We need to decarbonize industry. Here’s how to finance it

We need to decarbonize industry. Here’s how to finance it

In order to meet climate targets, it will be essential to decarbonize industry.

Technologies are available to do this - but adopting them requires businesses to make substantial investments in new assets and processes.

Debt capital needs to be made available for renovation and modernization, at a cost that does not discourage lenders or lower a business's return on equity.



The 2015 Paris Agreement recognizes that keeping the increase in global average temperature below 2°C from pre-industrial levels would significantly reduce the impact of climate change. In order to achieve this, it will be essential to decarbonize industry. Direct industrial processes contribute 5.2% of global greenhouse gas emissions, while energy use in industries contributes about 24.2%. This is set to rise further with rapid industrialization and the use of emission-intensive processes, particularly in developing countries.

There are many ways of reducing emissions in industry. For example, some state-of-the-art industrial technologies can absorb carbon dioxide through 'carbon scrubbing'. Industries can introduce circular economy principles in production and supply chain, and use sustainable alternative fuels. Some estimates indicate that replacing existing assets or processes in heavy industries could reduce carbon emissions by 10-20% without any significant adverse impact on financial returns.