Over 450 large-scale industrial projects in six of the world’s highest-emitting industries are seeking investment to start producing green commodities by 2030, according to analysis by the Industrial Transition Accelerator (ITA).
Heavy industries responsible for approximately 30% of global emissions are ready to initiate large-scale green industrial projects ahead of 2030 but are held up by insufficient demand for low-carbon products.
The global initiative that seeks to turbocharge delivery of green solutions across heavy industry, highlighted that the existing global project pipeline will require around $700bn of investment to start production of green commodities. To take these projects from the drawing board to construction and production, project developers need firm commitments in place from buyers to secure the necessary finance.
The initiative, launched at COP28 in a partnership between the UAE COP28 Presidency, UN Climate Change and Bloomberg Philanthropies, and hosted by the Mission Possible Partnership (MPP), is already actively working in Brazil and the UAE, providing targeted support to project developers to explore and accelerate critical project investment in those countries and potentially elsewhere in the Middle East and North Africa (MENA) as well.
Heavy industry – aluminium, cement, chemicals, steel, aviation and shipping – contributes approximately 30% of all global CO2 emissions. Unlocked, the global pipeline of green industrial projects would not only dramatically cut global emissions, but also contribute significantly to domestic green growth agendas. In Brazil and MENA alone, this would stimulate over $93bn investment.
To keep on track with Paris-aligned climate targets, a critical mass of large-scale projects that have the potential to drive a deep reduction in emissions – must reach their Final Investment Decision (FID) in the next 2-3 years and be brought online by 2030. MPP analysis for the ITA, through its Global Project Tracker, has identified 473 announced net-zero aligned industrial plants. If these plants reach FID and are combined with those already operating or at FID, they will collectively achieve approximately 80% of the 2030 target.
“The Industrial Transition Accelerator will help us move faster in the fight against climate change by increasing demand for low-carbon projects, cutting red tape, and ensuring clean energy projects around the world are operational as quickly as possible,” said Michael R. Bloomberg, UN Secretary-General’s Special Envoy on Climate Ambition and Solutions, Founder of Bloomberg L.P. and Bloomberg Philanthropies, and ITA Co-Chair. “The faster we move, the more we can grow the global economy and save lives.”
“The historic UAE Consensus agreed at COP28 is the most comprehensive and balanced agreement that marks a new era in climate action,” said Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, COP28 President, and ITA Co-Chair.
“One of the realities it recognises is the urgent need to decarbonise today’s energy system while simultaneously building the energy system of tomorrow.
“That is why we launched the Industrial Transition Accelerator: to drive decarbonisation across six heavy-emitting sectors which together account for over 30 per cent of global CO2 emissions.
“We need trillions of dollars and a variety of solutions to decarbonise these industries, but finance and innovation aren’t enough. Progressive government policies are critical to deploying solutions at the scale and pace needed. Now is the time for all stakeholders to seize the socio-economic opportunities of green industrialisation, roll up their sleeves, and deliver during this critical decade of action.”
Barriers to investment
In the absence of firm purchase commitments from the market for low-carbon products, such as green steel and sustainable aviation fuel (SAF), existing supportive policies to incentivise the purchase of green products are insufficient to make proposed projects bankable and unlock the required finance.
Faustine Delasalle, Executive Director of the ITA Secretariat and Chief Executive Officer of the Mission Possible Partnership, said, “By driving uptake of policies that stimulate green demand like mandates, embodied carbon emissions standards, and carbon pricing, we can create the conditions for a wave of investments.”
Through dialogue with industry and finance, the ITA has identified three critical requirements to accelerate demand: effective policies, clear product standards and mechanisms to facilitate product offtake. It will release a suite of tools, connected to each, that outline practical steps to help governments and corporates scale up demand:
1. The Policy Playbook: to help address the need for clearer policy interventions from government through regulation/mandates to reduce the green premium and drive purchase of low-carbon products.
2. The Standards Map: to be published this month, will provide an overview and assessment of existing international emissions accounting methodologies and definitions of low emissions products to help determine the standards that are fit for purpose and encourage their adoption by governments and individual buyers.
3. The Green Purchase Toolkit: brings together the tools and instruments that facilitate and de-risk purchase of green products for buyers, such as buyers’ platforms, market intermediaries and innovative insurance mechanisms.
Targeted regional support
To help mature the project pipeline at a regional level, the ITA is active on-the-ground within the Emerging Markets Developing Economies (EMDEs) to provide practical, tailored implementation support. Specifically, the ITA is partnering with project developers to identify and help overcome their barriers to investment by, for example, helping to stimulate demand for green goods by addressing policy and regulatory needs at a regional level, while building low-emissions value chains and identifying mechanisms to de-risk regional project investment.
Following the announcement of Brazil as the ITA’s first Country Partner in July, a pipeline of over 15 deep decarbonisation projects has been identified, with a total investment potential of $33bn. The pipeline consists primarily of brand-new greenfield assets, which could allow Brazil to expand its industrial capacity while avoiding over 33 million tonnes of CO2e emissions per year4. With a significant industrial base, an abundance of natural resources and access to low-cost renewable energy, Brazil is well positioned to become a global powerhouse for producing green industrial goods.
“Brazil’s plans demonstrate how the transition to a low-carbon economy can significantly boost growth. To fully realise these gains and to unlock investment in low-carbon industrial production, we need to build large-scale credible demand for green production,’ said Mark Carney, UN Special Envoy on Climate Action and Finance, Glasgow Alliance for Net Zero Co-Chair, and ITA Co-Chair.
The ITA has identified MENA as its second region of focus, with enormous potential and a growing pipeline of at least 25 projects, a total investment potential of $60bn, and favourable conditions for the development of industrial activities based on low-cost renewable energy. The industrial sector contributes 40% to MENA’s gross domestic product (GDP), surpassing the global average of 26%, and is responsible for 10% of CO2 emissions.
