:3,709(2020),4,236(2021),3,786(2022)kt-CO2 eq.;F-gases:322(2020),361(2021),186(

268、2022)kt-CO2 eq.121 Mt(2020),124Mt(2021)China(2020),Japan(2020-2022);EU(2020-2021)Carbon Intensity/32.9(2020),31.8(2021)GHG emissions per unit of chemicals productionEU(2020-2021)Table 5:Industrial emissions In Europe and AsiaSteelChemicalsINSTITUT MONTAIGNE52ChinaJapanSouth KoreaEuropean UnionSource

269、sProduction38.5 Mt(2021),40.21 Mt(2022),41.59 Mt(2023)of primary aluminum0t(2015 onwards)1.094 Mt of aluminum plates1.226 Mt of primary aluminiumChina(2021-2023)Japan(2024),Korea(2022),EU(2022)Carbon Emissions550 Mt of CO2N/A(2015 onwards)24 Mt CO2 equivalentChina(2022),Japan(2024),EU(2021)Carbon In

270、tensity12.5 to 13 tCO2/tN/A(2015 onwards)5.5 tCO2/tChina,EU(2019),Japan(2024)Production2,110 Mt53.2 Mt51.06 Mt182.1 MtChina(2022),Japan(2022),Korea(2022),EU(2019)Carbon Emissions763.4 Mt of CO223.2 Mt of CO2104 Mt of CO2China,Japan,South Korea(2022),EU(2023)Carbon Intensity0.58 t-CO2/t0.515 t-CO2/t(

271、2020,2021,2022)667 k-CO2/t of cementChina(2022),Japan(2020-2022),EU(2017)AluminumCementFORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA53ChinaJapanSouth KoreaEuropean UnionSourcesSteelChina Baowu Group Nippon Steel CorporationPosco HoldingsArcelorMittalProduction131.84 Mt44.37 Mt38.64 Mt68.89 Mt(202

272、2)Carbon Emissions63,397 kt CO2 78.8 Mt(average between 2017 and 2019)124.4 Mt CO2e(scope 1&2)Nippon Steel(2022),Posco,ArcelorMittal(2020)Carbon Intensity1.87(2019)1.92 t-CO2/t(scope 1&2)/2.06 t-CO2/t-steel(scope 1&2)Nippon Steel(2022),ArcelorMittal(2018)ChemicalsSINOPEC GroupSumitomo ChemicalLotte

273、ChemicalsBASFProduction45.291 Mt(2023)2,895,283million yens18.066 Mt(2022)(capacity)14,895mil-lionSumitomo(2023),BASF(2022)Carbon Emissions172.56 Mt CO2e,of which 148 Mt CO2e in direct emissions(2021),161.69 Mt CO2e,of which 137.72 Mt CO2e in direct emissions(2022),168.64 Mt CO2e,of which 142.28 Mt

274、CO2e in direct emissions(2023),2.696 Mt CO2e3.896 Mt CO2e14,635 Mt CO2e(2023),15,797 Mt CO2e(2022)SINOPEC,Sumitomo(2022),Lotte(2023),BASFCarbon Intensity62.96(2021),48.76(2022),52.50(2023)t-CO2/RMBmillion(GHG emissions/revenue)/304 t-CO2e/KRW Billion(Scope 1&2)/SINOPEC,Lotte(2023)Table 6:Emissions a

275、nd Production Data for Key Industries in Europe and Asia INSTITUT MONTAIGNE54ChinaJapanSouth KoreaEuropean UnionSourcesAluminumChinalcoN/ALotte AluminiumNorsk HydroProduction6,700,000 t(2023)N/A2,030 kmt Norsk Hydro(2023)Carbon Emissions61.3816 Mt of CO 2 eN/A1,084 t CO2e2.70 Mt CO2eChinalco(2019),L

