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While global regulation must certainly be ramped up, its acceleration should not be hasty.6 Disruptive developments could seriously harm financial market stability, and research is needed to establish optimal time frames for regulatory measures. More research is also needed to discuss if and how negative emissions could contribute.7 Considerations should include how carbon could be stored and used and at what cost (e.g. Section 10), as well as what might impede public acceptance of such practices. Finally, digitization could be a game-changer for climate change mitigation and sustainable production efforts. A whole array of research questions arises in this realm, such as understanding the technical aspects of using artificial intelligence (see Section 8) and the societal implications of the resultant human-machine interactions. 12.3.2 Designing effective and efficient solutions for Europe In addition to analyzing issues on a global level, research needs to address institutional development on a national or, in case of the EU, European level. It is of major importance to understand governance and political contexts so that narratives may be developed to ensure the transition is widely regarded as just and broadly supported. Otherwise, both the public and ‘the markets’ might not trust governmental efforts and plans. It is important to understand that the transformation of energy- and/or carbon- intensive industries and systems is a large investment, which needs to be quantified and financially endowed. As substantial economic resources will have to be spent outside these industries, it remains uncertain whether the often-told narrative that export chances of domestic industries will be enhanced by industrial policy can be true. A fundamental dilemma of industrial policy must also be addressed. As the public sector intervenes in market affairs, its decisions will unavoidably focus on specific technologies. Further research should thus explore to what extent these decisions might preclude (the desired) openness towards yet-to-be-developed technologies (neutrality) or lead to path dependence and lock-in effects. Closely related to this research question is whether the pursuit of geopolitical and “strategic” energy independence is feasible or will simply create a new import dependence now involving large- scale importing of renewable energy. These imports, however, might allow developing countries to industrialize as energy exporters. Another research question involves devising an encompassing regulatory framework, i.e. whether and how to extend the European emissions trading system (ETS). Should it be aug- mented with harmonized carbon taxation in other sectors not falling under the current realm of the ETS? How can we tap the potential of the division of labor in European emission avoidance? 6The ESRB [11] discusses that the transition away from relying on fossil fuels should, from the perspective of retaining the stability of financial markets, occur gradually. By contrast, if this transition to a low-carbon economy were to occur too late, the then necessarily abrupt repricing of carbon assets would entail serious systemic risks. 7 IPCC [12] discusses the need for negative emissions to implement a highly ambitious climate policy. 123PDF Image | sustainable production of fuels and chemicals
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