The cost of industrial decarbonization projects under development reaches $1 trillion

Developing countries need $70 billion for industrial decarbonization by 2030

Currently, projects to decarbonize heavy industries such as steel, cement, and chemicals worth about $1 trillion are under development, according to Angela Mehta’s column in Reuters.

Together, these sectors account for more than 30% of global greenhouse gas emissions, the columnist notes.

The challenge now is to unlock investment quickly. According to Faustin Delasalle, Executive Director of Mission Possible Partnership, there is only a two-year window of opportunity to bring these projects to a final investment decision if they are to be completed and launched by 2030.

However, the COP29 conference did not deliver the kind of large commitments to reduce industrial emissions seen in the energy sector, such as the COP28 commitment to triple the use of renewable energy sources.

Voluntary purchasing agreements for products such as low-carbon steel or cement have provided support for technologies that are not yet commercially viable, but more of the same is needed. In addition to subsidies, other policy instruments are needed to create demand for environmentally friendly products, such as green procurement, appropriate standards, and carbon pricing, according to Faustin Delasalle.

Countries have the opportunity to formulate relevant policies in the next round of Nationally Determined Contributions (NDCs) or climate commitments, which is due in February, as well as to set emission reduction targets for industrial sectors.

At COP29, it was announced that funding and technical support would be made available to countries to include industry in their future NDCs. The 43 countries that now make up the Decarbonization Climate Club have launched a global matchmaking platform to help developing countries and transition economies with policy development, technology transfer and financing.

The initial funding comes from the German government and aims to scale up bilateral efforts, such as those already underway between the UK and Brazil, to develop the latter’s hydrogen industry.

In addition, the United Kingdom, Germany and Canada have announced that they will provide more than $420 million to support industrial decarbonization in developing countries and transition economies. Part of the funding will go to the Climate Investment Funds’ industrial decarbonization program, which aims to disburse up to $1.3 billion and attract more investment from governments and philanthropic organizations ahead of next year’s COP30.

The bulk of industrial emissions in emerging economies are concentrated in steel and cement production. According to the International Energy Agency, investments in these countries for industrial decarbonization should reach $70 billion by 2030 and almost double by 2050. Globally, $500 billion a year is needed to decarbonize the industry by 2050.

As GMK Center reported earlier, that over the past six months, the volume of government grants for decarbonization projects in the steel industry in Europe has increased by €4 billion, reaching a total of €14.6 billion. In total, 15 subsidies were announced in European countries with an average amount of aid per project of about €1 billion.