绿色能源转型融资（英文版）--德勤VIP专享VIP免费

下载本文档

阅读 57
格式 pdf
大小 4.89 MB
约52页
2024-01-13
收藏
点赞(0)
海报
举报

Financing the Green

Energy Transition

A US$50 trillion catch

November 2023

The global community has been on a journey from

skepticism and fear of climate change to now one of

ambition to seize the opportunities for growth and

development. But the transition pathway is neither

costless nor easy. The energy and climate transition

represents one of the biggest modernization projects

of the production system of economies, worldwide,

since the Industrial Revolution; and the perils of

climate change mandate that this takes place in just a

fraction of the time.

This report on Financing the Green Energy Transition,

is the latest in Deloitte’s series of insights from the

macro analysis around the global economic imperative

to get to net zero in The Turning Point, to the criticality

of skills in Work toward net zero: the rise of the Green

Collar workforce in a just transition, and the potential

of new energy in Green hydrogen: energizing the path

to netzero. This report is a practical contribution to

the global eort in recognizing, at its foundation, that

nance is critical to economic growth and a key driver

of this economic modernization eort.

Critical to this report is not some simplistic articulation

of rates of return, but a detailed study in the factors

to help unlock nance in service of building new

markets with new rules, and, consequently, new risks

and strategic outlooks. Importantly, this report places

focus on a less recognized understanding of this

transition—that the optimal path to net zero requires

us to collectively manage the debt and equity aspects

of global investment ows in this transition upfront.

Why? Because the energy transition requires

developing economies as much as, if not more than,

the developed economies, for global growth consistent

with net zero by 2050. And as the nance community

knows well, de-risking projects, or making them

bankable, is key for both developed and developing

economies. The essence of a just transition sits at the

heart of this report.

The report highlights the magnitude of the global

task ahead of us to achieve net zero by 2050—an

investment ask of above US$7 trillion per annum

under current nancing conditions. But enabling

optimal, low-cost nance, by making projects

bankable, could help optimize the global investment

initiative and reduce the investment ask by around

US$2 trillion per annum—a US$50 trillion benet to

the global economy over the period to 2050.

This global transition proceeds having learned the

lesson of the last 80 years—that growth and the

equitable distribution of that growth are critical for a

sustainable future. The geopolitical imperative for this

cannot be ignored or not embedded into our collective

thinking going forward. This is a report to help make

the economic transition real—bankable—in the

service of global economic growth and prosperity.

Each day, the global community, and Deloitte’s clients,

stakeholders, and people confront the risks and

realities of the structural economic change ahead of

us. Our objective is to generate greater conversation

and debate on the best means of achieving our global

imperative of building a net-zero economy by 2050.

Tothis end, Deloitte welcomes you to engage with

us and each other, as we help build an ecosystem for

action, on the least-cost, optimal and equitable path to

reach our common ambitions.

