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Unlocking the low-carbon transition of the basic materials sector Finding the sweet spot for the net zero transition of steel, cement, plastic and other basic materials.

A number of leading climate policy researchers, through discussions with industry and policy actors from across Europe, have designed a comprehensive policy package proposal. It creates incentives for carbon mitigation whilst avoiding carbon leakage risk, retains the system of Free Allocation, imposes a levy at the EU border and is WTO compatible. The graphics were created by WiseEuropa (Poland), DIW Berlin (Germany), Comillas Pontificial University (Spain) and Climate Strategies, as part of their collaboration under the Climate Friendly Materials Platform. Additionally, the project was supported by EIT Climate-KIC. Learn more about the policy instruments. The infographics were designed by Designers for Climate.

The challenge: industry is the largest contributor to climate change…

… and basic materials are the largest source of industrial CO₂ emissions...

... partly because the production of basic materials requires fossil carbon.

To unlock the opportunities for industrial decarbonisation we will need a policy toolkit…

… that provides incentives for all actors in the value chain.

Yet currently, free allocation weakens incentives for investment in clean production processes.

New approach: the Climate Contribution re-establishes the carbon price to create strong incentives for efficiency and recycling…

…and it can be adjusted at the EU border to protect industry from carbon leakage.

In detail: how the Climate Contribution is calculated

And if complemented with Carbon Contracts for Difference, industry also has a strong incentive to innovate

When combined together, these instruments form a comprehensive policy package that provides industry with strong incentives to act!

What are your views on the policy toolkit? We want to hear from you.

This project was supported by EIT Climate-KIC

Credits:

Created with an image by sylwiadianaszczesniak - "concrete cement wall"