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Abstract
Western Europe is spearheading efforts to decarbonise energy-intensive industries. However, the region’s climate, population density and economic development set it at a disadvantage in generating cheap renewables. Although European governments have assumed that they will import resources like green-hydrogen derivatives to decarbonise industry in Europe, the region is likely to see several major industries relocate overseas instead. Although Europe will not experience wholesale deindustrialisation, the dislocations will still have a significant political impact. European governments will want to prop up their energy-intensive industries, but the strategic and economic rationale for doing so is weak. The region faces a tricky trilemma for energy-intensive industries, with trade-offs among industrial efficiency, industrial sustainability and industrial security – especially where governments assume that industrial security requires autonomy or local production. They can resolve the trilemma by shaping diverse global supply chains for energy-intensive goods and mitigating the impact of dislocations on local economies.
Notes
1 See Jason Bordoff and Meghan O’Sullivan, ‘Green Upheaval: The New Geopolitics of Energy’, Foreign Affairs, vol. 101, no. 1, January– February 2022, pp. 68–84; Daniel Scholten et al., ‘The Geopolitics of Renewables: New Board, New Game’, Energy Policy, vol. 138, art. 111059, March 2020; and Daniel Yergin, The New Map: Energy, Climate, and the Clash of Nations (New York: Penguin, 2020).
2 See Lukasz Bednarski, Lithium: The Global Race for Battery Dominance and the New Energy Revolution (London: Hurst, 2021); Juan Pablo Medina Bickel and Irene Mia, ‘Geopolitics and Climate Change: The Significance of South America’, Survival, vol. 65, no. 4, August–September 2023, pp. 123–38; Guillaume Pitron, The Rare Metals War: The Dark Side of Clean Energy and Digital Technologies (London: Scribe, 2022); and Henry Sanderson, Volt Rush: The Winners and Losers in the Race to Go Green (London: Oneworld, 2023).
3 Western Europe here refers to Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Switzerland and the United Kingdom.
4 See, respectively, EUROFER, ‘Emergency EU Measures Immediately Needed to Overcome Life-threatening Energy Crisis for European Steel Industry’, press release, 9 September 2022, https://www.eurofer.eu/press-releases/emergency-eu-measures-immediately-needed-to-overcome-life-threatening-energy-crisis-for-european-steel-industry/; Eurometaux, ‘Europe’s Non-ferrous Metals Producers Call for Emergency EU Action to Prevent Permanent Deindustrialisation from Spiralling Electricity and Gas Prices’, Open Letter to the European Commission, 7 September 2022, https://eurometaux.eu/media/qnhn5k30/non-ferrous-metals-ceo-letter-on-energy-crisis-06-09-2022.pdf; and European Chemical Industry Council (Cefic), ‘Energy Crisis: The EU Chemical Industry Is Reaching Breaking Point’, position paper, October 2022, https://cefic.org/app/uploads/2022/10/Cefic_Position_energy_crisis.pdf.
5 See Peggy Hollinger et al., ‘Will the Energy Crisis Crush European Industry?’, Financial Times, 19 October 2022, https://www.ft.com/content/75ed449d-e9fd-41de-96bd-c92d316651da.
6 Andy Home, ‘Power Problems Rein in Global Aluminium Output Growth’, Reuters, 24 January 2023, https://www.reuters.com/markets/commodities/power-problems-rein-global-aluminium-output-growth-2023-01-23/; and ‘Germany’s Speira to End Rheinwerk Aluminium Smelting Due to Energy Costs’, Reuters, 9 March 2023, https://www.reuters.com/markets/commodities/germanys-speira-end-rheinwerk-aluminium-smelting-due-energy-costs-2023-03-09/.
7 See EUROFER, ‘European Steel in Figures 2023’, https://www.eurofer.eu/assets/publications/brochures-booklets-and-factsheets/european-steel-in-figures-2023/FINAL_EUROFER_Steel-in-Figures_2023.pdf.
8 See Ludwig Burger, ‘BASF Seeks “Permanent” Cost Cuts at European Operations’, Reuters, 26 October 2022, https://www.reuters.com/markets/europe/basf-says-european-operations-need-be-cut-size-permanently-2022-10-26/; and Johanna Treeck, ‘Mittel-kaput? German Industry Stares Into the Abyss’, Politico, 10 November 2022, https://www.politico.eu/article/germany-industry-europe-energy-prices-basf/.
