An agent-based modelling approach to simulate the investment decision of industrial enterprises.

Abstract

China is the leading ammonia producer and relies on a coal-based technology which makes the already energy intensive Haber Bosch process, one of the most emission intensive in the world. This work is the first to propose an agent-based modelling framework to model the Chinese ammonia industry as it characterises the specific goals and barriers towards fuel switching and carbon capture and storage adoption for small, medium, and large enterprises either private or state-owned. The results show that facilitated access to capital makes investments in sustainable technologies more attractive for all firms, especially for small and medium enterprises. Without policy instruments such as carbon price, the decrease in emissions in the long-term is due to investments in natural gas based technologies, as they typically have lower capital and operating costs, and also lower electricity consumption than coal-based production. Conversely, with policy instruments in place, a strong decrease in emissions occurs between 2060 and 2080 due to investors choosing natural gas and biomethane-based technologies, with carbon capture and storage. In the long term, natural gas and biomethane could compete, with the outcome depending on infrastructure, supply chain availability and land use constraints.