Critical transitions: unpacking decarbonization strategies in portuguese industry and regional disparities

Abstract

In the wake of the Paris Agreement, the urgency for decarbonization has intensified globally, prompting varied responses from different regions and sectors. This study critically examines the uneven decarbonization trajectories of Portuguese firms within the framework of the Portugal 2020 (PT2020) program, informed by transition theory and regional innovation systems. Employing a multi-method approach that combines natural language processing and a systematic literature review, we identify and categorize the decarbonization strategies of 278 out of 2,793 firms funded by PT2020 between 2020 and 2023. Our findings reveal a modest (less than 10 % of all projects) but pivotal engagement in decarbonization, predominantly focused on the Porto metropolitan area and adjacent regions, indicating a pattern of uneven geographical transitions. Larger, established firms predominantly undertake these initiatives, reflecting a skew in policy effectiveness towards more stable entities. The most common pathways—demand and co-benefits (49 %) and decarbonization of electricity (34 %)—suggest a preference for immediately actionable strategies (electrification of uses and technological breakthroughs). This study underscores the disparity in decarbonization efforts across firms, but also regions, correlating higher industrial productivity and urbanization with increased activity. Such trends reveal the influence of existing economic structures and regional capacities on the adoption of green technologies, which exacerbate regional inequalities in the face of global decarbonization mandates. This study improves the understanding on the potential of decarbonization to increase or decrease inequalities among companies and regions. It provides crucial lessons for policies aiming to accelerate decarbonization to achieve the 2030 goals. Further research is required to explore the impact of regional specialization on decarbonization strategies and to develop more inclusive and equitable policies.