A scenario analysis of the potential effects of decarbonization on the profitability of energy-intensive and natural-resource based industries

The decarbonization of energy-intensive and natural-resourced based industries is associated with significant costs. In this paper, I explore how decarbonization may affect the profitability and market value of these industries. I also discuss the possibility to finance the investments through higher prices and/or enhanced productivity. I answer these questions using scenario analysis. The analysis is focused on the European Union and the United States. I find that the effects on profitability are likely to be modest despite relatively high investment costs. The main factor that may hold back investments is uncertainty about the future.