3s3: The future split between primary and secondary steel production: integrating material flows in an economic framework

Abstract

We develop a macroeconomic modelling framework in which we explicitly account for the circular flow of materials in the economy. We focus on the future split between primary and secondary steel production. The model combines conventional physical aspects of dynamic material flows analysis with energy-environmental-economy computable general equilibrium models. The endogenous substitution possibilities between primary resources and secondary-recycled materials determines the condition under which the share of recycled material is expected to increase relative to primary resources. For the purpose of this analysis we assume there is no quality prejudice between primary and secondary steel products. Firms decide on the optimal combinations between primary and
secondary steel only on price changes and initial conditions reflected in model’s calibrated share parameter.