Foreword

Jennifer Steinmann

Global Sustainability &

Climate Practice Leader

Deloitte Global

Financing the Green Energy Transition: A US$50 trillion catch | Foreword

/52

下载本文档

文本预览下载提示常见问题

FinancingtheGreenEnergyTransitionAUS$50trillioncatchNovember2023FinancingtheGreenEnergyTransition:AUS$50trillioncatchForewordForewordTheglobalcommunityhasbeenonajourneyfromThereporthighlightsthemagnitudeoftheglobalskepticismandfearofclimatechangetonowoneoftaskaheadofustoachievenetzeroby2050—anambitiontoseizetheopportunitiesforgrowthandinvestmentaskofaboveUS$7trillionperannumdevelopment.Butthetransitionpathwayisneitherundercurrentfinancingconditions.Butenablingcostlessnoreasy.Theenergyandclimatetransitionoptimal,low-costfinance,bymakingprojectsrepresentsoneofthebiggestmodernizationprojectsbankable,couldhelpoptimizetheglobalinvestmentoftheproductionsystemofeconomies,worldwide,initiativeandreducetheinvestmentaskbyaroundsincetheIndustrialRevolution;andtheperilsofUS$2trillionperannum—aUS$50trillionbenefittoclimatechangemandatethatthistakesplaceinjustatheglobaleconomyovertheperiodto2050.fractionofthetime.ThisglobaltransitionproceedshavinglearnedtheThisreportonFinancingtheGreenEnergyTransition,lessonofthelast80years—thatgrowthandtheisthelatestinDeloitte’sseriesofinsightsfromtheequitabledistributionofthatgrowtharecriticalforamacroanalysisaroundtheglobaleconomicimperativesustainablefuture.ThegeopoliticalimperativeforthistogettonetzeroinTheTurningPoint,tothecriticalitycannotbeignoredornotembeddedintoourcollectiveofskillsinWorktowardnetzero:theriseoftheGreenthinkinggoingforward.ThisisareporttohelpmakeCollarworkforceinajusttransition,andthepotentialtheeconomictransitionreal—bankable—intheofnewenergyinGreenhydrogen:energizingthepathserviceofglobaleconomicgrowthandprosperity.tonetzero.Thisreportisapracticalcontributiontotheglobaleffortinrecognizing,atitsfoundation,thatEachday,theglobalcommunity,andDeloitte’sclients,financeiscriticaltoeconomicgrowthandakeydriverstakeholders,andpeopleconfronttherisksandofthiseconomicmodernizationeffort.realitiesofthestructuraleconomicchangeaheadofus.OurobjectiveistogenerategreaterconversationCriticaltothisreportisnotsomesimplisticarticulationanddebateonthebestmeansofachievingourglobalofratesofreturn,butadetailedstudyinthefactorsimperativeofbuildinganet-zeroeconomyby2050.tohelpunlockfinanceinserviceofbuildingnewTothisend,Deloittewelcomesyoutoengagewithmarketswithnewrules,and,consequently,newrisksusandeachother,aswehelpbuildanecosystemforandstrategicoutlooks.Importantly,thisreportplacesaction,ontheleast-cost,optimalandequitablepathtofocusonalessrecognizedunderstandingofthisreachourcommonambitions.transition—thattheoptimalpathtonetzerorequiresustocollectivelymanagethedebtandequityaspectsJenniferSteinmannofglobalinvestmentflowsinthistransitionupfront.GlobalSustainability&ClimatePracticeLeaderWhy?BecausetheenergytransitionrequiresDeloitteGlobaldevelopingeconomiesasmuchas,ifnotmorethan,thedevelopedeconomies,forglobalgrowthconsistentwithnetzeroby2050.Andasthefinancecommunityknowswell,de-riskingprojects,ormakingthembankable,iskeyforbothdevelopedanddevelopingeconomies.Theessenceofajusttransitionsitsattheheartofthisreport.03FinancingtheGreenEnergyTransition:AUS$50trillioncatchTableofContentsForeword03Glossary05Executivesummary061.Climateneutralityisanunprecedentedfinancialchallenge081.1.Limitingglobalwarmingto1.5°C091.2.Thestruggletofinancetheenergytransition091.3.Objective102.Towardaclimate-neutralworld122.1.Adynamicbutinsufficientpolicyenvironment132.2.Keytechnicalcharacteristicsofanet-zeroworld153.Whatisholdingbacksustainableinvestments?203.1.Politicalbarriers223.2.Marketbarriers223.3.Transformationbarriers234.Fosteringinvestmentsinthegreentransition244.1.Atoolkittofostersustainableinvestments254.2.Focusondevelopingeconomies344.3.Investmentimplications365.Acallforaction38Appendices42Appendix1.Calculationoflevelizedcostofelectricityandhydrogen42Appendix2.Deloitte’sEnergyTransitionInvestmentCalculator43Endnotes45Authors49Globalcontacts50DeloitteCenterforSustainableProgress5104FinancingtheGreenEnergyTransition:AUS$50trillioncatchGlossaryGlossaryTermDefinitionTermDefinitionASEANAssociationofSoutheastAsianNationsIPPIndependentpowerproducerBAUBusiness-as-usualLCOE/HLevelizedcostofelectricity/hydrogenCAPEXCapitalexpenditureLICsLow-incomecountriesCBIClimateBondsInitiativeMDBMultilateraldevelopmentbankCSTClimatestresstestMICsMiddle-incomecountriesCCSCarboncaptureandstorageNDCNationallydeterminedcontributionCCUSCarboncapture,utilizationandstorageNZENet-zeroemissions(C)CfD(Carbon)ContractfordifferenceOrganizationforEconomicCo-operationCO2CarbondioxideOECDandDevelopmentCOPConferencesofthePartiesOperationalexpenditureDBSADevelopmentBankofSouthernAfricaOPEXPowerpurchaseagreementDFIDevelopmentfinanceinstitutionPPAPhotovoltaicDRIDirectreductionofironPVResearchanddevelopmentEAFElectricarcfurnaceR&DRateofreturnECBEuropeanCentralBankRoRUnitedKingdomEIBEuropeanInvestmentBankUKUnitedNationsEmergingmarketsanddevelopingUNUnitedStatesEMDEseconomiesUSEnergyperformancecertificateEPCEnvironmental,socialandgovernanceESGEuropeanUnionEUElectricvehicleEVFeed-inpremiumFiPFeed-intariffFiTGreenbondsprincipleGBPGrossdomesticproductGDPGreenhousegasGHGInternalcombustionengineICEInternationalEnergyAgencyIEAInternationalMonetaryFundIMF05FinancingtheGreenEnergyTransition:AUS$50trillioncatchExecutivesummaryExecutivesummaryReachingnet-zerogreenhousegas(GHG)emissionsgloballyby2050requiresafundamentaltransformationofsocietyfromthecurrentfossilfuel-centricmodeltoahighlyrenewableandelectrifiedenergysystem.Thistransformationentailssignificantinvestments,Developingeconomies,whereaboutthree-quartersontheorderofUS$5trillion/yeartomorethanUS$7ofgreeninvestmentsshouldoccur,oftenfacegreatertrillion/yearthrough2050.However,currently,lessrisksandstricterpublicbudgetconstraintsforthanUS$2trillionareinvestedeachyeartodrivethisenergytransitionprojects.Therefore,greenprojects,transition.Ifinvestmentsdonotscaleuprapidly,theespeciallywhentheyareintheGlobalSouth,areoftenworldwillfailtomeetitsclimateobjectives.notbankable,i.e.,theirrisk-returnprofilesdonotmeettheinvestors’criteriatomobilizesufficientcapital.Adirectresultofpoorinvestmentopportunitiesandrisk-returnprofilesforgreenprojectsisthelackofDeloitte’sFinancingtheGreenEnergyTransitionprojectprivatemoneyfinancingtherequiredtransformation.aimstoraiseawarenessoftheneedforgovernments,Mostoftheidentifiedtechnologicalsolutionsforfinancialinstitutions,lendersandinvestorsandclimateneutrality(renewableenergy,electrification,projectdeveloperstojointlydevelopandagreeongreenhydrogen,etc.)arehighlycapital-intensivemechanismstofosterbankability.Thecurrentpaper,andoftennewandimmaturewithsignificantasthefirstofitsseries,addressesthisbankabilitydevelopmentuncertainties.Ahighlycapital-intensivechallengeandassessesthefinancialinstrumentsenergytransitionmeansthatthecostofcapitalisthatcanfosterinvestmentsinthegreentransition,akeycostdriver.Thisreflectsanimmutablelawofnotablyindevelopingeconomies,focusingonthefinance:theriskiertheprojectthehigherthecostofenergy-industrynexus,responsiblefor80%ofglobalcapital.Infact,financingcosts,stemmingfromthegreenhousegas(GHG)emissions.Inwritingthiscostofcapital,canaccountforasmuchashalfofthereport,Deloittecallsonitsreaderstoengageintheinvestmentexpenditure.conversationonthefutureofgreenfinanceandontheresolutionofkeyinvestmentbarrierstoacceleratetheGreenprojectscurrentlysufferfromunderinvestmentenergytransitiontoday.andhighrequiredreturnratesbecauseprivateinvestorsseegreentechnologiesasriskierthanGovernmentsofcountriesacrossthefullspectrumalternativeinvestments.Akeycontributortothisofeconomicdevelopmentshouldworkwithfinancialriskperceptionisthepoliticalandregulatoryrisksinstitutionstodevelopmechanismsandinstrumentsthatstemfromgovernments’failuretoestablishthatcanreducerisksandunlockprivatefinancethenecessarymechanismsandinstrumentsthatatattractivecosts.Theserisksareassociatedwithcanguaranteeattractivereturnsoninvestment.political,marketandtransformationbarriers.06FinancingtheGreenEnergyTransition:AUS$50trillioncatchExecutivesummaryThekeyactionleverstoovercomethemcanbegroupedincumulatively).About70%ofthoseinvestmentswouldtakethreemaincategories:reducingtherisksofgreenprojects,placeinlow-andmiddle-incomeeconomies.Reducingcapitalbridgingthecostgapbetweenfossil-basedGHG-intensivecostscanbothfacilitateprivatecapitalflowstowardtheproductsandtheirgreencounterpartsandcuttingtheuseoftransitionandreducetheircost.Achievingbankabilitycanfossilfuels.unleashprivatefinanceandbringinvestmentspendingdownbyUS$2trillioneveryyear(US$50trillioncumulatively,about•Clearclimatepolicies,guaranteemechanisms,offtakehalfofglobalyearlyGDPtoday)intheperiodto2050.reliabilityandthedevelopmentofdomesticcapitalmarketscansignificantlyreducetherisksassociatedwiththeseAchievingclimategoalsisaformidablechallenge.Decisiveandprojects.Notably,blendedfinancemechanismscanreducecoordinatedpolicysupport,andcollectiveactionfrominvestorsbothprojectrisksandfacilitatecommercialcapitalflowsandpolicymakersareparamounttoguideinvestmentstowardtogreenprojectsbyvirtueofthemobilizationpowerofgreenandsustainableprojects.concessionalcapital.US$1ofconcessionalpublicfinancecanmobilizemorethanUS$4commercialcapital,morethanhalf•Governmentsshouldreducetherisksthatthreatentheofwhichcancomedirectlyfromprivatecapital.bankabilityofgreeninvestments.Allunderlyingrisks,fromunreliableofftaketounstablemacroeconomics,raise•R&Dandupfrontinvestmentsupportschemes,theadditionfinancingcosts.De-riskingtheinvestmentlandscapecanofoperatingpremiumstogreenassetsandthepenalizationhelpunlockthelow-costcapitalthatwillmakethecostlyofGHG-intensiveassetsaresomeofthekeytoolstobridgeandcapital-intensiveenergytransitionmoreaffordable.thecostgapbetweengreenandGHG-intensiveassets.TheyOverall,governmentswillbepivotalinmakingmoregreenareoftenusedincombinationtofacilitatemarketintegrationprojectsbankable.ofgreenproducts(e.g.,carbontaxandfeed-inpremiums).•Undercurrentfinancingconditions,reachingnetzeroby•Endingfossilsubsidies,compensatingfortheearlyphase-out2050cancostmorethanUS$7trillion/year.ConcessionalofsomeofthefossilassetsandfacilitatingthejobtransitionfinanceviainnovativefinancingstructurescanreducetheofpeopleemployedinGHG-intensiveindustriestocleanonescostofthetransitionbynearly40%fordevelopingcountries,canfacilitatethetransitionbothsociallyandeconomically,loweringglobalinvestmentneedstoUS$5.5trillion/year.preparingthegroundworkforcuttingfossilassets.•SocietiesandinvestorsshoulddealwithsignificantDevelopingcountriesoftenfacehigherpoliticalandregulatory,upfrontinvestmentstodayandreapthebenefitslater.offtaker,marketliquidity,currencyandinflationrisks.TheseThecostofinactionishigherthantheburdenofasmooth,areallfactorsimpactingprojects’financingcosts,makingplannedtransitioninitiatedtoday.Thegreentransitioncancapital-intensiveenergytransitionprojectsdisproportionatelyincreasetheworldeconomybyUS$43trillionbetween2021expensive.Whiledevelopingregionsgenerallyhavebetterand2070.Requiredinvestmentlevelsremainbelow6%renewableendowments,highercostofcapitalentailshigherofglobalGDPannually,whereasacurrentpolicypathwayproductcostsintheseregions.Financingcostsaccountfor(alignedwith+3°Cofglobalwarming)wouldentailalmost8%aboutone-quarterofthelevelizedcostofelectricity(LCOE)ofglobalGDPlossby2070.fromsolarpowerplantsinadvancedeconomies,buttheyaccountforabouthalfofitindevelopingeconomies.Moreover,•Investorsshouldchannelgreenfundstodevelopingthegovernmentsofdevelopingcountriestendtorunontightereconomies.Currently,lessthanhalfofgreeninvestmentsbudgets.Therefore,twokeyeffortschieflyaimedatemergingtakeplaceindevelopingcountries.ExcludingChina,whicheconomieswillbetode-riskprojectstolowerthecostofcapital,accountsforone-thirdofgreeninvestments,thatnumberandtoremovebarriersconstrictingtheflowofprivatecapitalshrinksto16%.Toreachclimategoals,some70%ofgreentowardgreenprojects.investmentswouldneedtohappenintheGlobalSouthby2030.ThiscanonlybepossiblewithinternationalcooperationIntheabsenceofconcessionalfinanceindevelopingandtheactiveparticipationofdevelopmentfinanceeconomies,anet-zeroscenariowouldcostmorethanUS$7institutionsandmultilateraldevelopmentbanks.trillion/yearonaveragethrough2050(almostUS$200trillion07FinancingtheGreenEnergyTransition:AUS$50trillioncatch1.Climateneutralityisanunprecedentedfinancialchallenge1.Climateneutralityisanunprecedentedfinancialchallenge08FinancingtheGreenEnergyTransition:AUS$50trillioncatch1.Climateneutralityisanunprecedentedfinancialchallenge1.1.Limitingglobal1.2.Thestruggletofinancewarmingto1.5°CtheenergytransitionAnthropogenicgreenhousegas(GHG)emissionslikecarbonBoththeInternationalEnergyAgency11andInternationaldioxide(CO2),methaneandnitrousoxide(N2O)haveRenewableEnergyAgency12estimatethataboutUS$4causedmuchoftheobservedglobalwarmingoverthepasttrillion/yearofglobalinvestmentswillbeneededuntil2050150years.1toachievenet-zeroGHGemissionsandlimitglobalwarmingto1.5°C.ThisrequiresashiftfromthehistoricalvalueofClimatechangecausedbytheriseoftemperaturesovertheUS$1.8trillion/yearin2019andcurrentpolicytrajectoryofearth’ssurfaceseriouslythreatenstoendangerbiodiversity,US$3.3trillion/year.12makefreshwaterscarcer,andcausefrequentdevastatingeventssuchasdroughts,floodsandwildfires.2AccordingtoThus,despitestrongeffortsfromeachsideoftheeconomy,thetheIntergovernmentalPanelonClimateChange(IPCC),limitingworldhasbeenstrugglingtokeepupwiththeinvestmentneedsglobalwarmingto1.5°Ccould“reducetheprobabilityofextremeofthetransition.Financingtheenergytransitionhasprovendrought,precipitationdeficits,andrisksassociatedwithwaterparticularlychallengingindevelopingcountries,whichfaceevenavailabilityinsomeregions”.ThisrequiresveryrapidglobalGHGhigherinvestmenthurdlesthanadvancedeconomieswheretheemissionreductionsandreachingclimateneutralitybynolatertransitionisalsoslow.10,13than2050.3Moreover,thedevelopingworldwillbemoreseverelyaffectedEnergyandindustrialactivitiesareresponsibleformorebyclimatechangethanadvancedeconomiesandwillalsobethethan80%ofglobalGHGemissions.4Therefore,theprofoundhomeofmosthumansthroughoutthe21stcentury.14,15Thisiswhytransformationofbothenergysupplyandindustrialprocessesfinancingthetransitionindevelopingregionsisarguablythecruxisanunavoidablesteponthepathtoclimateneutrality.Thekeyoftheglobalracetonetzero.Thesilverliningliesintheimmensedecarbonizationleversoftheseactivitiesconsistoflarge-scalenaturalresourceendowmentofthedevelopingworld,fromrenewabledeployment,5electrificationofend-uses(buildings,preciousrawmineralstomakebatteriestosunbakedplainswhereindustrialprocessesandtransportsector),6directandindirectsolarpanelsthrive.Withitsyoungandincreasinglyeducateduseofgreenhydrogeninhard-to-abatesectors(e.g.,steelmaking,workforce,thedevelopingworldhaswhatittakestoleverageitse-fuelsforaviationandmaritimetransport)7andenergynaturalresourcesforthetransition.Thequestionnowishowtoefficiencyimprovements.6Moreover,carboncapture,utilizationresolvethefundingdeadlock.andstorage(CCUS)willberequiredtodecarbonizeindustrialactivitiesthatusefossilfuelsasfeedstock,andtoproducee-fuelsGovernments,andespeciallydevelopingcountries,cannotsingle-formaritimeandaerialtransport.8Suchatransformationofhandedlyfundtherequiredinvestmentstogettonet-zeroGHGtheenergy-industrynexusfromahighlyfossil-basedsystememissionsby2050.Theprivatesectormustbemobilized.Asmuch(above80%ofprimaryenergyandfeedstocksupply)9toanearlyoftherequiredtransformationconsistsofhighlycapital-intensivefossil-freeworldamountstoatruesocietal,cultural,economictechnologicalchanges,projectdevelopers,especiallyindevelopingandpoliticalrevolutionwhichwillrequireunprecedentedeffortscountries,arelimitedbyfinancialconstraints.Indeed,fundingandinvestments.10maynotalwaysbereadilyavailableforgreentransitionprojects,particularlyinplaceswhereinvestmentsfacehigherrisksorfornewtechnologieswithoutaproventrackrecord.Consequently,unlockingabundantandaffordablefundingforthetransitionwillrequirepolicyandmarketactorstoworktogethertoovercomekeyinvestmentbarriers.09FinancingtheGreenEnergyTransition:AUS$50trillioncatch1.Climateneutralityisanunprecedentedfinancialchallenge1.3.ObjectiveTheFinancingtheGreenEnergyTransition–AUS$50-trillionToanswertothesequestions,Deloitte’sFinancingtheGreenEnergycatchstudyaimstounderstandthekeybottlenecksthatTransitionstudyassesses:hindertheinvestmentsrequiredtoreachnetzero.01.thestateofplayoffinancialfacilitatinginstrumentsandtheirTheprojectconsistsofanidentificationofthekeyfinancialregionalandtechnologicalspecificities,andfacilitatinginstrumentstohelpacceleratethetransition,amappingofthegapsregardingthepracticalimplementationof02.theprojectfinanceenvironmentandsomeofitscomplexitiesthesefacilitatinginstruments,atechnology-andgeography-andsuggestionofapracticalcomprehensivesustainabledifferentiatedassessmentofthesefinancialinstrumentsbasedonfinanceecosystem.modeling,andastakeholderreturnonexperienceanddepictionofafutureprojectfinanceecosysteminserviceofsustainabilityThefirststepisthereforetounderstandthestateofplayandtheandclimatetargets.Moreprecisely,theoverarchinggoalofthisexistingfinancialinstrumentsinserviceofclimate.Giventhattheprojectistofindandlistouttoolsforincreasingthebankabilityenergy-industrynexusisthekeycontributortoglobalwarmingofgreenprojects,especiallyindevelopingcountries,tofacilitate(80%ofglobalanthropogenicGHGemissions),thisreportaimstoprivatecapitalflowstowardtheenergytransitionbyansweringthecreatesuchknowledgeandintroduceregionalandtechnologicalfollowingquestions:considerationstothisanalysisofthestateofplayalongwithmissingpiecesofthegreenenergytransitionfinancepuzzle.