A green COVID-19 recovery of the EU basic materials sector: identifying potentials, barriers and policy solutions
Creators: name: Chiappinelli, Olga
name: Gerres, Timo
name: Neuhoff, Karsten
name: Lettow, Frederik
name: de Coninck, Heleen
name: Felsmann, Balázs
name: Joltreau, Eugénie
name: Khandekar, Gauri
name: Linares, Pedro
name: Richstein, Jörn
name: Śniegocki, Aleksander
name: Stede, Jan
name: Wyns, Tomas
name: Zandt, Cornelis
name: Zetterberg, Lars
Publisher: name: Taylor & Francis
Year: 2021
Subjects: subject: Biotechnology
subject: 59999 Environmental Sciences not elsewhere classified
subject: FOS: Earth and related environmental sciences
subject: Ecology
subject: FOS: Biological sciences
subject: 80699 Information Systems not elsewhere classified
subject: FOS: Computer and information sciences
subject: Cancer

description: This paper explores climate-friendly projects that could be part of the COVID-19 recovery while jump-starting the transition of the European basic materials industry. Findings from a literature review on technology options in advanced development stages for climate-friendly production, enhanced sorting, and recycling of steel, cement, aluminium, and plastics, are combined with insights from interviews with 31 European stakeholders in these sectors about the practical and economic feasibility of these technology options. Results indicate that with an estimated investment of 28.9 billion Euros, up to 20% of EU’s basic materials could be produced through low-emission processes or additional recycling by 2025 with technologies that are commercially available or at pilot scale today. However, our stakeholder consultation also shows that in order to make these short-term investments viable, six main barriers need to be addressed, namely: (i) the lack of effective and predictable carbon pricing, (ii) the limited availability of affordable green electricity, (iii) the lack of a regulatory framework for circularity, (iv) low technology market readiness and funding, (v) the lack of infrastructure for hydrogen, CO<sub>2</sub> and power, and (vi) the lack of demand for climate-friendly and recycled materials. Based on these insights, the paper proposes elements of a policy package that can create a framework favourable for investments in these technologies; these policies should ideally accompany the recovery package to give credibility to investors that the business case will last beyond the recovery period. Technologies for climate-friendly materials production, sorting and recycling can be supported as part of the recovery package but require an enabling policy framework.Combining continued free allocation with a Climate Contribution within the EU ETS can enhance economic viability of climate-friendly options.Project-based Carbon Contracts for Difference can eliminate carbon price uncertainty for climate-friendly processes.Auctions for publicly backed Contracts for Difference and Power Purchasing Agreements can guarantee price-stability of low-emission electricity.Green public procurement and public-private partnerships can provide infrastructure for hydrogen, CO<sub>2</sub> and electricity while creating demand for climate-friendly materials.Revising regulations on product design and end-of-life emissions can improve sorting and recycling incentives. Technologies for climate-friendly materials production, sorting and recycling can be supported as part of the recovery package but require an enabling policy framework. Combining continued free allocation with a Climate Contribution within the EU ETS can enhance economic viability of climate-friendly options. Project-based Carbon Contracts for Difference can eliminate carbon price uncertainty for climate-friendly processes. Auctions for publicly backed Contracts for Difference and Power Purchasing Agreements can guarantee price-stability of low-emission electricity. Green public procurement and public-private partnerships can provide infrastructure for hydrogen, CO<sub>2</sub> and electricity while creating demand for climate-friendly materials. Revising regulations on product design and end-of-life emissions can improve sorting and recycling incentives.