Impact and repercussions of regional industrial and environmental regulations on Austria ́s steel industry in the context of an inhomogeneous global economy and policy suggestions for a profitable green transition

Abstract

A comprehensive analysis, aimed at understanding the evolution of the Austrian steel sector and thereby deriving future policy suggestions, suggests that the apparent decline in international competitiveness of the European steel sector can only be explained by incorporating the interconnection of many interdependent industrial and environmental regulatory acts as well as globally asymmetrical capital market exposure and various country specific factors. This decline has been particularly noticeable since the turn of the century, with Austria being disproportionally affected. Furthermore, multiple factors have been identified that are in support of policy intervention to assist the steel sector in its transition towards a decarbonized industry. Through an interdisciplinary approach, taking into account both technological feasibility and research on addressing market failures, policy recommendations for both the EU and Austria have been formulated.These conclusions stem from a comprehensive evaluation of various sources aggregated in a holistic assessment of the impact and repercussions of regional industrial and environmental regulations on an industry that is competing globally. This includes in-depth analyses on the EU-policy landscape and public policy research as well as country level macroeconomic data. Additionally, particular focus has been directed to an international comparison of present-day technology dominance and transitionary potential across countries and regions, in light of available steel production methods and their environmental impact. Concludingly it is suggested that EU-policy should focus on (1) promoting research,development and industrialization (R&D&I) focused on both carbon capture and storage/utilization (CCS/U) and carbon direct avoidance (CDA) technologies as well as knowledge sharing, (2) constructing and coupling hydrogen and renewable energy infrastructure, (3) building recycling markets, (4) ensuring green public procurement,(5) advancing financial incentive setting, (6) aligning global approximations and improving projections, (7) increasing public awareness and finally (8) creating a global level playing field through international agreements. Additionally for Austria (A) an even stronger focus on public awareness as well as (B) the introduction of earmarked CO2 taxes to finance (C) an increase in government R&D expenditure focused on advancing CCS/U technologies and recycling metallurgy and (D) national recycling infrastructure have been identified as additive policy measures.