9 See Martin Arnold, ‘German Energy Subsidy Savings Spark Battle Over How to Use Cash’, Financial Times, 9 August 2023, https://www.ft.com/content/9432e1e9-8b19-465f-ab53-cbbe08b2b19a.
10 Even these figures do not tell the whole story: they represent an average cost of electricity from wind and solar facilities across whole countries, whereas the real competition is between traditional industrial hubs like the Ruhr and subnational locations elsewhere in the world where renewable energy is especially cheap. The cost of electricity from the average large-scale solar facility built in 2021 was 65% higher than the cost of electricity from the most efficient solar farms. See International Renewable Energy Agency (IRENA), ‘Renewable Power Generation Costs in 2021’, Figure 3.7, p. 96, https://www.irena.org/publications/2022/Jul/Renewable-Power-Generation-Costs-in-2021.
11 Based on data from ibid., Figure 6.7, p. 151.
12 The cost of onshore wind in Texas is $20–40 per megawatt hour compared to $58–76 in Europe. National Renewable Energy Laboratory, ‘SLOPE: State and Local Planning for Energy’, https://maps.nrel.gov/slope/. See also Mark Dyson, ‘Wind and Solar Are Saving Texans $20 Million a Day’, Rocky Mountain Institute, 3 August 2022, https://rmi.org/wind-and-solar-are-saving-texans-20-million-a-day/; and Wind Europe, ‘Wind Energy Is the Cheapest Source of Electricity Generation’, 29 March 2019, https://windeurope.org/policy/topics/economics/.
13 See Alexandra Devlin et al., ‘Global Green Hydrogen-based Steel Opportunities Surrounding High Quality Renewable Energy and Iron Ore Deposits’, Nature Communications, vol. 14, article no. 2578, 4 May 2023, https://www.nature.com/articles/s41467-023-38123-2; Dolf Gielen et al., ‘Renewables-based Decarbonization and Relocation of Iron and Steel Making: A Case Study’, Journal of Industrial Ecology, vol. 24, no. 5, October 2020, pp. 1,113–25; and Hilton Trollip, Bryce McCall and Chris Bataille, ‘How Green Primary Iron Production in South Africa Could Help Global Decarbonization’, Climate Policy, vol. 22, no. 2, January 2022, pp. 236–47.
14 See Jonathan Packroff, ‘Some Industries Might Have No Future in Germany, Economists Say’, Euractiv, 2 August 2023, https://www.euractiv.com/section/economy-jobs/news/some-industries-might-have-no-future-in-germany-economists-say/.
15 See Laura Pitel, Guy Chazan and Patricia Nilsson, ‘Germany Plans to Subsidise Power-hungry Industries’, Financial Times, 5 May 2023, https://www.ft.com/content/b4f6d51d-e023-4af0-bafc-b96650a0586d; and Hans von der Burchard, ‘Germany Mulls New Energy Price Subsidy for Industries’, Politico, 18 September 2023, https://www.politico.eu/article/germany-energy-price-subsidy-industry-competition/.
16 See Riham Alkousaa, ‘German Industry Leans on Berlin for Swift Carbon Storage Plan’, Reuters, 23 August 2023, https://www.reuters.com/sustainability/german-industry-leans-berlin-swift-carbon-storage-plan-2023-08-23/.
17 Secondary steel, which is mainly used in construction and is produced by processing scrap steel in an electric arc furnace, is not affected as significantly by differences in energy costs. The minimills that produce secondary steel often operate flexibly to avoid using electricity at peak times, making their energy costs more manageable. They also benefit from operating in proximity to steel scrap, which is abundant in highly populated, economically developed regions.
