Analysis of policy measures and feedback effects on industry transformation towards carbon neutrality

Abstract Motivated by the urgent need to curb carbon emissions substantially over the next years and decades, we develop a qualitative system dynamics model to investigate the role of feedback effects on the transformation of the industry sector towards carbon neutrality. Through systems thinking, this research analyses the complex interactions between policy measures, investment decisions in different environmental measures to reduce CO 2 emissions (e.g., use of electric and thermal energies from renewables and increase of energy efficiency), CO 2 compliance, the pressure to take further climate action, the industry's economic success and the availability of investment funds. The study contributes to qualitatively identify and explore levers that policymakers can use to encourage industry to invest further in climate protection measures. Moreover, it provides an important basis for the development of quantitative modelling approaches.