Decarbonizing Heavy Industry: Unlocking $1 Trillion in Projects for a Greener Future

Global efforts to decarbonize heavy industries such as steel, cement, and chemicals are gaining momentum, with approximately $1 trillion worth of projects currently under development. These industries collectively account for over 30% of global greenhouse gas emissions, emphasizing the urgency of addressing their environmental impact.

The challenge lies in securing investments swiftly. Faustin Delasalle, Executive Director of the Mission Possible Partnership, highlighted the critical two-year window to bring these projects to a final investment decision to ensure completion by 2030. However, the recent COP29 conference fell short of delivering significant commitments for industrial emissions reduction, unlike the ambitious pledges made in the energy sector, such as COP28’s goal to triple renewable energy adoption.

Voluntary purchasing agreements for low-carbon materials like steel and cement have supported emerging technologies, but broader action is required. Delasalle emphasized the need for additional policy instruments, including subsidies, green procurement strategies, robust standards, and carbon pricing, to stimulate demand for sustainable products.

Countries have a key opportunity to strengthen industrial decarbonization efforts through their next round of Nationally Determined Contributions (NDCs) in February, setting sector-specific emission reduction targets. At COP29, new funding and technical support were announced to help nations incorporate industry into their NDCs. The Decarbonization Climate Club, comprising 43 countries, also launched a global matchmaking platform to assist developing and transition economies with policy creation, technology transfer, and financing.

Initial funding for this initiative is provided by the German government, which aims to scale up bilateral efforts like the UK-Brazil collaboration to develop Brazil’s hydrogen industry. Additionally, the United Kingdom, Germany, and Canada pledged over $420 million to support industrial decarbonization in developing nations, with part of this funding directed to the Climate Investment Funds’ industrial decarbonization program. This program plans to allocate up to $1.3 billion while encouraging further investment from governments and philanthropic entities ahead of COP30.

Steel and cement production account for a significant portion of industrial emissions in emerging economies. The International Energy Agency projects that industrial decarbonization investments in these countries will reach $70 billion by 2030 and nearly double by 2050. Globally, $500 billion in annual investments is required to achieve industrial decarbonization by mid-century.

Recent data shows that government grants for European steel industry decarbonization projects have surged by $4.2 billion over the past six months, reaching a total of $15.3 billion. Across Europe, 15 subsidies were announced, with an average aid amount of $1 billion per project, reflecting the growing emphasis on sustainable industrial transformation.

As the clock ticks on climate goals, the global community faces a decisive moment to align investments, policies, and technologies toward a greener, more sustainable industrial future.

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