18 See EUROFER, ‘Map of EU Steel Production Sites’, https://www.eurofer.eu/assets/Uploads/Slide1.PNG.
19 Based on investment costs for H2 Green Steel and HYBRIT in Sweden, and GravitHy in France. See Charles Daly, ‘Mercedes-backed H2 Green Steel Gets €4.55 Billion Debt Financing’, Bloomberg, 24 October 2022, https://www.bloomberg.com/news/articles/2022-10-24/mercedes-backed-h2-green-steel-gets-4-55-billion-debt-financing; Rachel Parkes, ‘Green Steel Group Plans Giant Electrolyser Array in France for Hydrogen-derived “Direct Reduced Iron”’, Recharge News, 30 June 2022, https://www.rechargenews.com/energy-transition/green-steel-group-plans-giant-electrolyser-array-in-france-for-hydrogen-derived-direct-reduced-iron/2-1-1249168; ‘Sweden’s H2 Green Steel Plans to Raise $1.65 bln for Boden Plant’, Reuters, 24 April 2023, https://www.reuters.com/markets/commodities/swedens-h2-green-steel-plans-165-bln-fundraising-ft-2023-04-24/; and Veolia, ‘Five Billion Euros to Produce Steel Using “Green Hydrogen” in Sweden’, 22 December 2020, https://web.archive.org/web/20210307000740/https://www.planet.veolia.com/en/five-billion-euros-produce-steel-using-green-hydrogen-sweden.
20 See Alexandra Devlin and Aidong Yang, ‘Regional Supply Chains for Decarbonising Steel: Energy Efficiency and Green Premium Mitigation’, Energy Conversion and Management, vol. 254, February 2022.
21 See Thomas Koch Blank, ‘The Disruptive Potential of Green Steel’, Rocky Mountain Institute, September 2019, p. 5, https://rmi.org/wp-content/uploads/2019/09/green-steel-insight-brief.pdf.
22 See Devlin et al., ‘Global Green Hydrogen-based Steel Opportunities Surrounding High Quality Renewable and Iron Ore Deposits’; Gielen et al., ‘Renewables-based Decarbonization and Relocation of Iron and Steel Making’; and Trollip, McCall and Bataille, ‘How Green Primary Iron Production in South Africa Could Help Global Decarbonization’.
23 Devlin et al., ‘Global Green Hydrogen-based Steel Opportunities Surrounding High Quality Renewable Energy and Iron Ore Deposits’. Another study found that importing green crude steel from Morocco would be 14% cheaper than local production in Germany and 24% cheaper than local production in Finland. Of the European countries studied, only Spain is cost-competitive with Morocco. Japan faces similar problems, with primary-green-steel production there using iron ore and hydrogen imported from Australia projected to be some 32% more expensive than simply importing the green steel from Australia in 2050. See Gabriel Lopez et al., ‘Towards Defossilised Steel: Supply Chain Options for a Green European Steel Industry’, Energy, vol. 273, article no. 12736, 15 June 2023, https://www.sciencedirect.com/science/article/pii/S0360544223006308?via%3Dihub. Likewise, green steel imported into Western Europe from Namibia is likely to be 15% cheaper than green steel produced in Europe. See African Climate Foundation and SYSTEMIQ, ‘Namibia’s Green Hydrogen Strategy: Key Questions + Initial Answers’, January 2022, https://gh2namibia.com/gh2_file_uploads/2022/09/Namibias-Green-Hydrogen-Opportunity-key-questions-initial-answers-Jan-2022-_-SYSTEMIQ.pdf.
24 Global ammonia production stands at around 185m metric tonnes per year, with prices ranging from around $425 to $525 per metric tonne, depending on geography. See International Energy Agency, ‘Ammonia Technology Roadmap: Towards More Sustainable Nitrogen Fertiliser Production’, October 2021, https://iea.blob.core.windows.net/assets/6ee41bb9-8e81-4b64-8701-2acc064ff6e4/AmmoniaTechnologyRoadmap.pdf; and S&P Global, ‘Platts Ammonia Price Chart’, accessed 20 October 2023, https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/051023-interactive-ammonia-price-chart-natural-gas-feedstock-europe-usgc-black-sea.
25 International Energy Agency, ‘Ammonia Technology Roadmap’, p. 72.
26 Based on the most favourable greenhydrogen-technology option – that is, dedicated variable renewable energy plus geological hydrogen storage or pipeline H2 storage – with renewable-energy costs at $10 per megawatt hour in the most favourable locations compared to $25 in the best locations in Europe. See Mission Possible Partnership, ‘Making Net-zero Ammonia Possible: An Industrybacked, 1.5°C-aligned Transition Strategy’, September 2022, pp. 44, 59, https://missionpossiblepartnership.org/wp-content/uploads/2022/09/Making-1.5-Aligned-Ammonia-possible.pdf.