•Whataretheexistingfinancialtoolstoincreasethebankabilityofsustainableprojectsandmakethemmoreattractivefromaninvestorperspective,andhoweffectivearethey?•Whatismissingfromtheexistingspectrumofsolutionsandwhyaretheinvestmentsnottakingplaceattherequiredscaleorpace?•Howdoesagreenprojectfinancingenvironmentlookandhowdodifferentactorsinteractinsuchanenvironment?Whatarethepracticalandinstitutionalinefficienciesinfinancingsuchprojectsandhowcantheybeovercome?•Whatarethepotentialnewinnovativefinancialinstrumentstopromoteglobally,andwhataretheregion-specificrequirementsforhelpingtoacceleratethetransitiontowardnet-zero?•Whatcanpublicandinternationalorganizationsdoascatalyzersofprojectfinance?Whatcanpolicymakersdotohelpeasethetransitionandguideprivatefundstowardclimatetargets?10FinancingtheGreenEnergyTransition:AUS$50trillioncatch1.ClimateneutralityisanunprecedentedfinancialchallengeTheoverarchinggoalofthisprojectistofindandlistouttoolsforincreasingthebankabilityofgreenprojects,especiallyindevelopingcountries,tofacilitateprivatecapitalflowstowardtheenergytransition.11FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworld2.Towardaclimate-neutralworld12FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworld2.1.AdynamicbutinsufficientpolicyenvironmentTheyear2015markedaturningpointforglobalclimateconsumption-basedmethodologyisshowingnow,sincemid-policywith195partiessigningtheParisAgreementandthe2000s,itisnotthemaindriverofthisdecouplinganymoreforUNadoptingits17SustainableDevelopmentGoals(SDGs).16mostadvancedeconomiessuchastheUK,EuropeandNorthHowever,thefollow-upontheselandmarkagreementsAmericancountries.26Cleanenergies,notablyrenewableenergies,hasbeendisparatearoundtheglobe,withsomecountrieshavealreadymanagedtochangethestoryastheybecomedoublingongreenenergypoliciesandothersstagnatingincreasinglyattractive.Notonlyaretheycatchingupwithfossilsince.17Themeasureofthisprogressarethenationallyfuelsintermsofcosts,buttheyalsoofferagreaterdegreeofdeterminedcontributions(NDCs),whichParisAgreementstrategicautonomy.Thisisespeciallyrelevantforcountriesthatsignatoriesshouldupdateeveryfiveyears.havehistoricallybeenhithardbyfossilfuelsupplyshocks.AsofOctober2023,177countrieshaveupdatedtheirNDCs.18GlobaltidesshiftinginfavorofclimateneutralitytransitionscanOfthose,107countriesrepresentingover80%ofglobalGHGbemeasuredbytheprogressmadeonnationalnet-zerotargets.emissionshaveoptedformoreambitiousemissionsreductionAsofAugust2023,93economies(92countriesandtheEU)havetargets.Theseincludehistoricalemitters(advancedeconomies)net-zerotargets,including19inpledges,51inpolicydocumentsandpotentialfutureemitters(emergingcountries).Althoughtheand22inlaw(Figure1).Advancedeconomies,LatinAmericaandreportingproceduresoftheParisAgreementaremandatoryAsia-Pacificnationsarelargelyleadingtheracetonet-zerobyforsignatories,theachievementofitsobjectivesisnot.19Hence,2050.Bycontrast,emerginganddevelopingregions,particularlytheParisAgreementiseffectivelynon-binding.ThisiswhyAfrica,China,theMiddleEast,RussiaandSouthAsiashowweakerNDCs,aswellasbindingnet-zeroGHGemissiontargetsarekeypledges,laterdeadlinesormissingtargets.Ifleftunchecked,thetosecuringclimateobjectivesagainstthetidesofgrowthandclimatefootprintoftheseboomingeconomiescouldescalate.crises,particularlywhenfossilfuelsubsidiesbecomepoliticallyIndiaforinstancetargetsnet-zeroemissionsby2070,bywhichattractive.Forinstance,therecentenergypricecrisisforcedpointitcouldhost16%oftheworld’spopulation27andbeclosegovernmentstodeployvastsubsidyplans20toprotectconsumerstoovertakingtheUSeconomy.28Therefore,despiteconsiderablewhoweretrapped21intheirdependencyonincreasinglyexpensivepoliticalprogress,morepledgesmustbemadetohelpsecurethefossilfuels.achievabilityofclimatetargets.Besidestemporarilyboostingfossilfuelsubsidies,theenergypriceRisinggreentechnologiesandbigclimatepromisesprovidethecrisishasalsoinducedaparadigmshift,placingenergysecuritybackdropfortheongoingconstructionofaglobalnetworkofandstrategicdependenciesatthetopofpolicymakers’agenda.22climatepoliciesandtransitions.GovernmentsandcompaniesThis,alongwithasharpriseinfossilfuelprices,hasreducedthearereleasingstrategieswithtargets,pathwaysandinvestmentgapineconomicattractivenessbetweenfossilfuelsandgreenoutlines.Emissionspricingmeasuresarealsograduallybeingtechnologies.Beforetheenergycrisis,economicgrowthwasimplementedgloballytoincentivizetheswitchtocleanenergies.largelyplannedaroundtheexpansionoffossilfuelconsumption.AccordingtotheWorldBank,suchmeasureswouldonlycoverThehistoricalrealityofdevelopedcountrieshavingbuilttheirabout23%ofglobalGHGemissionsin2023butarerampingupeconomiesonthebackoffossilfuelsmadeitparticularlyrapidly.29Indeed,totalrevenuesfromemissionpricingincreasedchallengingtoaskdevelopingcountriesnotto.However,today,sixfoldfrom2016to2022,bothduetohigherCO2pricesandcleanenergiesareenteringthefrayasaviablealternativegrowthtoexpansionintonewjurisdictions.30Cleanenergystrategiesmodel.EvenifGHGemissionsandeconomicdevelopmentwereandsupportschemesarealsobeingshapedaroundtheglobe.deeplycorrelatedinthepast,23somedevelopedeconomiesForinstance,therearenowaround60countrieswithnationalmanagedoverthepastfewdecadestodecoupletheireconomichydrogenstrategiesandroadmaps,upfromlessthanfivebeforegrowthandGHGemissions.24Themainreasonsforthis2020.31TheUSInflationReductionAct’s(IRA)section45V32observationareadecreaseincarbonintensityoftheenergydeployeduptoUS$100billioninmassivetaxcreditsforhydrogen,mixoftheseeconomiesaswellasadecouplingofenergyuseraisingthestakesglobally.33However,greensubsidiesofthisscaleandeconomicgrowth.25Explainingthisdecouplingonlybythearestilllargelylackinginthepartsoftheworldwherechallengingoffshoringofproductionoverseaswouldhavebeenprimarilyeconomicandfinancingconditionsmakethemmostimpactful.trueintheearlyyearsfollowingthisobservation.However,as13FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworldFigure1.Globalmapofnet-zerotargetsNet-zeroemissionpledgesgloballyBefore2050Commitmentstrength20502051–2060Law2061–laterPolicyNotargetPoliticalpledgeSource:DeloitteanalysisbasedondatafromClimateWatch34,35Figure2.GlobalmapofgreentaxonomiesNationalinplaceSupranationalinplaceIndevelopmentIndiscussionNotaxonomySource:DeloitteanalysisbasedondatafromInstituteforEnergyEconomicsandFinancialAnalysisandfromClimateBondsInitiative36,3714FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworldFurthermore,theramp-upoffinancialregulationsinservice2.2.Keytechnicalofclimatemitigationhasbeenslowerthanmoredirectenergyandclimatepoliciesandisalreadyshowingstronggeographicalcharacteristicsofdisparities.Thesedisparitiesarealreadysalientwithgreentaxonomies–classificationsystemsthatsetcriteriatolabelsomeanet-zeroworldeconomicactivitiesassustainable.DefininggreentaxonomiescancreateacommonunderstandingofwhichactivitiesareGreentransitionpolicyframeworksareconsideredconsidered“green”.Itcanalsohelpincreasesecurityforinvestorsinsufficienttodayinpartbecausegreentechnologiesandreducegreenwashingopportunities.Greentaxonomiesremainmisunderstood.Coordinatingandfinancingtheappeartobelargelyabsentfromofficialdiscussions(Figure2)ingreentransitionrequiresadeepunderstandingofthekeygeographiesincludingtheUnitedStates,Japan,Africa(exceptgreenproductsthatneedfunding.SouthAfrica)andtheMiddleEast.Despitetheirindividualbenefits,thedevelopmentofmanydifferentgreentaxonomiesaroundtheGlobalenergy-relatedCO2emissionsaredistributedacrosspowerglobecanreducetheircredibilityandeffectiveness.Forexample,generation,industry,transportandbuildings(Figure3).Eachalessclimate-ambitiouscountrywithahighshareofcoalinofthosesectorshasitsowncharacteristics,complexitiesanditselectricitymixcouldseenaturalgaspowerplantsasgreenpotentialsolutions,nullifyingtheprospectsofaone-size-fits-allinvestments,whereasamoreambitiouscountrywouldnot.decarbonizationsolution.Moreover,undertherightcircumstances,greentaxonomiescan•Powergenerationaccountedfor42%ofglobalenergy-relatedhelpreducefinancingcosts.Forinstance,allotherthingsequal,CO2emissionsin2022,41makingitoneofthehighest-emittingifequityinvestorsbecomeaversetoenvironmentalrisks,afirmsectoroftheglobaleconomy.Fossilfuel-firedpowerplantswithapoorenvironmentaltrackrecordcouldfacehigherequityproduced61%ofglobalelectricityin2022,andcoalalonecoststhanademonstrablygreenercompany.38Thesegreenequityaccountedforover35%ofelectricityproduction.42Thecostreductionsviagreentaxonomiesarenotclearlymirroredindevelopmentofcleanelectricitycanbringthedualbenefitofthedebtmarket,wheretheissuanceofso-calledgreenbondscuttingemissionsandhelpingenableelectrificationinend-usecurrentlylacksadequateinternationalstandardization.39Greensectorslikeindustries,transportandbuildings.43bondsareanotherkeygreenfinanceinstrumentandconsistsofdebtthatistraceablylinkedtogreeninvestments.Thekeyto•Industriesareresponsibleforaround9.2GtCO2emissionseachunlockingdebtcostreductionswithgreenbondsistobolsteryear(26%ofglobalCO2emissions).41Cement,chemicalsandtheirgreencredibility,i.e.,tomakethemmoretransparentandsteelarethelargestindustrialemitters,accountingforarounduniformvia,forinstance,taxonomies.Greenbondsandother60%ofenergyconsumptionand70%ofCO2emissions44insustainabledebtinstrumentscouldthushelpdebt-constrainedtheglobalindustrysector.Globaldemandforchemicalsandentitiesraisefundsforenergyinfrastructureprojects.Asof2022,steelisexpectedtoincreaseby30%and12%respectivelybyadvancedeconomiesconcentratedabout80%ofsustainabledebt2050,whilecementdemandisexpectedtoremainflatthanksissuances.40Furtherworkisthereforeneededtohelpstandardizetoefficiencymeasuresinconstruction.11Longinvestmentcyclesgreenfinanceinstrumentsandtoexpandtheiruseinandbeyondarecomingtoanendwithinthenextdecadeforanumberadvancedeconomies.ofindustrialsites,makingdecarbonizationanow-or-neverdecisionforalargeshareofthesector.11Duetothelowmaturityandsignificantinfrastructuretransformationrequirementsofhigh-temperatureelectricheatingtechnologies,decarbonizingindustrialsectors,particularlytheheavyoneslikecement,chemicalsandsteel,hasprovenchallenging.45•Transportaddedupto23%ofglobalenergy-relatedCO2emissionsin2022,41splitacrossadiversearrayofsectorsspanningaviation,road,railandmaritimetransport.Somesub-sectorssuchaspassengercarshaveclearlyidentifieddecarbonizationsolutionslikeelectricvehicles.46,47,48Otherslikeaviationarestrugglingtofindaviablealternativetoconventionaltechnology,oftenduetotechno-economicconstraintsontheuseofelectricityorhydrogenandlow-maturityofbiofuelsandsyntheticfuelstoreplacefossilfuelsinlargescale.•Finally,thebuildingssectoremitted3GtCO2in2022orjustunder10%ofglobalemissions.Today,buildingsaroundtheglobearelargelydependentontheuseoffossilfuels,15FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworldparticularlynaturalgas,forcookingandspaceandwateristoenablethereadertomakeinformeddecisionsabouttheheating.Electrificationandefficiencymeasures(suchastheproductstheywanttoregulateorinvestin.Inparticular,thethermalinsulationofbuildings)areincreasinglyseenasviablefigurerevealsthehighcapital-intensivenessandrelativelylowdecarbonizationoptionsinthebuildingsector.49technologicalreadinessofmanyofthesolutionsthatstandoutwithregardstooverallcosts,systemdisruptiveness,andskilledFigure4showsthemaintechnologicaloptionstoreachnet-zerolaborrequirements.Asexploredthroughouttherestofthereport,GHGemissionsfromtheperspectiveofindividualsites,buildingsthecapitalintensivenessandriskinessofgreentechnologiesmakeorvehicles.Assuch,itdisplays,ataglance,someofthekeyreducingfinancingcostsahigh-priorityactionlevertohelpunlockcharacteristics,barriers,uncertainties,andtherebyopportunitiesthetransition.ofeachsolutionineachsector.ThepurposeofthisinformationFigure3.Globalenergy-relatedCO2emissionsovertimeandbreakdownbysectorbetween2019and202234.034.434.832.23.08.0GtCO2/year9.2201920202021202214.72022PowerIndustryTransportBuildingsSource:IllustrationbasedondatafromtheIEA4116FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworldFigure4.Globaldecarbonizationhingesonhighlycapital-intensivetechnologies50SectorCategoryMainsolutionsAdditionalrequirementsCoststructureTRLNZPPotentiallimitationsof(2)thesolutionSkilledDisrup-CostUpfront/Lifetime(1)workerstivenessBothPowerRenewablesWindUpfrontLanduse,mineralneedsSolar(PV)UpfrontLanduse,concentratedmarket42%FossilfuelsGeothermalUpfrontGeographicalconstraintNuclearHydroUpfrontGeographicalconstraintofglobalRetrofitting(bio/H2)Fuelcost,limitedbiomassenergy-CCUSLifetimeMissingCO2infrastructurerelatedCO2GenIII+/SMRUpfrontSafety,wastemanagementemissionsElectrificationUpfrontPowerpriceandsupplystabilityHydrogenInfra.,hydrogenavailabilityChemicalsBioenergiesBothLimitedsustainablebiomassRecyclingBothPlasticcollectionratesIndustrySteelCCUSMissingCO2infrastructureCementElectrification(EAF)LifetimePowerprice,scrapavailability26%Hydrogen(DRI)LifetimeInfrastructure,technicallimitationsCCUSBothMissingCO2infrastructureofglobalAlternativeinputmaterialsLifetimeAvailabilityofgoodclaydepositsenergy-CCUSBothSafety,end-of-liferelatedCO2Hydrogen(heat)BothInfrastructurerequirementsemissionsElectrificationLifetimeMaturity/infrastructure/costissuesElectrificationLifetimePowerpriceandsupplystabilityLightHydrogenLifetimeInfrastructurerequirementsindustryBioenergiesLifetimeLimitedsustainablebiomassElectricity(battery)LifetimeInfrastructure,cleanelectricityRoadHydrogen(fuelcell)LifetimeInfrastructure,fuelcostBiofuels(ICE)BothFuelcost,limitedbiomassTransportMaritimeE-Fuels(ICE)UpfrontFuelcost,limitedCO2Biofuels(ICE)BothFuelcost,limitedbiomass,safety23%E-Fuels(ICE)LifetimeFuelcost,limitedCO2,safetyH2-pure(fuelcell)LifetimeFuelcost,lowrangeofglobalElectricity(battery)LifetimeSafety,verylowrangeenergy-Biofuels(ICE)LifetimeFuelcost,limitedbiomassrelatedCO2E-Fuels(ICE)LifetimeFuelcost,limitedCO2emissionsHydrogen(fuelcell)UpfrontSafety,lowrange,fuelcostElectricity(cable)LifetimeInfrastructurecost&feasibilityAviationHydrogen(fuelcell)LifetimeFuelcost,lowrangeHeatpumpsLifetimeConcentratedmarket,coolinggasesRailSolarthermalUpfrontSpacefootprintDistrictheatingLifetimeInfrastructure,non-renewableBuildingsHeating&Bio/H2gasboilersUpfrontLimitedcleangasescoolingSolidbiomassUpfrontLimitedbiomass,lowefficiency9%ThermalstorageUpfrontWearandtear(corrosiveness)Construc-SustainablematerialsLifetimeLonglifespanofbuildingstockofglobaltionRecyclingLifetimeLimitednet-zeropotentialenergy-UpfrontrelatedCO2UpfrontemissionsLifetimeHighMediumLowSource:DeloitteanalysisbasedontheIEA’sEnergyTechnologyPerspectiveandvariousothersourcesmentionedinthetext.(1):TRL=TechnologicalReadinessLevel;(2):NZP=Net-ZeroPotential17FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworldThedecarbonizationofelectricityrestsonthedevelopmentruleofthumb,theeffectivenessofelectrificationdwindlesasofthreestrandsoftechnologies.temperaturesapproach1000°Cundercurrenttechnologicallevels.55Thisleaveslessspaceforelectricityinheavyindustries,•First,renewablepowergenerationcapacity,particularlysolarwhereprocessesusuallyoperateabove500°C.Inthechemicalphotovoltaic(PV)andonshoreandoffshorewind,willbyallsector,electrificationcanbeusedforsteamcracking,aprocessbenchmarksneedtoincreasemassivelyaroundtheworld.51inwhichlong-chainhydrocarbonsarebrokenintosimplerHydroelectricpowerplantsandgeothermalpowerplantsones.Inthecementsector,electricitycanbeusedtopowercanprovidepowersystemswithflexiblepowergenerationunitsthatproduceclinkerforcementproduction,althoughthatcapacity,buttheiroverallavailabilityisscarcearoundthetechnologyisstillatthedemonstrationstage.Inthesteelsector,globe.Renewables,includinggeothermalenergyandhydro-electricarcfurnaces(EAF)areanalreadyproventechnology.electricity,arebynaturehighlycapitalintensivebutincurzerofuelcosts.BothwindandsolarPVhavelowcapacity-to-landuse•Withawidevarietyofhighlyenergy-intensiveprocessesandratioscomparedtofossilplants,andfacehighlyconcentratedmanycarbon-basedproducts,thechemicalindustryisahard-upstreamsupplychains.However,windandsolarpowerplantsto-abatesectorwithnoone-size-fits-allabatementsolution.donotrequireanyfueltorun.Therefore,whiletheymightfaceRecyclingandespeciallythereuseofplasticsisatechnologicallyupfrontimportdependencechallenges,overtheirlifetime,maturedecarbonizationsolutionforchemicalsproduction.theyrequirenofuelimports,boostingtheresilienceoftheHowever,itwillrequirehigherplasticcollectionratesandlocalenergysystems.Duetotheirlowoverallcosts,gainsinlowerrecyclingcoststobecomeviable.56Carboncaptureandstrategicautonomyandinstantenvironmentalbenefitsuponutilization(CCU)isanothermaturesolution,butitscurrentinstallation,renewableswillformthebackboneoftheglobalenergyintensivenesscanoffsetthebenefitsofCO2captureandelectricitytransition.52makeitlesseconomicallyattractive.57,58Also,integratingcapturetechnologiesintoexistingchemicalprocessescanbecomplex•Second,theretrofittingofexistingfossilassetstocleangas(co-)andrequirecostlyCO2transportandstorageinfrastructure.combustionortopowerplantswithcarboncaptureandstorageLastly,hydrogenandbioenergyfeedstockshavebeenusedin(CCS)extensionscanreduceemissions,particularlyinregionstheindustry,buttheirconsumptionisslatedtosurgemassively.withpoorrenewableendowments.ThesesolutionsaredeemedThescaleoftherequiredimplementationwillthereforecallsomewhatdisruptivebecausetheyrequirethedevelopmentoffornewcostlyinfrastructure,puttingmorecapital-intensivecapital-intensivehydrogenorCO2infrastructurenetworks.Whilepressureonsuchdecarbonizationprojects.cleangascombustionislimitedbytheavailabilityandcostofthefuel,CCScanbelimitedbytheabsenceofCO2networks.•Today,blastfurnacesareoneofthemostcommonandhighestCO2-emittingsteelmakingpathway.59Hydrogen-baseddirect-•Third,thedevelopmentofnuclearenergycanbringsignificantreducedsteelmakingisseenasoneoftheprimaryapproachesemissionreductionsinsuitablelocationsthathavethemeanstohelptheindustryachieveitsdecarbonizationgoals.Manytofundsuchprojects.Indeed,nuclearpowerplantscomeatfirmsarealsoexploringopportunitiestoloweremissionssignificantupfrontcostsandverylongconstructiontimes.53throughtheincreaseduseofrecycledscrapsteel,meltedviaMoreover,thecostsofnuclearpowerplantdecommissioningtheelectricarcfurnace(EAF)steelmakingprocess,whichcanandwastedisposalremainhighlyuncertain.54Whilehighupfrontcut85%oftheemissionsofblastfurnaces.59Thewidespreadcostscangetredeemedoverenormouspowerproductionadoptionofthesesolutionsfacesbarrierssuchasunfavorablevolumesthankstohighutilizationfactorsoverlongperiods,investmentcyclesandscarceskilledworkforce.Addingtothat,mechanicalfailuresandchangesinnuclearsafetystandardshydrogen-basedgreensteelcurrentlysuffersfromthelackcanentailsignificantcosts.Concerningsmallmodularreactorsofinfrastructureandhighcostofgreenhydrogen.Finally,the(SMR),theyhaveyettogainmoretechnologicalmaturitytostartlimitedavailabilityofhigh-qualityscrapcanhurttheviabilitychallengingexistingfossilpowerplants.ofbothrecycledsteelproductionandhydrogen-basedgreensteelproduction.Overall,cleanelectricitygenerationpathwaysaretechnologicallymaturebuthighlycapitalintensive,makingthecostofdeveloping•Unlikeotherenergy-intensiveindustries,onlyone-thirdcleanprojectshighlysensitivetofinancingcostsinthissector.ofemissionsfromcementproductioncomesfromfuelBothrenewableandnuclearvaluechainsaremaintainedbyconsumption,whiletwo-thirdscomefromtheuseofrawhighlyskilledworkforce,whichemphasizestheimportanceofmaterials.60Usingcleanerinputmaterialscanoffersignificantformaltraining.emissionreductionpotentials,butthismaybelimitedbytheavailabilityofcleanerinputs.CarboncaptureandstorageTheglobalindustrialsectorshouldnotbeviewedasasinglecanbeanothersolutiontohelpdecarbonizecement.Likeinblocktodecarbonize,butasanarrayofindustrieswithotherindustrialsectors,CCSfacesbarrierswhichalsoincludevaryingconstraintsthatdictatedifferentresponsestothethepracticalchallengesofCO2leakageandsocio-politicalsamesolutions.acceptability.Finally,hydrogencanalsobeusedasachemicalinputtoreducerawmaterialneedsandtherebyemissions.•ElectrificationisakeyemissionreductionsolutionacrossaHowever,theeconomicviabilityofhydrogenuseincementnumberofindustrialsubsectorswhoseprocessesonlyrequireremainslowfornow.61low-tomedium-temperatureheating(below400°C).Asa18FinancingtheGreenEnergyTransition:AUS$50trillioncatch2.Towardaclimate-neutralworldPhysicalconstraintsvaryacrosstransportsectors,butEmissionsfrombuildingscomefromheatingandcoolingthreetechnologicalchoicesstandout:food,waterandspace,andconstruction.69Asheatingandespeciallycoolingdemandsareexpectedtorisewithglobal•Electrificationistheclearwinnerincars,light-andmedium-warming,70theirdecarbonizationisvital.Heating,coolinganddutyroadvehiclesandtrains,wherevehiclerangeorweightconstructionallseeclearsolutionsemergefromFigure4.arerelativelyloworwherecableelectricitycanbedispensed.Technologicalimprovementscouldpushelectrificationfurther•Thekeysolutionstohelpdecarbonizeheatingandcoolingareintomorehard-to-electrifysegmentssuchaslong-haulroadheatpumps,followedbydistrictheatingand,marginally,cleantransport,62butcommercialaviationandlargeshipsremainoutgasboilers.Heatpumpsaretwotofourtimesmoreexpensiveofreachfornow.63Electrificationiscapitalintensivebecauseupfrontthangasboilersbutarethreetofivetimesmoreenergyitrequiresthepurchaseofbatteriesandtheinstallationofefficient,makingthempotentiallycostsavingovertheirlifetime.71chargingnetworks.However,electricenginesarealsotwiceTheyareaprovenandmoderatelydisruptivetechnologythatasenergyefficientasinternalcombustionenginesdependingcouldbecomethefirstheatingtechnologyby2050.72onthetransportsegment,makingthemsaveenergyandtherebyemissions.•Districtheatingcanbeanotheroption,butitneedsacleanheatsourceandhighlycapital-intensiveinfrastructure.Finally,•Whilehydrogenfuelcellscoulddecarbonizethehard-to-electrifythebenefitsofcleangasboilersarelimitedbytheirlowenergytransportsectors,theyarecostly,requiringhighexpensesinefficiencyandtheavailabilityoflow-costhydrogenorbiogas.fuelcells,cleanhydrogensupplyandsupportinginfrastructureHydrogenboilerswouldalsorequirethecreationofcostlynetworks.However,theyofferlongerrangeandfasterfuelingdistributionnetworks,andtheiruseinbuildingspresentstimesthanbattery-electricvehicles,makingthemmoresafetychallenges.73,74operationallyversatile.64AkeyphysicallimitationofhydrogenvehiclesisthelowvolumetricenergydensityofhydrogenunderOverall,thedecarbonizationofbuildingswillrequirehighupfrontambientconditions,whichmakesittechnologicallyinfeasibleinvestmentsintoheatpumpsanddistrictheatingbutalsointotodaytoflyacommercialhigh-capacityaircraftonhydrogen.65cleanelectricitysupplyintheupstream.Theseimprovementscanhelpmobilizemanyskilledworkers,ontheorderof,forexample,•Drop-incleanfuelscouldprovideaninterimoptionwhilebatteryaround30,000heatpumpengineersintheUKalone.75Grantsandandfuelcellvehiclesramp-up,oralong-termsolutionwherefundingschemeswillbekeyforadoption,ashomeownerstendtoelectricityandhydrogencannotpenetrate.Syntheticfuelshavelimitedborrowingpower.(e-fuels)thathavethesamepropertiesasfossilfuelsbutaremadefromcleanhydrogenandclimateneutralCO266arelimitedRegardlessoftheirrespectiveprosandcons,clean(especiallybytheirhighcostandlowavailability.Whilebiofuels(producedgreen)technologiesareonaveragemorecapital-intensivethanfrombiologicalfeedstockratherthanfossilsources)havelowertheirfossilcounterparts.Financiallyconstrainedentitiescanproductioncoststhane-fuels,theyarelimitedbytheavailabilitythereforebetrappedintoacostlierfossilfuelpathwaysimplyofsustainablebiologicalfeedstock.67Despitebeingnet-zero,becausethegreenalternativemaybetooexpensiveupfront.Thistheircombustionstillproducesharmfulpollutionintheformcanhappenforinstancewithnaturalgas-firedpowergeneration,ofparticulatematter.Nonetheless,currenttechnologicallevelswhichischeaperupfrontbutfarmoreexpensivedownthelinefailtoelectanotheralternativethanbioore-jetfueltoreducethansolarelectricity.76Inaperfectworld,thissituationdoesnotemissionsfromaviation.68ariseasthecheaperoptionprevails.However,countries,firmsandindividualsfaceanintricacyofconstraintsthatmaybarOverall,transportwillhaveamulti-fuelfuture.Electricityislikelyinvestmentsfromflowingintotheenergytransition.totakethelion’sshareofpassengercar,light-dutyandotherelectrifiablesegmentswhilehydrogeninitspureform,hydrogen-basedsyntheticfuelsandbiofuelssharetherestbasedonoperationalcapabilities.Technologicalmaturityremainslowformanyofthetruenet-zerosolutions,implyinganeedforfurtherresearchanddevelopment(R&D)expenditure.19FinancingtheGreenEnergyTransition:AUS$50trillioncatch