Industrial Transition Accelerator aims to galvanise action across industry, government and finance to stimulate demand and unlock billions of dollars of investment in the next 2-3 years
- The ITA, a global initiative launched at COP28, in partnership between the UAE COP28 Presidency, UN Climate Change and Bloomberg Philanthropies, is working directly with industries, investors and governments to accelerate investment by 2026
- Over 450 large-scale industrial projects in six of the world’s highest-emitting industries[1] are seeking investment to start producing green commodities by 2030
- Globally, insufficient demand for low-carbon products has been identified as the critical investment barrier
- Companies and financiers require market certainty, provided by policies driving green demand and voluntary purchase agreements to make substantial investment decisions
19 September, 2024, London – Heavy industries responsible for approximately 30%[2] 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, according to new analysis by the Industrial Transition Accelerator (ITA).
The global, multi-stakeholder initiative that seeks to turbocharge delivery of green solutions across heavy industry, highlighted that the existing global project pipeline will require around $700bn[3] 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 in order to secure the necessary finance.
The global 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. Today, 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 would 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.”
"Urgent, transformative action is essential to accelerate investment in industrial decarbonisation and meet the goals of the Paris Agreement,” said Simon Stiell, Executive Secretary of UN Climate Change. “By aligning our efforts and investing in innovative solutions, we can ensure that we reduce emissions by 2030, but also create new economic opportunities and jobs."
“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 recognizes is the urgent need to decarbonize today’s energy system while simultaneously building the energy system of tomorrow. That is why we launched the Industrial Transition Accelerator: to drive decarbonization across six heavy-emitting sectors which together account for over 30 percent of global CO2 emissions. We need trillions of dollars and a variety of solutions to decarbonize 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 industrialization, 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.
“We need to structurally embed demand at a global scale to seize the opportunity in front of us today,” said Faustine Delasalle, Executive Director of the ITA Secretariat and Chief Executive Officer of the Mission Possible Partnership. “The lack of clear, sustained demand for low-carbon products is the single biggest barrier to investment. Businesses and financiers cannot commit to these projects without market certainty. 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:
- 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.
- 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.
- 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.
Recognising the importance of cooperation between government, industry and finance, the ITA is working closely with all key stakeholders, to encourage the right frameworks to improve investment conditions.
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 year[4]. 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. “To seize the potential of industrial decarbonisation globally, governments must develop demand-side policies that provide the private sector with the certainty needed to make long-term investments.”
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.
-ends-
Notes to Editors
Contact details:
- Charlie Dakin, Greenhouse Communications, +447861 530357 / ITA@greenhouse.agency
- Kate Savage, Greenhouse Communications, +447502 384664 / ITA@greenhouse.agency
About the ITA: The ITA is a global multistakeholder initiative to catalyse decarbonisation across heavy-emitting industry and transport sectors, that represent a third of global emissions. With expansive networks across industry, financial institutions, and governments, the ITA brings together global leaders to unlock investment at scale, for the rapid deployment of decarbonisation solutions. Within three years, it aims to significantly grow the pipeline of commercial-scale, clean industrial projects to reduce emissions by 2030 and enable delivery of Paris Agreement-aligned ambition for these sectors. https://ita.missionpossiblepartnership.org/
Investment figures: The total investment figures (global and regional) have been calculated using the number of identified projects in the MPP's Global Project Tracker - which uses aggregated data to chart investment progress into net-zero-aligned projects - and publicly available investment data and insight on the amount of investment required for a green industrial plant to reach FID. Sources include: MPP, RMI, Systemiq and BNEF.
[1] Aluminum, cement, chemicals, steel, aviation, shipping
[2] MPP – Mission Possible Partnership
[3] The total investment figures in USD (global and regional) have been calculated using the number of identified projects in the MPP's Global Project Tracker - which uses aggregated data to chart investment progress into net-zero-aligned projects - and publicly available investment data and insight on the amount of investment required for a green industrial plant to reach FID and begin production of green commodities. Sources include: MPP, RMI, Systemiq and BNEF. [4] Compared to if that capacity were built with conventional carbon-intensive technologies.