27 Conservative shipping costs for ammonia are $60–80 per tonne, with more optimistic estimates as low as $40. See Ministry of Economy, Trade and Investment of Japan, ‘Fuel Ammonia Supply Cost Analysis (Interim Report)’, September 2022, https://www.meti.go.jp/shingikai/energy_environment/nenryo_anmonia/supply_chain_tf/pdf/20220928_e0.pdf; International Energy Agency, ‘The Role of Lowcarbon Fuels in the Clean Energy Transition of the Power Sector’, October 2021, p. 39, https://iea.blob.core.windows.net/assets/01ca16c8-e493-475c-81c4-04ac5d3b9882/Theroleoflow-carbonfuelsinthecleanenergytransitionsofthepowersector.pdf; and Kawakami Yasuaki, Endo Seiya and Hirai Harumi, ‘A Feasibility Study on the Supply Chain of CO2-free Ammonia with CCS and EOR’, Institute of Energy Economics Japan, February 2019, https://eneken.ieej.or.jp/data/8371.pdf.
28 See Emergen Research, ‘Chlor Alkali Industry Overview’, May 2023, https://www.emergenresearch.com/industry-report/chlor-alkali-market.
29 European Salt Producers’ Association, ‘Salt Uses: Chemical Industry’, https://eusalt.com/about-salt/salt-uses/industry/.
30 Eurochlor, ‘Chlor-alkali Industry Review 2021–2022: Euro Chlor on Its Transition Pathway’, August 2022, https://www.chlorineindustryreview.com/wp-content/uploads/2022/08/Industry-Review-2021-2022.pdf.
31 Eurochlor, ‘The Electrolysis Process and the Real Costs of Production’, July 2018, https://www.eurochlor.org/wp-content/uploads/2021/04/12-Electrolysis-production-costs.pdf/.
32 Rough calculation based on desalination of seawater at 50% efficiency, requiring 18 cubic metres of seawater per kilogram of hydrogen, containing 1.94% chlorine by mass.
33 Ewa Manthey, ‘Aluminium Smelter Shutdowns Threaten Europe’s Green Transition’, ING, 14 March 2023, https://think.ing.com/articles/aluminium-smelter-shutdowns-threaten-europes-green-transition/.
34 Peter Hobson, ‘Sky-high Energy Costs to Fan Fire Under Aluminium and Zinc Prices’, Reuters, 12 August 2022, https://www.reuters.com/markets/commodities/sky-high-energy-costs-fan-fire-under-aluminium-zinc-prices-2022-08-12/.
35 See ‘Germany’s Speira to End Rheinwerk Aluminium Smelting Due to Energy Costs’; and Home, ‘Power Problems Rein in Global Aluminium Output Growth’.
36 International Aluminium Institute, ‘Primary Aluminium Production’, https://international-aluminium.org/statistics/primary-aluminium-production/.
37 CRU Consulting, ‘Opportunities for Aluminium in a Post-Covid Economy’, report prepared for the International Aluminium Institute, 28 January 2022, https://international-aluminium.org/wp-content/uploads/2022/03/CRU-Opportunities-for-aluminium-in-a-post-Covid-economy-Report.pdf.
38 European Commission, ‘Energyefficient Cloud Computing Technologies and Policies for an Eco-friendly Cloud Market’, May 2020 (updated November 2020), https://digital-strategy.ec.europa.eu/en/library/energy-efficient-cloud-computing-technologies-and-policies-eco-friendly-cloud-market.
39 Kara Fox, ‘Ireland’s Data Centers Are an Economic Lifeline. Environmentalists Say They’re Wrecking the Planet’, CNN, 23 January 2022, https://edition.cnn.com/2022/01/23/tech/ireland-data-centers-climate-intl-cmd/index.html.
40 See Tracy Brown Hamilton, ‘In a Small Dutch Town, a Fight with Meta Over a Massive Data Center’, Washington Post, 1 June 2022, https://www.washingtonpost.com/climate-environment/2022/05/28/meta-data-center-zeewolde-netherlands/; and Netherlands Central Bureau of Statistics, ‘StatLine: Hernieuwbare elektriciteit; productie en vermogen’, https://opendata.cbs.nl/statline/#/CBS/nl/dataset/82610NED/table?ts=1617545569760.
