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Increasing urbanisation and climate change belong to the greatest challenges of the 21st century. A high share of global greenhouse gas emissions are estimated to originate in urban areas (40 % to 78 % according to UN Habitat 2010). Therefore, low carbon city strategies and concepts implicate large greenhouse gas (GHG) mitigation potentials. At the same time, with high population and infrastructure densities as well as concentrated economic activities, cities are particularly vulnerable to the impacts of climate change and need to adapt. Scarce natural resources further constrain the leeway for long-term, sustainable urban development. The Low Carbon Future Cities (LCFC) project aims at tapping this three-dimensional challenge and will develop an integrated strategy / roadmap, balancing low carbon development, gains in resource efficiency and adaptation to climate change. The study focuses on two pilot regions - one in China (Wuxi) and one in Germany (Düsseldorf+) - and is conducted by a German-Chinese research team supported by the German Stiftung Mercator. The paper gives an overview of first outcomes of the analysis of the status quo and assessment of the most likely developments regarding GHG emissions, climate impacts and resource use in Wuxi. The project developed an emission inventory for Wuxi to identify key sectors for further analysis and low carbon scenarios. The future development of energy demand and related CO2 emissions in 2030 were simulated in the current policy scenario (CPS), using five different sub-models. Selected aspects of Wuxi's current material and water flows were analysed and modelled for energy transformation and the building sector. Current and future climate impacts and vulnerability were investigated. Recent climatic changes and resulting damages were analysed, expected changes in temperature and precipitation in the coming four decades were projected using ensembles of three General Circulation Models. Although Wuxi's government started a path to implement a low carbon plan, the first results show that more ambitious efforts are needed to overcome the challenges faced.
Green hydrogen will play a key role in building a climate-neutral energy-intensive industry, as key technologies for defossilising the production of steel and basic chemicals depend on it. Thus, policy-making needs to support the creation of a market for green hydrogen and its use in industry. However, it is unclear how appropriate policies should be designed, and a number of challenges need to be addressed. Based on an analysis of the ongoing German debate on hydrogen policies, this paper analyses how policy-making for green hydrogen development may support industry defossilisation. For the assessment of policy instruments, a simplified multi-criteria analysis (MCA) is used with an innovative approach that derives criteria from specific challenges. Four challenges and seven relevant policy instruments are identified. The results of the MCA reveal the potential of each of the selected instruments to address the challenges. The paper furthermore outlines how instruments might be combined in a policy package that supports industry defossilisation, creates synergies and avoids trade-offs. The paper's impact may reach beyond the German case, as the challenges are not specific to the country. The results are relevant for policy-makers in other countries with energy-intensive industries aiming to set the course towards a hydrogen future.
This report was prepared by the Wuppertal Institute in cooperation with the German Economic Institute as part of the SCI4climate.NRW project. The report aims to shed light on the possible phenomenon that the availability and costs of "green" energy sources may become a relevant location factor for basic materials produced in a climate-neutral manner in the future.
For this purpose, we introduce the term "Renewables Pull". We define Renewables Pull as the initially hypothetical phenomenon of a shift of industrial production from one region to another as a result of different marginal costs of renewable energies (or of secondary energy sources or feedstocks based on renewable energies).
Shifts in industrial production in the sense of Renewables Pull can in principle be caused by differences in the stringency of climate policies in different countries, as in the case of Carbon Leakage. Unlike Carbon Leakage, however, Renewables Pull can also occur if similarly ambitious climate policies are implemented in different countries. This is because Renewables Pull is primarily determined by differences in the costs and availability of renewable energies. In addition, Renewables Pull can also be triggered by cost reductions of renewable energies and by changing preferences on the demand side towards climate-friendly products. Another important difference to Carbon Leakage is that the Renewables Pull effect does not necessarily counteract climate policy.
Similar to Carbon Leakage, it is to be expected that Renewables Pull could become relevant primarily for very energy-intensive products in basic materials industries. In these sectors (e.g. in the steel or chemical industry), there is also the possibility that relocations of specific energy-intensive parts of the production process could trigger domino effects. As a result, large parts of the value chains previously existing in a country or region could also be subjected to an (indirect) Renewables Pull effect.
For the federal state of NRW, in which the basic materials industry plays an important role, the possible emergence of Renewables Pull is associated with significant challenges as climate policy in Germany, the EU and also worldwide is expected to become more ambitious in the future.
This report aims to enable and initiate a deeper analysis of the potential future developments and challenges associated with the Renewables Pull effect. Thus, in the final chapter of the report, several research questions are formulated that can be answered in the further course of the SCI4climate.NRW project as well as in other research projects.
To combat climate change, it is anticipated that in the coming years countries around the world will adopt more stringent policies to reduce greenhouse gas emissions and increase the use of clean energy sources. These policies will also affect the industry sector, which means that industrial production is likely to progressively shift from CO2-emitting fossil fuel sources to renewable energy sources. As a result, a region's renewable energy resources could become an increasingly important factor in determining where energy-intensive industries locate their production. We refer to this pull factor as the "renewables pull" effect. Renewables pull could lead to the relocation of some industrial production as a consequence of regional differences in the marginal cost of renewable energy sources. In this paper, we introduce the concept of renewables pull and explain why its importance is likely to increase in the future. Using the examples of direct reduced iron (DRI) and ammonia production, we find that the future costs of climate-neutral production of certain products is likely to vary considerably between regions with different renewable energy resources. However, we also identify the fact that many other factors in addition to energy costs determine the decisions that companies make in term of location, leaving room for further research to better understand the future relevance of renewables pull.