Basic Materials Industries Research Articles

Decarbonising the energy intensive basic materials industry through electrification – Implications for future EU electricity demand

The need for deep decarbonisation in the energy intensive basic materials industry is increasingly recognised. In light of the vast future potential for renewable electricity the implications of electrifying the production of basic materials in the European Union is explored in a what-if thought-experiment. Production of steel, cement, glass, lime, petrochemicals, chlorine and ammonia required 125 TW-hours of electricity and 851 TW-hours of fossil fuels for energetic purposes and 671 TW-hours of fossil fuels as feedstock in 2010. The resulting carbon dioxide emissions were equivalent to 9% of total greenhouse gas emissions in EU28. A complete shift of the energy demand as well as the resource base of feedstocks to electricity would result in an electricity demand of 1713 TW-hours about 1200 TW-hours of which would be for producing hydrogen and hydrocarbons for feedstock and energy purposes. With increased material efficiency and some share of bio-based materials and biofuels the electricity demand can be much lower. Our analysis suggest that electrification of basic materials production is technically possible but could have major implications on how the industry and the electric systems interact. It also entails substantial changes in relative prices for electricity and hydrocarbon fuels.

Global climate policy and deep decarbonization of energy-intensive industries

If we are to limit global warming to 2 °C, all sectors in all countries must reduce their emissions of GHGs to zero not later than 2060–2080. Zero-emission options have been less explored and are less developed in the energy-intensive basic materials industries than in other sectors. Current climate policies have not yet motivated major efforts to decarbonize this sector, and it has been largely protected from climate policy due to the perceived risks of carbon leakage and a focus on short-term reduction targets to 2020. We argue that the future global climate policy regime must develop along three interlinked and strategic lines to facilitate a deep decarbonization of energy-intensive industries. First, the principle of common but differentiated responsibility must be reinterpreted to allow for a dialogue on fairness and the right to development in relation to industry. Second, a greater focus on the development, deployment and transfer of technology in this sector is called for. Third, the potential conflicts between current free trade regimes and motivated industrial policies for deep decarbonization must be resolved. One way forward is to revisit the idea of sectoral approaches with a broader scope, including not only emission reductions, but recognizing the full complexity of low-carbon transitions in energy-intensive industries. A new approach could engage industrial stakeholders, support technology research, development and demonstration and facilitate deployment through reducing the risk for investors. The Paris Agreement allows the idea of sectoral approaches to be revisited in the interests of reaching our common climate goals.Policy relevanceDeep decarbonization of energy-intensive industries will be necessary to meet the 2 °C target. This requires major innovation efforts over a long period. Energy-intensive industries face unique challenges from both innovation and technical perspectives due to the large scale of facilities, the character of their global markets and the potentially high mitigation costs. This article addresses these challenges and discusses ways in which the global climate policy framework should be developed after the Paris Agreement to better support transformative change in the energy-intensive industries.

Productive inefficiency analysis and toxic chemical substances in US and Japanese manufacturing sectors

Corporate social responsibility is imperative for manufacturing companies to achieve sustainable development. Under a strong environmental information disclosure system, polluting companies are disadvantaged in terms of market competitiveness, because they lack an environmentally friendly image. The objective of this study is to analyze productive inefficiency change in relation to toxic chemical substance emissions for the United States and Japan and their corresponding policies. We apply the weighted Russell directional distance model to measure companies’ productive inefficiency, which represents their production technology. The data encompass 330 US manufacturing firms observed from 1999 to 2007, and 466 Japanese manufacturing firms observed from 2001 to 2008. The article focuses on nine high-pollution industries (rubber and plastics; chemicals and allied products; paper and pulp; steel and non-ferrous metal; fabricated metal; industrial machinery; electrical products; transportation equipment; precision instruments) categorized into two industry groups: basic materials industries and processing and assembly industries. The results show that productive inefficiency decreased in all industrial sectors in the United States and Japan from 2001 to 2007. In particular, that of the electrical products industry decreased rapidly after 2002 for both countries, possibly because of the enforcement of strict environmental regulations for electrical products exported to European markets.

The basic construction materials industry and today’s vast housing shortage

This paper documents some of the aspects of the major challenge facing world-wide building: humanity's daunting shortage of basic housing, monographically focusing on what this means for the basic building materials industry. These needs have created the greatest demand ever for ex-novo solutions and an exponential increase in slum rehabilitation and improvement, translated here into the need for construction materials and more specifically, cement, as the emblematic component of buildings.

Earnings Management and Tunneling through Related Party Transactions: Evidence from Chinese Corporate Groups

From the U.S. accounting scandals to the emerging markets crisis of 1997-1998, there have been numerous examples of managers or large shareholders using related party transactions to manipulate earnings or divert resources away from their companies. This paper attempts to provide large sample evidence of these transactions in China where the corporate structure, economic institutions and weak legal system are conducive to the related party dealings. Using a sample of 131 Chinese listed firms in the basic materials industries such as mining, lumber, chemicals and building materials, we have found that firms that are controlled by a corporate group engage in more related party transactions than firms that are not. Among the group-controlled listed firms, the results show that they report abnormally high levels of related party sales, mainly to their controlling shareholders and other member firms in the group, when they have incentives to inflate earnings to avoid being delisted or prior to issuing new equity. Once the group-controlled listed firms have generated more free cash flows, they divert resources back to the group through providing other member firms generous trade credits. Our stock return results also confirm the conjectures that at least part of the related party transactions is perceived by the market as opportunistic. Investors view the reported sales figures to be less credible when they are generated from related party dealings than through arm's length transactions. Related party lending is negatively correlated with firm value, as measured by Tobin's Q and market-to-book equity.