276、otte(2022),Norsk Hydro(2023)Carbon Intensity6.60 t-CO2e/RMB10,000N/A/41.1 t-CO2e/NOKmillion Chinalco(2019),Norsk Hydro(2023)CementAnhui ConchTaiheiyo Cement CorporationSsangyong C&EHeidelberg MaterialsProduction395 Mt(capacity)27,228 kt(of which 17,229 kt produced in Japan)15 Mt(capacity)176 Mt(capa

277、city)Anhui(2023),Taiheiyo(2023),SsangyongCarbon Emissions175,889,434 t CO220,065 Mt(of which 13,036 Mt in Japan)of CO29.9 Mt(2020)61.2 Mt CO2Anhui(2023),Taiheiyo(2023),Heidelberg(2022)Carbon Intensity0.8270 t-CO2/t-clinker0.698 t-CO2/t-cementitious0.551 t-CO2/t-cementitious materiaAnhui(2023),Taihei

278、yo(2023),Heidelberg(2022)FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA552.2.TRANSITION TECHNOLOGIES AND PROCESSESThe concept of decarbonizing energy-intensive industries is well understood within the scientific community,and although it is challen-ging,it is far from unachievable.However,two main

279、 challenges remain:First,there are engineering hurdles that need to be resolved for cer-tain technologies,as some necessary technologies are known but not yet mature enough for deployment or even demonstration.This creates significant technology uncertainty,complicating invest-ments and strategizing

280、 by industrials and policymakers.Second,and most importantly,the economic complexities asso-ciated with technological adoption present significant obstacles that need to be resolved through policy and regulations.These obs-tacles originate in the cost gap between decarbonized and car-bon-intensive g

281、oods that is present during the transition phase,giving rise to the question:How can customers be encouraged to choose the green alternative?These two factors create substantial uncertainty in industrial decarbo-nization policy.A technology that seems suitable today might become obsolete in a few ye

282、ars,complicating policy decisions that must encou-rage risk-taking while remaining open to the most appropriate future technologies.Fossil fuel use in industry can be categorized into two main areas:heating and processes.Heating typically involves boilers and furnaces powered by natural gas,coal,or

283、oil,whereas processes use fossil fuels as feedstocks for chemical reactions and material production.Substitution strategies for decarbonization include transitioning to electric and clean hydrogen-based heating systems for heating needs.For industrial processes,replacing fossil-derived feedstocks IN

284、STITUT MONTAIGNE56with green hydrogen and bio-based alternatives presents a viable pathway.Additionally,using alternative low-carbon raw materials or recycled materials instead of those heavily reliant on fossil fuels is a cru-cial strategy for achieving decarbonization goals.Beyond the substitution

285、 strategy,two additional decarbonization approaches are being considered by industries and governments to achieve carbon neutrality goals.The first strategy focuses on improving energy efficiency through process optimizations,policy implementations,and technological advancements.The second strategy

286、involves carbon capture,utilization,and storage(CCUS),which allows for the conti-nued use of fossil fuels in processes that are difficult to decarbonize in the short term by capturing and storing the resulting carbon emissions.CategoryCurrent useDecarbonization StrategiesHeatingUses boilers and furn

287、aces powered by natural gas,coal,or oil.Transition to electric heating systemsorUse clean hydrogen-based heating systemsProcessesUses fossil fuels as feedstocks for chemical reactions and raw material production.Replace fossil-derived feedstocks with green hydrogenorUse bio-based alternativesorUtili

288、ze low-carbon or recycled materialsEnergy EfficiencyEnergy efficiency improvement through process optimizations,policy implementations,and technological advancements.Carbon Capture,Utilization,and Storage(CCUS)Allows for continued use of fossil fuels in difficult-to-decarbonize processes by capturin

289、g and storing carbon emissions.It may be useful in some countries to avoid stranded assets.Table 7:Substitution Strategies for DecarbonizationFORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA572.3.ELECTRIFICATIONElectrification is a crucial component of industrial decarbonization.Direct electrificati

