The incentives for supply chain collaboration to improve material efficiency in the use of steel: An analysis using input output techniques |
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| Affiliation: | 1. China Energy Group, Energy Analysis and Environmental Impacts Department, Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory, 1 Cyclotron Road, MS 90R2002, Berkeley, CA 94720, USA;2. Fraunhofer Institute for Systems and Innovation Research (ISI), Karlsruhe, Germany;1. Department of Mechanical Engineering, Faculty of Engineering, University of Malaya, 50603 Kuala Lumpur, Malaysia;2. Department of Mechanical and Chemical Engineering, Islamic University of Technology (IUT), Dhaka, Bangladesh;1. European Commission, Joint Research Centre, Institute for Energy and Transport, Westerduinweg 3, NL-1755LE Petten, The Netherlands;2. E4SMA S.r.l., Via Livorno 60, I-10144 Torino, Italy;1. Process Metallurgy Research Unit, University of Oulu, P.O. Box 4300, FI-90014 Oulu, Finland;2. Energy Engineering, Division of Energy Science, Luleå University of Technology, SE-97187 Luleå, Sweden;3. Swerea MEFOS, Process Integration Department, Box 812, SE-97125 Luleå, Sweden;4. Research Unit of Sustainable Chemistry, University of Oulu, P.O. Box 3000, FI-90014 Oulu, Finland;5. Future Eco North Sweden AB, Gjutvägen 9, SE-96138 Boden, Sweden |
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| Abstract: | In the face of increasing demand and limited emission reduction opportunities, the steel industry will have to look beyond its process emissions to bear its share of emission reduction targets. One option is to improve material efficiency — reducing the amount of metal required to meet services. In this context, the purpose of this paper is to explore why opportunities to improve material efficiency through upstream measures such as yield improvement and lightweighting might remain underexploited by industry. Established input–output techniques are applied to the GTAP 7 multi-regional input–output model to quantify the incentives for companies in key steel-using sectors (such as property developers and automotive companies) to seek opportunities to improve material efficiency in their upstream supply chains under different short-run carbon price scenarios. Because of the underlying assumptions, the incentives are interpreted as overestimates. The principal result of the paper is that these generous estimates of the incentives for material efficiency caused by a carbon price are offset by the disincentives to material efficiency caused by labour taxes. Reliance on a carbon price alone to deliver material efficiency would therefore be misguided and additional policy interventions to support material efficiency should be considered. |
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