- Endorsed by 40+ global business leaders and 700+ financial
institutions, the Industrial Transition Accelerator (ITA) has
issued an open letter urging governments to use policy to stimulate
demand for green products
- Uncertain demand and a lack of incentives is stalling
industrial decarbonisation, with producers and customers at a
stalemate due to lower priced higher carbon products
- New data shows growth in the overall number of planned
large-scale, green industrial facilities in 2024, but only eight
projects have secured finance since April
BAKU,
Azerbaijan, Nov. 14,
2024 /PRNewswire/ -- Governments must urgently
act to stimulate demand for green materials, chemicals and fuels to
accelerate the decarbonisation of the world's highest-emitting
industries[1], according to 40+ business/ finance
leaders and coalitions, representing more than 1,000 companies and
financial institutions, in a new open letter. Doing so could unlock
up to $1tn[2] of investment and bring more than 500
green industrial plants to construction by 2030. This would enable
the emissions reduction needed from aluminium, cement, chemicals,
steel, aviation and shipping - to align with a 1.5°C pathway
in the next decade.
New data from the ITA and the Mission Possible Partnership (MPP)
reveals a growing pipeline of industrial projects. However, <
20% are operational or have the finance and approvals necessary to
begin construction. Since April 2024,
only eight facilities globally have reached Final Investment
Decision (FID), leaving 561 announced but not yet definitively
confirmed. 300 of these have been awaiting investment decisions for
at least two years. If this rate continues linearly, it would take
around 35 years for enough facilities to begin
construction[3].
To move to a 1.5°C-aligned trajectory the full pipeline of
projects must be financed and begin construction within the next
two years[4].
A lack of policies has led to insufficient demand for green
products leaving corporations and financiers without the certainty
needed for long-term investments. Consequently, projects are
stalling. Buyers are unable to commit to long-term offtake
agreements at scale due to the continued availability of cheaper,
higher-carbon equivalents and lack of incentives to opt for the
cleaner option.
Led by the ITA and endorsed by The Glasgow Finance Alliance for
Net Zero (GFANZ), the coalition from more than 50 countries, calls
for governments to deploy policy measures in the open letter:
- Supporting global carbon pricing and fuel
standard measures
- Setting and enforcing mandatory quotas for low- and
near-zero-carbon fuels and products
- Setting mandatory targets for low- and
near-zero-carbon materials in public procurement
- Setting stringent and progressively tightening limits on
whole life carbon
- Implementing mechanisms that help bridge the price gap
between green commodities and potential buyers
Alongside the letter, the ITA has published a Green Demand
Policy Playbook setting out evidence-based policy measures
available to governments to increase demand for low- and
near-zero-carbon materials, chemicals and fuels so as to unlock
supply.
[1] Aluminium, cement, chemicals, steel,
aviation and shipping
[2] 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 . Sources include: MPP, RMI, Systemiq and BNEF.
[3] 40 years for 552 projects at the pace of 7 projects
over 6 months (552/7)/2
[4] The Tracker compares actual investment progress
against the MPP's 2030 pipeline targets, representing around 70% of
the emissions abatement needed to keep the sectors within their
sectoral carbon budgets for 2030 and on track for net zero 2050.
The remaining 30% can be achieved through energy and materials
efficiency
Infographic:
https://mma.prnewswire.com/media/2556879/ITA_Infographic.jpg
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content:https://www.prnewswire.co.uk/news-releases/business-and-finance-call-on-government-to-unlock-demand-for-low-carbon-products-and-accelerate-industrial-projects-worth-1-000-000-000--302304519.html