290、on offers many benefits,primarily regarding its efficiency in energy use,which surpasses alternatives such as fossil fuels,hydrogen,or ammonia.This approach involves replacing fossil-fuel-based systems with electric systems,thus leveraging clean energy sources to achieve decarbonization.In practice,

291、this means transitioning from fossil-fuel-based heating to electric heating methods.For low-temperature applications(below 100C),industrial heat pumps,which utilize ambient or recycled waste heat efficiently,are highly effective.High-temperature heat pumps can handle output temperatures up to 160180

292、C,with some innovative pro-jects pushing this limit to around 200260C.58For higher temperature requirements(above 200C),electric boilers are efficient,converting electricity directly into heat at temperatures up to 500C.Electric arc furnaces(EAF)are essential for applications requi-ring extremely hi

293、gh temperatures,such as steel production,where they can reach temperatures up to 3,500C.59Furthermore,electrification extends to industrial processes.For exa-mple,the steel industry can utilize EAFs powered by clean electricity to replace traditional coal-based blast furnaces in metallurgy processes

294、.Finally,electrolytic-process power,which is common in the aluminum industry,is increasingly being considered as a solution to electrify other sectors such as steel and even the cement sector.If powered with clean electricity,the electrolytic process could become a key element of many future low-car

295、bon industrial processes.58 Agora Energiewende,“Breaking Free from Fossil Gas:A New Path to a Climate-Neutral Europe,”May 4,2023,https:/www.agora-energiewende.org/publications/breaking-free-from-fossil-gas#downloads.59 Agora Energiewende,“Breaking Free from Fossil Gas.”INSTITUT MONTAIGNE58The increa

296、sing substitution of fossil fuels with low-carbon energy sources,mainly for electrification of usages such as low to mid-level heat,if essential to industrial decarbonization,still suffers from lack of access to enough affordable clean electricity due to the restricted resource availability.Challeng

297、es for Industrial Electrification:60 Economic:-high capital costs-process modification-long payback periods-high electricity-to-fossil-fuel price ratio-uncertain boundary conditions Technological:-limited number of manufacturers-long lifespan of existing equipment-limited number of examples-lack of

298、compressors for high temperatures-lack of“plug and play”solutions 61-bespoke designs instead of standardization and replication-significant capital investment required for new infrastructure and retrofitting induces high initial costs60 Table compiled by the author and Dr.Lukas Hermwille,based on va

299、rious sources cited in an X(Twitter)thread by Jan Rosenow(janrosenow),March 10,2024,https:/ This refers to the absence of easy-to-install,standardized,and ready-to-use technologies or systems that can be seamlessly integrated into existing industrial processes.SectorCurrent UseElectrification Soluti

300、onBenefitsCementFossil-fueled kilnsElectric kilnsReduced emissions,efficiencySteelCoal-based blast furnacesElectric Arc FurnacesLower emissions,renewables useAluminumElectrolysis with fossil fuels-based electricityRenewable-powered electrolysisEmissions-free productionChemicalsFossil boilersElectric

301、 boilers,heat pumpsEfficiency,lower emissionsTable 8:Summary Table of electricity applications for industry decarbonizationFORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA59 Infrastructure:-potential requirement for upgraded grid connection-long wait times for connections-need for robust electrical

302、infrastructure to handle increased loads-increased vulnerability to power outages Knowledge:-Lack of capacity to manage energy consumption(particu-larly in SMEs)-Need for combined knowledge of both process and electrical technology-Lack of awareness of heat consumption in companies-Insufficient know

303、ledge regarding available technologies and their capabilitiesINSTITUT MONTAIGNE60China,the Future Electrostate?Most countries that are genuinely committed to decarbonization tend to implement policy instruments that favor electrification where necessary.However,China lags behind Europe in elec-trify

304、ing its industry and remains heavily reliant on coal processes,despite the surge in clean electricity generation in China.Simul-taneously,China is undergoing a renewable energy revolution,with massive installations of renewable capacity accounting for over 50percent of the global total.This has led