Restrained Trade: Cartels in Japan's Basic Materials Industries.

Restrained Trade: Cartels in Japan's Basic Materials Industries.

Restrained Trade: Cartels in Japan's Basic Materials Industries

Restrained Trade: Cartels in Japan's Basic Materials Industries

96/03471 - Industrial energy conservation

Energy consumption by industry declined 8% between 1973 and 1981 and by 13% for the basic materials industry. Investments by the energy-intensive sector and energy conservation efforts suggest that energy use growth by industry would have been stagnant, and will continue to be so, even without the economic recession and slowdown of production. Important components in this analysis and its conclusion are the declining role of materials in the economy and the reduction of energy intensities in relation to real dollar of value added. The strength of industries supplying energy-saving equipment and services and effective energy-management efforts on the part of consumers will continue to hold down energy consumption. 66 references, 3 figures, 7 tables.

Informal market governance in Japan's basic materials industries

Too much emphasis has been placed on formal state policies and on ties between individual firms to explain Japanese economic behavior and impediments to imports in Japanese markets. We need to look instead at informal governance by trade associations. In so doing, the concept of relational contracting should be applied not just to dyadic relationships between individual firms but also to relationships between entire industries. Whole industries engage in relational contracting to ensure the stability of both prices and supplies. These industry agreements stabilize Japanese markets but at the same time keep imports out of them. This informal governance complements state policies to support uncompetitive industries. These agreements are more likely to occur and succeed between selling and buying industries that each are relatively concentrated, when upstream products are standardized, when upstream goods constitute a smaller share of downstream production costs, when these sectors have not experienced previous conflicts that undermine cooperation, and when the Ministry of International Trade and Industry wants a domestic supply of its products.

Capacity Creation in Basic-Materials Industries

In this article, Bosworth examines the capacity situation, primarily through a detailed analysis of the aluminum, paper, and steel industries. Operating rates reached high, if not record, levels in each of these industries sometime during the 1972-74 period; and each has been cited by at least some observers as an industry of potential capacity shortage in the near future. Bosworth finds both similarities and differences among these three industries in the developments underlying their recent capacity problems. He examines the cost and price incentives to expand capacity in each of the industries. He constructs indexes of supply cost that measure the change through time in the total cost of production resulting from changing costs of labor, materials, energy, and capital when applied to a fixed production technology and product mix. He adjusts these costs to standard operating rates in all years and includes required changes for meeting environmental standards in projecting supply costs into the future. Since Bosworth's calculations of supply costs take account of increases in energy costs and required expenditures for pollution control--two factors often cited as inhibiting future capacity expansion--Bosworth concludes that the outlook for capacity expansion is reasonably good in all these industries insofar as themore » relation of prices to costs go. Nevertheless, since it takes time to add to capacity, each of the industries, particularly steel and aluminum, could face tight capacity situations in the next couple of years if total demand in the economy expands rapidly. Bosworth notes that sufficient excess capacity abroad would minimize the impact of any temporary shortages in domestic capacity. (From Editor's Summary)« less

DEVELOPMENT AND ACCUMULATION OF THE INDUSTRIAL REGIONS IN KYUSHU

Now Japanese industrial development is very striking accompanied by the plant modernization, and the technical revolution; the industrial regions are greatly changing. The writer tried to investigate the industrial regions in Kyushu and their development as a problem of balancing regional variations from the standpoint of economic geography. Kyushu, the survey area, has a Japan's principal coal mining region in the north, and wide underde veloped regions in the south. Most of the industrial regions in Kyushu have been developed on the combination of the domestic coall and the foreign raw materials from Chinese Continent, or Southeast Asia, in the aid of government supra porting colonial policy, which has little relation to national market. After the Second World War, therefore, they have rather a disadvantage of “mallocalization to west.” This is the reason why the main industries in Kyushu were limitted to iron industry, chemical industry and cement industry, etc. As for the distribution of industrial regions, they expand from Kitakyushu to Nakatsu, Oita and Saeki in the east, and to Fukuoka, Yatsushiro and Minamata in the west. Kitakyushu in which the Yahata Steel CO. LTD. is the biggest work is the center of Kyushu industrial regions. Nagasaki and Nobeoka industrial districts are isolated. Recently some industries such as “Pulp” and “Food” processing have been newly established, but as yet there is a tendency also in such new industries for which the combination with “coal” is fundamental, which results in the greater regional variation of economic development. Put it is noticeable that a new industrial combination appeared in Oita district, which has the best conditions of industrial localization, which in any other areas are so unfavorable that they limit the localization of the basic materials industries, to iron-steel industry, oil refinery, etc. It seems to be unprofitable to establish the basic materials industries any where in Kyushu, and the industry of various types must be selected according to the regional conditions and this is the only practical way to aim at balanceing regional variations of the economic standard.