Analyzing investment strategies under changing energy and climate policies: an interdisciplinary bottom-up approach regarding German metal industries

Abstract

German metal producers face an intense international competition. The comparably high domestic energy and production costs additionally challenge the producers. Beside this, German energy intensive industries (GEII) are embedded in a complex regulatory framework induced by energy and climate policies. These policies consist of different economic political instruments which are regularly changed to incentivize greenhouse gas (GHG) emission reductions. Therefore, future investment decisions in energy efficiency increasing technologies (EEIT) have to be evaluated dependent on these changing political conditions. Thus, actors in the metal industry need decision support in developing sustainable investment strategies which withstand different political developments. Given these circumstances, we develop an actor-oriented simulation model which simulates the optimal future investment decisions of all German iron, steel and aluminum producing plants under different political conditions based on a detailed plant-specific technical process description. Thereby, economic and engineering parameters are combined in an interdisciplinary approach to derive future investment strategies for the metal producing plants facing probable political changes. This approach closes the scientific gap between top-down oriented studies which usually are not capable of representing detailed plant-specific aspects and solely technical oriented studies which are often limited to a single plant or facility.