305、to a significant surplus of clean electricity generation at peak loads in some pro-vinces,which the country still struggles to store or transfer to pro-vinces with high demand.To address these challenges,China is increasingly taking mea-sures to promote the electrification of industrial processes.Th

306、ese efforts aim to support decarbonization and prevent the waste of renewable electricity in the future.Although these measures are not specifically targeted at the use of clean electricity,they encou-rage the adoption of electrification technologies.Relevant initia-tives include promoting electric

307、boilers,electric kilns,and electric heating and implementing high-temperature heat pumps,high-power electric storage boilers,and other electric energy substi-tutes in key industries.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA6102,0004,0006,0008,00010,00012,000Figure 1:Electricity Demand in Sele

308、cted Regions,199120256219911992199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022202320242025ChinaIndiaUnited-StatesEuropean UnionTWh62 International Energy Agency,“Electricity Mid-Year Update,”July 2024,https:/ MONTAIGNE622.4.CLE

309、AN HYDROGENHydrogen is poised to be a pivotal element in the strategy to decarbo-nize industry,sometimes accounting for approximately 40percent of anticipated emission reductions,complementing efficiency improve-ments and electrification efforts.Currently,the global industrial sector utilizes around

310、 90million tons of hydrogen,primarily derived from gray hydrogen processes that emit significant carbon dioxide.To achieve comprehensive decarbonization,IRENA projects that global demand for hydrogen will need to rise dramatically to 530million tons.This surge would necessitate a substantial increas

311、e in electrolyzer capacity,estimated at 5,700GW based on current technologies.63 Howe-ver,rapid advancements in direct electrification technologies may alter these forecasts,potentially reducing future reliance on hydrogen.Clean hydrogen,generated through electrolysis using renewable energy or nucle

312、ar power,plays a crucial role in industry decarbonization for industrial processes and high-temperature heating.Alongside this,blue hydrogen produced from traditional fossil fuels with carbon capture,utilization,and storage technologies also provides a viable alternative to the direct utilization of

313、 fossil fuels.The positive aspect of hydrogen usage in industry is its relative versatility.Hydrogen can both serve as an energy vector that emits no greenhouse gases and be used in various processes.It can function as a reducing agent or combine with CO2 to manufacture low-carbon chemicals.Addi-tio

314、nally,its storage capacity provides flexibility.An additional advantage from a political economy perspective is the potential to repurpose existing natural gas infrastructure,thereby 63 International Renewable Energy Agency(IRENA),“Green Hydrogen for Industry:A Guide to Policy Making,”March 2022,htt

315、ps:/www.irena.org/publications/2022/Mar/Green-Hydrogen-for-Industry.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA63enhancing the value of current assets;however,this approach has cer-tain limitations.These include material compatibility issues,increased leakage risks due to hydrogens smaller mole

316、cular size,and the need for substantial modifications to existing storage facilities.64A key challenge in this transition is access to renewable electricity.The production of green hydrogen by 2050 will require an amount of electricity equivalent to current global electricity demand,highligh-ting a

317、significant infrastructural and logistic hurdle.Currently,Europe,South Korea,and Japan represent the most significant markets for hydrogen,reflecting strategic investments and policy frameworks aimed at fostering hydrogen adoption.Hydrogen will be a central component of industrial decarbonization.Ho

318、wever,clean hydrogen production is expensive in many regions due to the high costs associated with electrolysis and renewable energy sto-rage.Electrolyzers are still in the process of being improved to scale up the hydrogen economy effectively.This presents a significant competi-tiveness challenge d

319、ue to the high cost of clean hydrogen,which will directly impact the competitiveness of industries.Regions that suc-cessfully reduce the cost of low-carbon hydrogen will be in the strongest position to attract industrial investments and facilities.Second,the infrastructure needed for hydrogen produc

