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Regional Industrial Transitions to Climate Neutrality

image of Regional Industrial Transitions to Climate Neutrality

Some manufacturing activities are among the most difficult human activities to make climate neutral and they are typically regionally concentrated. Across Europe these regions are often socioeconomically relatively weak. Yet these sectors provide relatively well-paid jobs in many of these regions. Some of these regions may also have more difficult access to infrastructure to provide the hydrogen, carbon capture and storage and zero-emission freight, which can be important to some of these activities. Industrial transitions to climate neutrality therefore have regional development implications. Since regions differ in their socio-economic conditions, understanding these regional development implications will help policy makers prepare a just transition. This publication identifies manufacturing activities that are particularly difficult to decarbonise and the transformations they require. It shows how these activities are distributed across European regions, focusing on employment at emission-intensive production locations. It identifies conditions for getting access to needed infrastructure and how access conditions differ across regions. It investigates the socio-economic vulnerabilities of affected regions, their manufacturing businesses and workers. In some regions, workers and firms may be particularly vulnerable, for example, because of low-skill jobs, type of employment contract or low productivity.

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Identifying regional access to hydrogen, carbon capture and storage, and climate-neutral freight

Making the key manufacturing sectors described in Chapter 1 climate neutral requires infrastructure. This chapter shows how access conditions and costs may differ across regions. Both hydrogen, needed for chemicals and steel production, and captured CO2 emissions, most generally needed for cement production, are best transported via pipelines. Pipelines are subject to scale economies: clustered production sites will face lower costs. The first hydrogen transport network will therefore likely be laid out in Northwest Europe. In some regions, local renewable electricity production potential will not be sufficient or too costly to produce the needed hydrogen and will require imports. Good connection to ports also matters: hydrogen or hydrogen-derived products may also be shipped. Moreover, transport to and from ports plays an important role to provide the basic materials key industries produce to downstream industries. Any costs from decarbonising road transport could impact transport costs in inland production locations the most.

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