$700 billion of investment could flow into the green heavy industry pipeline globally if demand for low-carbon products increases, according to Industrial Transition Accelerator analysis.

The heavy industries of  aluminium, cement, chemicals, steel, aviation, shipping, which are responsible for approximately 30% of global emissions, are ready to initiate large-scale green industrial projects ahead of 2030. However, they are being held up by insufficient demand for low-carbon products, Kallanish notes from the analysis.

The existing global project pipeline, of 473 announced net-zero aligned industrial plants identified by its MPP Global Project Tracker, across the heavy industries will require around $700 billion of investment to start production of green commodities. To keep on track with Paris-aligned climate targets, the majority of these projects must reach their Final Investment Decision (FID) in the next 2-3 years and be brought online by 2030.

For steel, there has been 44 projects announced globally and six reaching FID.

Without firm purchase commitments from the market for low-carbon products, such as green steel and sustainable aviation fuel, existing supportive policies to incentivise the purchase of green products are insufficient to make proposed projects bankable and unlock finance, the study finds.

It additionally notes three critical requirements to accelerate demand. These are effective policies which through regulation or mandates drive purchasing of low-carbon products; clear product standards which facilitate adoption by buyers, including governments; and mechanisms to facilitate and de-risk product offtake.

“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,” says Faustine Delasalle, executive director of ITA Secretariat.

The ITA is partnering with project developers at regional level to help overcome their barriers to investment by, for example, addressing policy and regulatory needs to help stimulate demand for green goods. It also aims to build low-emissions value chains and identify 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 $33 billion.

The Middle East and North Africa is its second region of focus, with a growing pipeline of at least 25 projects, a total investment potential of $60 billion, and favourable conditions for the development of industrial activities based on low-cost renewable energy.

“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 industrialisation, roll up their sleeves, and deliver during this critical decade of action,” concludes ITA co-chair Sultan Al Jaber.