320、tion,storage,and distribution is either lacking or underdeveloped,necessitating subs-tantial investments and time to build an adequate support system.Last,there is a mismatch between demand and supply ensuring consistent and sufficient access to clean hydrogen to meet industrial needs is one of the

321、most uncertain aspects of integrating hydrogen as an industry decar-bonization strategy nowadays.64 Kornl Tlessy,Lukas Barner,and Franziska Holz,“Repurposing Natural Gas Pipelines for Hydrogen:Limits and Options from a Case Study in Germany,”International Journal of Hydrogen Energy 80(2024):821831,h

322、ttps:/doi.org/10.1016/j.ijhydene.2024.07.110.INSTITUT MONTAIGNE64a.Consequences of the Future Hydrogen Economy for the Post-Carbon Industrial LandscapeThe emerging hydrogen market is set to diverge markedly from traditio-nal oil market dynamics.Unlike the oil market,which is dominated by a few selle

323、rs and many buyers,the hydrogen market will likely feature a few buyers primarily in energy-intensive industrial sectors but numerous potential sellers.This inversion necessitates the develop-ment of a robust and coordinated infrastructure for hydrogen transport and distribution.This will have conse

324、quences.Access to abundant and affordable clean electricity is crucial for cost-efficient clean hydrogen production.Access to a cheap hydrogen supply will be instrumental for many industrial sec-tors if they transition to hydrogen for their processes or heating.Conse-quently,developing a clean hydro

325、gen supply in traditional industrial regions will not be easy.If industries rely heavily on affordable access to clean hydrogen,it may significantly impact the future geography of industry in the post-carbon economy.Hydrogen will always be a valuable resource.Nevertheless,if an indus-trial process c

326、an be electrified,it will likely transition to electrification for efficiency gains.This means that as technology evolves,decarboni-zing heating below certain temperatures may become more feasible with electricity than with hydrogen(depending on technological inno-vation,above 600C).This underscores

327、 that while hydrogen will be cen-tral to industrial decarbonization,it may not always be as central for all applications as initially envisioned,highlighting the crucial uncertainty in technological developments and their impact on global industrial decarbonization strategies.That said,in many proce

328、sses,hydrogen will remain essential as a reducing agent such as in the steel industry and some aluminum processes or as a feedstock in the chemicals sector to achieve decarbonization.FORGING A POST-CARBON INDUSTRYINSIGHTS FROM ASIA65The Real Challenge for Hydrogen Use in the Industrial SectorThe lar

329、ge-scale commercialization of green hydrogen will require significantly increasing the energy efficiency of infrastructure(electrolyzers and hydrogen uses)and securing large volumes of low-carbon electricity from renewable energies.Consi-dering that few countries have access to low-carbon electricit

330、y supplies,and even fewer have established low-carbon electricity markets,the feasibility of the large-scale commercialization of green hydrogen will be limited by the low level of available low-carbon electricity generation capacity.The deployment of green hydrogen must therefore be promoted strate

331、gically,using a flexible approach,with priority given to sectors where there is no alternative,such as in the steel sector and some sections of the chemical sector.SectorCurrent UseGreen Hydrogen SolutionBenefitsCementNatural gas for heatHydrogen-fired kilnsZero emissions,high efficiencySteelCoal fo

332、r reductionHydrogen-based Direct Reduction of IronEmissions-free primary steel productionAluminumFossil fuel combustionHydrogen for high-temp processes,potentially as a reducing agent in the future(R&D)Cleaner energy sourceChemicalsFossil-derived hydrogenGreen hydrogen for feedstock,utilizing CO2Car

333、bon-neutral chemical productionTable 8:Summary of Green Hydrogen Applications for Industry DecarbonizationINSTITUT MONTAIGNE66In Europe,the establishment of such infrastructure will require harmonized policies at the European Union level and beyond,fostering collaboration between governments and industry stakeholders.The Hydrogen Bank 65 is emerging as particularly crucial in this context,serving