41 Rough conservative estimate based on a capacity factor of 28% for onshore wind in the Netherlands, per ‘StatLine’.
42 See Pieter Haeck and Antonia Zimmermann, ‘Europe’s Hidden Energy Crisis: Data Centers’, Politico, 3 October 2022, https://www.politico.eu/article/data-center-energy-water-intensive-tech/.
43 See Laura Roddy, ‘Doubt Over Tech Giants’ €2bn Data Investment’, The Times, 21 August 2022, https://www.thetimes.co.uk/article/doubt-over-tech-giants-2bn-data-investment-kzgks50gw.
44 See Government of the Netherlands, ‘Kabinet beperkt mogelijkheid tot vestiging hyperscale datacentra’, press release, 10 May 2022, https://www.rijksoverheid.nl/actueel/nieuws/2022/06/10/kabinet-beperkt-mogelijkheid-tot-vestiging-hyperscale-datacentra.
45 Energy accounts for around 30% of greenhouse farms’ operating expenditure and 53% of indoor vertical farms’ operating expenditure, but operating costs are only around 20% of the total costs of operation. See Djavid Amidi-Abraham, ‘Understanding Capital Expenses for Vertical Farms and Greenhouses’, Agritecture, 25 January 2021, https://www.agritecture.com/blog/2021/1/25/understanding-capital-expenses-for-vertical-farms-and-greenhouses; Dafni Despoina Avgoustaki and George Xydis, ‘Indoor Vertical Farming in the Urban Nexus Context: Business Growth and Resource Savings’, Sustainability, vol. 12, no. 5, March 2020, p. 1,976; Robin Brumfield, ‘Dealing with Rising Energy Costs’, Greenhouse Product News, March 2007, p. 24, https://gpnmag.com/wp-content/uploads/dealingwithrising.pdf; and Katarzyna Kowalczyk et al., ‘Comparison of Selected Costs in Greenhouse Cucumber Production with LED and HPS Supplemental Assimilation Lighting’, Agronomy, vol. 10, no. 9, September 2020, p. 1,342.
46 See Precedence Research, ‘Aviation Fuel Market’, June 2023, https://www.precedenceresearch.com/aviation-fuel-market#; and Skyquest, ‘Global Aviation Fuel Market’, April 2023, https://www.skyquestt.com/report/aviation-fuel-market.
47 See Mission Possible Partnership, ‘Making Net-zero Aviation Possible’, July 2022, p. 39, https://missionpossiblepartnership.org/wp-content/uploads/2023/01/Making-Net-Zero-Aviation-possible.pdf.
48 See World Economic Forum and McKinsey & Company, ‘Clean Skies for Tomorrow: Delivering on the Global Power-to-liquid Ambition’, May 2022, p. 18, https://www3.weforum.org/docs/WEF_Clean_Skies_for_Tomorrow_Power_to_Liquid_Deep_Dive_2022.pdf.
49 See International Energy Agency, ‘Direct Air Capture: A Key Technology for Net Zero’, 2022, https://iea.blob.core.windows.net/assets/78633715-15c0-44e1-81df-41123c556d57/DirectAirCapture_Akeytechnologyfornetzero.pdf; Sabine Fuss et al., ‘Negative Emissions – Part 2: Costs, Potentials and Side Effects’, Environmental Research Letters, vol. 13, no. 6, May 2018, https://iopscience.iop.org/article/10.1088/1748-9326/aabf9f; Royal Society and Royal Academy of Engineering, ‘Greenhouse Gas Removal’, September 2018, https://royalsociety.org/-/media/policy/projects/greenhouse-gas-removal/royal-society-greenhouse-gas-removal-report-2018.pdf; and Marwan Sendi et al., ‘Geospatial Analysis of Regional Climate Impacts to Accelerate Cost-efficient Direct Air Capture Deployment’, One Earth, vol. 5, no. 10, October 2022, pp. 1,153–64.
50 Sendi et al., ‘Geospatial Analysis of Regional Climate Impacts to Accelerate Cost-efficient Direct Air Capture Deployment’.
