Work by Francois Cohen and Giulia Valacchi

We estimate the effect of coal prices on steel plant location worldwide and production preferences for BOF, a polluting technology, and EAF, a greener one. A 1% increase in national coal prices could reduce the number of BOF and EAF units by around 0.61% and 0.43% respectively. We simulate the implementation of a stringent European carbon market and find a non-negligible shift in steelproduction outside Europe, with limited impact on the technologies employed to produce steel. If applied worldwide, the same policy would strongly affect production in Asia, which relies on BOF and currently benefits from lower coal prices.


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