How the Renewables Pull Effect can Influence Location Decisions

With the expected increasing shift of industrial production towards clean energy sources, the regional availability of renewable energy could become a significant factor in industrial companies' location decisions – especially in energy-intensive industries: Where renewables can be produced cheaply, there is a significant cost advantage for companies – the so-called renewables pull effect. In an article now published in the journal "Energy Research & Social Science", Dr. Sascha Samadi, Co-Head of the Sectors and Technologies Research Unit at the Wuppertal Institute, Prof. Dr. Stefan Lechtenböhmer, Senior Advisor at the Wuppertal Institute, and Andreas Fischer, Economist for Energy and Climate Policy at the German Economic Institute, describe the concept of renewables pull and explain why its importance is likely to increase in the future. 

In their article, the researchers use the production of sponge iron and ammonia as examples: In those areas, high regional cost differences in climate-neutral production can be expected in the future, Samadi says: "To date, there have been repeated concerns that regions with comparatively weak climate protection regulations and low CO2 prices could attract energy-intensive industrial production that is based on fossil fuels. However, as the costs of generating electricity and hydrogen from renewable energy sources have now fallen significantly and CO2 prices are expected to rise worldwide in the future, we are expecting the renewables pull effect to become increasingly important instead." At the same time, however, many other factors also influence companies' location decisions, the researchers said.

The article is available free of charge via the link below.