51 See Richard Haass, ‘Deglobalization and Its Discontents’, Project Syndicate, 12 May 2020, https://www.project-syndicate.org/commentary/deglobalizaton-discontents-by-richard-n-haass-2020-05; Mohamed El-Erian, ‘From Near-shoring to Friend-shoring: The Changing Face of Globalisation’, Guardian, 9 March 2023, https://www.theguardian.com/business/2023/mar/09/from-near-shoring-to-friend-shoring-the-changing-face-of-globalisation; Paul Krugman, ‘The World Is Getting Less Flat’, New York Times, 6 September 2022, https://www.nytimes.com/2022/09/06/opinion/the-world-is-getting-less-flat.html; Adam Posen, ‘The End of Globalization?’, Foreign Affairs, 17 March 2022, https://www.foreignaffairs.com/articles/world/2022-03-17/end-globalization; and Joseph Stiglitz, ‘Getting Deglobalization Right’, Project Syndicate, 31 May 2022, https://www.project-syndicate.org/commentary/deglobalization-and-its-discontents-by-joseph-e-stiglitz-2022-05.
52 The listed Western European states each have more than 200 people per square kilometre, compared with fewer than 25 in the listed Scandinavian states. See United Nations Department of Economic and Social Affairs, ‘World Population Prospects 2022’, 2022, https://population.un.org/wpp/.
53 Europe may produce fewer commodity chemicals (including ammonia, urea, nitric acid, chlorine, hydrochloric acid and caustic soda) and import them instead for use in the production of agrichemicals and consumer chemical goods, among other things. Some energy-intensive activity, such as primary-steel production, will continue in Europe, albeit at reduced levels. See, for example, Chris Bataille, Seton Stiebert and Francis G.N. Li, ‘Global Facility Level Net-zero Steel Pathways; Technical Report on the First Scenarios of the Net-zero Steel Project’, Net Zero Steel, 11 October 2021, http://netzerosteel.org/wp-content/uploads/pdf/net_zero_steel_report.pdf.
54 See European Union, ‘Annual Detailed Enterprise Statistics for Industry’, 2023, https://data.europa.eu/data/datasets/hvepsb0xidbfx9oxmopg?locale=en; and Reiner Salzer et al., ‘Employment and Careers of European Chemists (ESEC2)’, Chemistry: A European Journal, vol. 24, no. 66, November 2018, pp. 17,370–88.
55 See International Aluminium Institute, ‘Employment in the Global Aluminium Industry, 2019’, May 2021, pp. 6–7, https://international-aluminium.org/wp-content/uploads/2021/06/Employment-in-Aluminium-Industry-Report-2021.pdf.
56 See ‘Annual Detailed Enterprise Statistics for Industry’.
57 See European Commission, ‘Steel: Preserving Sustainable Jobs and Growth in Europe’, 16 March 2016, https://ec.europa.eu/commission/presscorner/detail/fr/MEMO_16_805.
58 See Alan Beattie, ‘Brussels Defies US Pressure to Join Its Anti-China Gang’, Financial Times, 23 October 2023, https://www.ft.com/content/a1b7aba6-9178-4e2f-809f-0e92aa261b54.
59 See Kadee Russ and Lydia Cox, ‘Will Steel Tariffs Put U.S. Jobs at Risk?’, Econofact, 26 February 2018, https://econofact.org/will-steel-tariffs-put-u-s-jobs-at-risk.
60 See, for example, Dalia Marin, ‘The China Shock: Why Germany Is Different’, VoxEU, CEPR, 7 September 2017, https://cepr.org/voxeu/columns/china-shock-why-germany-different; and Robert Marschinski and David Martinez Turagano, ‘Reassessing the Decline of EU Manufacturing: A Global Value Chain Analysis’, European Commission, Joint Research Centre Technical Report, 2019, https://op.europa.eu/en/publication-detail/-/publication/5f21b462-1a33-11ea-8c1f-01aa75ed71a1#.
61 See US Department of Defense, ‘Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States: Report to President Donald J. Trump by the Interagency Task Force in Fulfillment of Executive Order 13806’, September 2018, https://media.defense.gov/2018/Oct/05/2002048904/-1/-1/1/assessing-and-strengthening-the-manufacturing-and-defense-industrial-base-and-supply-chain-resiliency.pdf.
62 See Christian Reichl and Michael Schatz, ‘World Mining Data 2023’, Federal Ministry of Finance, Republic of Austria, 25 April 2023, p. 155, https://world-mining-data.info/wmd/downloads/PDF/WMD2023.pdf; and US Department of the Interior, ‘Mineral Commodity Summaries 2023’, US Geological Survey, January 2023, p. 99, https://pubs.usgs.gov/periodicals/mcs2023/mcs2023.pdf.
63 Reichl and Schatz, ‘World Mining Data 2023’, p. 161; and US Department of the Interior, ‘Mineral Commodity Summaries 2023’, p. 41.
64 See Guillaume Gaulier and Soledad Zignago, ‘BACI: International Trade Database at the Product-level. The 1994–2007 Version’, CEPII Working Paper, 2010–23, http://www.cepii.fr/CEPII/en/bdd_modele/bdd_modele_item.asp?id=37.
65 Such metals include chromium, manganese, molybdenum, nickel, niobium, titanium, tungsten and vanadium.
66 See, for example, William D. Judge, Jaesuk Paeng and Gisele Azimi, ‘Electrorefining for Direct Decarburization of Molten Iron’, Nature Materials, no. 21, September 2021, pp. 1,130–6; and ArcelorMittal, ‘Effectively Recycling Advanced Steels’, https://automotive.arcelormittal.com/sustainability/recycling.
67 See, for instance, Simon Nicholas and Soroush Basirat, ‘New from Old: The Global Potential for More Scrap Steel Recycling’, Institute for Energy Economics and Financial Analysis, December 2021, https://ieefa.org/wp-content/uploads/2021/12/The-Global-Potential-for-More-Scrap-Steel-Recycling_December-2021_2.pdf.
68 See Sally Turner, ‘“Right Shoring” API Production in Europe’, Pharmaceutical Technology, 22 March 2023, https://www.pharmaceutical-technology.com/features/right-shoring-api-production-in-europe-2/.
69 See Devlin and Yang, ‘Regional Supply Chains for Decarbonising Steel’, Supplementary Data; and Devlin et al., ‘Global Green Hydrogen-based Steel Opportunities Surrounding High Quality Renewable Energy and Iron Ore Deposits’.
70 See ‘Germany to Earmark 4 bln Euros Annually for Power Subsidy – Economy Minister’, Reuters, 22 May 2023, https://www.reuters.com/world/europe/germany-earmark-4-bln-euros-annually-power-subsidy-economy-minister-2023-05-22/.
71 See European Commission, ‘State Aid: Commission Approves German €550 Million Direct Grant and Conditional Payment Mechanism of up to €1.45 Billion to Support ThyssenKrupp Steel Europe in Decarbonising Its Steel Production and Accelerating Renewable Hydrogen Uptake’, press release, 20 July 2023, https://ec.europa.eu/commission/presscorner/detail/en/IP_23_3928.
72 Based on 50–70 kg of hydrogen per tonne of steel, annual steel output of 26m tonnes, hydrogen shipping costs of $2 per kg in 2030 and $1 by 2050, and steel shipping costs of $50 per tonne. See ‘Hydrogen Economy Outlook: Key Messages’, BloombergNEF, 30 March 2020, https://data.bloomberglp.com/professional/sites/24/BNEF-Hydrogen-Economy-Outlook-Key-Messages-30-Mar-2020.pdf.
73 See European Commission, ‘Competition: State Aid Brief’, issue 1/2023, July 2023, https://competition-policy.ec.europa.eu/system/files/2023-07/state_aid_brief_1_2023_kdam23001enn_TCTF_survey_0.pdf.
74 See World Energy Council, ‘Policies for the Future: 2011 Assessment of Country Energy and Climate Policies’, 2011, https://www.worldenergy.org/assets/downloads/PUB_wec_2011_assessment_of_energy_and_climate_policies_2011_WEC.pdf. The council noted the substance of the energy trilemma in 2010. See World Energy Council, ‘Pursuing Sustainability: 2010 Assessment of Country Energy and Climate Policy’, 2010, https://www.worldenergy.org/assets/downloads/PUB_wec_2010_assessment_of_energy_and_climate_policies_2010_WEC.pdf.
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Nicholas Crawford
Nicholas Crawford is a systemic- and emerging-risk expert at Euroclear. The views expressed in this article are the author’s and not those of Euroclear.