3.Whatisholdingbacksustainableinvestments?3.Whatisholdingbacksustainableinvestments?20FinancingtheGreenEnergyTransition:AUS$50trillioncatch3.Whatisholdingbacksustainableinvestments?Asshownpreviously,theenergytransitionwilllargelydependonthereplacementoffossil-basedmeansofproductionbycostliergreentechnologies.Thetremendousamountofneededcleanenergyinvestmentswillcallforbothprivateandpubliccapitalproviders.However,tohelpattractprivatefunding,decidersshouldfirstovercomeanarrayofstructuralinvestmenthurdlesthatcanbecategorizedintopolitical,marketandtransformationbarriers(Figure5).Eachgeographyfacesadifferentmixofthosebarriers.Thismeanstherewillbenoone-size-fits-allsolution.Figure5.MainbarrierstoinvestmentincleantechnologiesMacro-levelLackofrisk(countryinfrastructurerisk,inﬂation…)TranUnskilledMicro-levellabor(oﬀtaker,technologyrisk…)MarketsformationMissingPoliticalStrandedmarketsassetsLackofLackofregulatoryLackofclearstrategicframeworktransparencyandintegritypoliticaldirection21Source:DeloitteanalysisFinancingtheGreenEnergyTransition:AUS$50trillioncatch3.Whatisholdingbacksustainableinvestments?3.1.Politicalbarriers3.2.MarketbarriersPoliticsandthesocialacceptabilityoftheenergytransitionMarketforcesworkingagainstthegreentransitionconsistcanmakeorbreakgreeninvestments.Goodleadershipwillofmissinggreenmarkets,andmacro-andmicro-levelrisksbecriticalinremovingpoliticalhurdles,fromthehighlevelthatinterferewiththebankabilityofgreenprojects.wherestrategiesaremadedowntolocaladministrationsthatdeliverpermits.RemovingpoliticalbarrierscanallowAtthemacrolevel,globalinflationaryshockslikethe2022energypolicymakerstobothhelpbridgethegreen-fossilcostgapcrisistriggeredbytheRussia-Ukrainewar,canconstrictcapitalandde-riskgreenprojects.flows,raisingthecostoffinancinggreenprojects.InflationcancompoundwithdepreciationoflocalcurrenciesagainsttheThefirstbarriertoovercomeisalackofclearstrategicpoliticalUSdollartomakedebtrepaymentextremelydifficultforgreendirection.Unstablegovernmentsorambiguousprioritiescanprojectsindevelopingcountries.ThiswasthecaseinSierraLeone,sendnegativesignalstoprospectivelocalenergytransitionwhosecurrencylost40%ofitsvalueagainsttheUSdollarininvestors.LookingatNorthAfrica,LibyaandMoroccooffertwo2022-23asinflationsoaredby40%.90Greenprojectsoftenhaveradicallydifferentpoliticalperspectivesdespitecomparablesolarlonglifetimesofover25years,91overwhichforeignexchangeirradiations.72MoroccohasratifiedtheParisAgreement,issuedquotescanfluctuatewidely.Thecostofhedgingincreaseswithanambitiousnationallydeterminedcontributionandissuedatherisktohedge.92Thiscanmakeforeigngreeninvestmentscomprehensiveregulatorytransitionframework.72,77,78,79,80Theoverlyexpensiveintensemacroeconomiccontexts.Finally,localrulingMoroccangovernmentisalsoexpectedtostablyremainriskpremium,theaggregatedmarketmetricforthepoliticalinpowerandtokeepexpandinggreenenergy,includinggreenbarriersdescribedearlier,increasesthecostofcapital.ZoominghydrogenexportprojectswithEurope.81Bycontrast,theLibyanintomarkets,thekeyrisksarerelatedtoofftakers,projectpoliticalleadershipcanbeseenaslessstable,andthecountryhasmanagementandtechnologies.OfftakeriskdepictstheriskofneitherratifiedtheParisAgreementnorpublishednewenergyaprojectnotfindingreliablebuyersfortheirproduct.Thiscantransitionpoliciessince2012.77,82,83Despiteroughlyequalsolarhappenwithnewgreentechnologieslikecleanhydrogen,whichpowerpotential,asolarPVinvestorwouldchooseMoroccoovercanstruggletobreakthroughduetomissingdemand.93IntheLibyaduetolowerpoliticalrisksimpactingprojects’riskprofiles.samevein,liquiditycanbeakeyriskfornewgreentechnologies,whichmightnotbeabletogenerateenoughrevenuetocoverThesecondobstacleisthelackofclearandtransparentregulatorytheirduepaymentsontime.Forinstance,anoffshorewindfarmframeworks.Thiscantrickledownfrommissingstrategicthattooklongerthananticipatedtobebuiltmayfaceliquidityguidanceorpoliticalinstability,butitcanalsofrequentlyoccurchallengesifcreditorsaskforrepaymentbeforeitstartsoperating.inadvancedeconomies.Forinstance,untilrecently,theEULastly,technologyriskencompassesallthecomplexitiesdescribedregulatoryframeworkforgreenhydrogenwaslargelyunclearinsection2.2,plusuncertaintiesoncostreductionsandactualandthusseenasamajorbarriertoinvestmentsinthisindustry.84performanceinharshconditions.Forexample,battery-electricZoomingintolocalregulation,inefficientadministrationsposevehiclescanunderperforminextremetemperatures,94makinganotherriskforgreenprojects,especiallyasnewordisruptivethemlessattractiveinmanydevelopingcountries.technologiesoftenrequirespecialconstructionpermits.85In2022,theEUhadaboutfourtimesmorewindcapacityinpermittingAboveall,greenprojectsareriskybecausetheyoftenlackathaninconstruction,withleadtimesofoften5yearsfromthemarket.Greenhydrogen,forexample,doesnotyethaveaglobalstartofpermittingprocedures.86Yet,thefactorthatcanturnslowandoftenlocalmarket.Thismeansthatprospectiveinvestorsadministration,unclearregulationandunpredictablegovernancedonothavereliablepricesorquantitybenchmarks,lackvisibilityintoriggedprojecttendersiscorruption.87,88Eliminatingontechnologyanddeliveryspecificities,andwillhavelimitedcorruption,particularlyindevelopingcountrieswhereitmaybepredictabilityastofuturedemandandsupplypatterns.Formoreprevalent,89canhelpdecreasepoliticalrisksandfacilitateinstance,theIEAprojectsEUelectrolyzercapacitytoreach39GWgreeninvestments.in2030,lessthanhalfoftheEU’spoliticalobjectiveof80GW.95Therefore,despitegreenhydrogenbeingaviableoptionto,forexample,decarbonizesteel(Figure4),demand-sideinvestorshavelittlesupply-sidecertaintybesidespoliticalpledges.Supply-sideinvestorsexperiencetheoppositewithhighofftakeuncertainty,creatinga“chickenandegg”problemthatcanbesolvedbygovernmentintervention.Bycontrast,othercapital-intensivemarketslikerealestatetendtohavefarmorepredictablepatternsandhavelongmovedpastthe“chickenandegg”problem.Thus,greenfinancemayberiskierthanconventionalfinance,atleastuntilgreenproductmarketsareoperational.223.3.TransformationThecleanenergysectorbarriersalreadyemploysmorepeopleAsgreenprojectsgraduallycomeonline,fossil-basedworldwideprojectswillinevitablybediscarded,leavingfossilindustrythanthefossilassetsandworkersstranded.industryandisslatedtoToday,thefossilfuelindustryisvitaltomostcountries.InbeakeyjobKazakhstan,fossilfuelsaccountforaroundhalfofallexportsbycreationsourcemonetaryvalue.96Abruptlyclosingfossilfuelplantswithoutanthroughouttheimmediatesustainablereplacementcouldthereforehurtjobs,transition.98industriesandfinancialsystemsthatareoverexposedtostrandedassetrisks,likeinwealthycountries.97Thisincentivizesbeingslowtocutfossilfuelinvestments,whichinturncanmakepotentialgreeninvestorsunsureofwhethertheylosemoneybynotinvestinginfossilassets.However,thecleanenergysectoralreadyemploysmorepeopleworldwidethanthefossilindustryandisslatedtobeakeyjobcreationsourcethroughoutthetransition.98Theshifttocleaneconomiescancreatenewopportunitiesandlowerthecostsofgreenenergyforindustries.Thegainsinstrategicautonomyfromrenewableenergywillalsocushionfinancialmarketsagainstthevolatilityofglobalfossilfuelprices.Thetrueriskofphasingoutthefossilfuelindustrythereforeliesmoreinthecostofpoliticalinactionthanintheclosureofplants.Decarbonizingtheglobaleconomywillentailunprecedentedtransformationthatsomecountriesmightnothavethecapacitytoaccommodate.Upstreamfromgreenprojects,infrastructureandeducationareoftenpriorityareaswherecrucialinvestmentscouldremovebottlenecksdowntheline.Thisargumentisparamountwhenitcomestoenergyinfrastructure,particularlyelectricity.DevelopingcountriesloseanestimatedUS$120billion/yearfromfrequentpoweroutages.99Oneoftheworst-hitcountriesisNigeria,with4,600hoursofoutagesin2018,100mostlyduetopoorinfrastructureandgridmanagement.99,101However,Nigerianelectricityisoverwhelminglymadefromoil,gasandhydropower,whoseproductionisfarmorepredictablethanthatofsolarorwindpowerplants.102ThiscastsdoubtsonNigeria’sabilitytohandlevariablerenewablepowerproductionwithoutfirstinvestingintoaprofoundoverhaulofitselectricityinfrastructure.Yet,solarandwindpowercouldalsoalleviatepowerproblemsincountrieslikeBangladeshwheremostpoweroutagesarecausedbyfossilfuelshortages.103Skilledlaborisanothercapacitybarriertogreeninvestments,particularlyinthedevelopingworld.Bootsonthegroundarealwaysneededtoinstall,maintainandreplaceequipment.Thisrequiresskilledlabor,whichisscarcerindevelopingcountriesthaninadvancedeconomies.10423FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.Fosteringinvestmentsinthegreentransition4.Fosteringinvestmentsinthegreentransition24FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.Fosteringinvestmentsinthegreentransition4.1.AtoolkittofostersustainableinvestmentsGuidinginvestmentstowardsustainableprojectscallsforfinancingcoststohelpenablecriticalinvestmentsinsustainablethreetypesofactions:de-riskinggreenprojects,bridginginfrastructure.Bridgingthegreen-fossilcostgapmeansincreasingthecostgapbetweengreenandfossilprojectsandcuttingthecostcompetitivenessofgreenassetstohelpattractinvestorsfossilfuels.andofftakers.Inversely,bridgingthecostgapalsoimpliesreducingtheattractivenessoffossilassets.TheseactionscanThekeyactionlevershighlightedintheexistingliteratureonthesteertheeconomytowardreducingtheuseoffossilfuels,whosefinancingissuesofenergytransitionsuchastheworkofIEA,10economicburdenoncountries,firmsandpeople,particularlyinIRENA,12theWorldBank13andtheWorldEconomicForum105areemergingmarkets,shouldbemanagedthroughoutthetransition.summarizedinFigure6.De-riskinggreenprojectsentailsloweringFigure6.OverviewofkeysolutionstoturngreenprojectsmorebankableDe-riskgreenprojectsBridgethegreen-fossilcostgapCuttingfossilfuelsEndpublicsupportforfossilassetsDeveloplocalgreenfinancialmarketsDiluteriskviaportfoliodiversificationSetupgreenhousegasemissionpricingCreatealow-riskprojectenvironmentReducegreentechcostsDealwithstrandedassetsProvidelossreservesandguaranteesReducegreenprojectupfrontcostsDealwithstrandedpeopleReducerevenueriskMakegreenprojectsinvestableChannelprivatefundsintothegreentransitionSource:DeloitteanalysisbasedonIEA,10IRENA,12theWorldBank13andWorldEconomicForum10525FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionDe-riskingsustainableandgreenprojectsseniordebtisrepaidbeforesubordinateddebtandthushasalowerdefaultrisk.ThesamesubordinationmechanismexistsforDevelopinglow-riskprojectenvironmentsequity.Thesemechanisms,commonlyusedinblendedfinanceSection3outlineshowregulatory,political,marketandcurrencyframeworks,areessentialtothetoolkitofdevelopmentbanks.risksdrivefinancingcosts.ImplementingandcoordinatingholisticenergytransitionpolicyframeworksattheregionalandBox1.TheJustEnergyTransitionInvestmentPlaninternationallevelscansomewhatmitigatetheseriskstoreduceinSouthAfricafinancingcosts.Concretely,thisamountstofosteringmarkettransparencyandregulatoryclarity,developinginfrastructureLikemanycountries,106SouthAfrica’snationallyplans,publishinglong-termtargetsandstrategiesandassistingdeterminedcontribution(NDC)tomitigatingclimateprojectdevelopers.Nationalenergyandclimatestrategiesarechangeinitiallylackedadetailedenergytransitionandoftenthestartingpointforsettingalow-riskenvironmentforinvestmentplanforthecountry.However,afterCOP27,greenprojects.SouthAfrica’sJustEnergyTransitionInvestmenttheSouthAfricangovernmentfilledthisgapbyissuingPlan(publishedinNovember2022)isacaseinpoint,whichitsJustEnergyTransitionInvestmentPlan(JETIP).107ThiscreatedasolidandtransparentbaseforthedevelopmentofgreenplanoutlinedtheUS$100billionofinvestmentsneededprojects(Box1).toachievethenation’sdecarbonizationcommitmentssetinitsNDCfor2023-2027.TohelpreachUS$100Lossreservesandguaranteemechanismsbillion,SouthAfricaandothercontributingcountriesFinancialsupportmechanismssuchasguaranteesorfirst-losshopetoleveragearoundUS$4ofprivatemoneyfortranchescanhelptoreduceprojectriskandthusfinancingcosts,everyUS$1ofpublicinvestment.Itisuncertainwhethermakinggreenprojectsmorebankable.Thefirst-losstrancherefersSouthAfricacanachievesuchleverage,butthehightothetranchewiththelowestpriorityintermsofrepayment.levelofdetailandclarityofJETIPseemstoprovideaTherefore,incaseofdefault,itwillfirstabsorbthelosses.Suchsolidbaseforattractingprivateinvestors.Theplanlaysreservesandguaranteeproductsinsureinvestorsagainstlossesouttargets,budgets,policytoolsandinfrastructureif,forexample,theprojectmeetsbottlenecks,underperformsorandskillrequirementstohelpbuildaconvincingfacesfinancialdifficulties.Thisriskreductionmakestheprojectcasethatgreenprojectscantakeplaceinalow-riskmoreappealingtorisk-averseinvestors,especiallyinemergingregulatoryenvironment.orriskymarkets.Subordinationofcapitalcanprovideadditionalsecuritytohelpattractinvestors.Aproject’sdebtstructuremayhavedifferentlayersofrepaymentpriority(Box2),wherebyBox2.ClimateInvestmentFunds50%seniordebtTodate,theClimateInvestmentFunds(CIF)hascommittedUS$7.5billionofblended70%seniorfinanceproductstodevelopingcountriesdebttounlockinvestmentsinlow-carbontechnologies,cleanenergystorageand20%industrialdecarbonization.108TheCIFexpectssubordinatedtomobilizeUS$62.1billionofco-financing,orUS$8foreachUS$1ofblendedfinance.109ThedebtinstrumentsCIFdeploystoattractinvestmentsarediverseandinclude110seniorconcessionalFirstlosstrancheloans,subordinatedloansandmezzanine(50%)instruments,111whichhelpreduceseniordebtdefaultrisk.Thefollowingfigureillustrates30%equityFirstlosstranche30%equitythebenefitsofdebtsubordination.Compared(30%)totraditionalfinancestructures,thefirst-losstrancheisgreaterinsubordinateddebtTypicalprojectBlendedﬁnancemechanisms,whichdecreasesdefaultrisksforﬁnancestructurestructureseniordebt.Source:IllustrativeexamplebasedonDeloitteanalysis26FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionMarketcreationDevelopingcapitalmarketsCreatingorfacilitatingaccesstoanexchangeplatformfornon-Developinglocalfinancialecosystemscanincentivizesustainableexistingmarketscanreducerevenuerisks,loweringthefinancinginvestmentsinfourbroadways.First,anadequatelocalfinancialcostofcleanenergyprojects.Despitebeingkeytodecarbonizingmarketinstillsconfidenceinlong-terminvestments.115Second,hard-to-abatesectors,112greenhydrogenlacksitsownmarketwell-functioningmarketscanprovideinformationthroughandremainstooexpensivetocompetewithGHG-intensivegraypricediscoveryandfinancialreporting.Thiscanhelpreducehydrogen.95Forinstance,inJuly2023,USgrayhydrogenpricesinformationasymmetriesforprospectiveinvestors.116,117Third,werebelowUS$1/kgH2,whilethecheapestUSgreenhydrogendevelopingfinancialmarketscanincreasecompetitionbetweenwaspricedatUS$2.7/kgH2.113Offtakecontractscansolvethiscapitalsuppliers,whichpotentiallyreducesfinancingcosts.challengebyenablingbuyerstofindgreenproducts,andsellersFinally,maturefinancialecosystemscanofferawiderangeoftosecurebuyers.PowerPurchaseAgreements(PPAs)areatypehedgingandfinancingoptions,includingsolutionsthatarebetterofofftakecontractswherebythepartiesfixanexchangepricesuitedforgreenprojects,likegreenbonds.Growingdemandforforelectricity,usuallybasedonitslevelizedcostofproduction.climate-consciousfinancehasfueledtheriseofgreenbondsandThus,PPAscancreategreenproductmarketsandhelpbridgesustainabilitybonds,whoseglobalvolumeexceededUS$650thegreen-fossilcostgapbyreducinggreenproductrevenuebillionin2022.118Theseworklikeconventionalbondsexceptrisk.OtherPPAtypesincludefeed-intariffs(i.e.,PPAswherethetheyaimtoraisefundsforenvironmentallybeneficialprojects.governmentisthebuyer),andcontractsfordifference(seeBox8However,ensuringthatgreenbondsactuallyfundgreenprojectsformoreinformation).PPAvariantshelptoreducepriceandisimpossiblewithoutalsodevelopingglobalgreenbondstandardsvolumerisks,whichlowersrevenueuncertaintyand,inturn,toshoreuptransparency,comparabilityandthuscredibility.reducesfinancingcosts(Box3).Box3.ImpactofPPAsinde-FinancingVolumeriskFinancingriskingprojectscostsPriceriskcostsRevenueriskisakeycomponentofOperatingCostofcapitaldecreaseOperatingfinancingcosts,asinvestorsaimtocostscostsensureprojectsgeneratereturns.PPAscanreducefinancingcostsforUpfrontUpfrontrenewablesprojectsbydampeningcostscostsrevenuerisk.Securinglong-termcontractswithreliableofftakersLCOEImpactofPPALCOEwithPPAlikegovernmentsstabilizesprojectrevenuesthroughoutthePPA’sSource:IllustrativeexamplebasedonDeloitteanalysislifetime.Assuch,globalcontractedPPAvolumesrosefrom0.3GWin2012to36.7GWin2022,withan18%leapin2021-2022,partlyduetotheRussia-Ukrainewarraisingdemandforrevenuecertainty.114ThefollowingfigureillustratestheimpactofaPPAonthelevelizedcostofelectricity(LCOE–theaveragenetpresentcostofelectricityproductionoveraproject’slifetime).Stabilizingprojectrevenuedecreasesrisk,loweringinvestors’requiredreturnsandtherebyreducingfinancingcosts.27FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionManysuchstandardsexistaroundtheworld,119but,ideally,issuershamperthegrowthofgreenbondsindevelopingcountries.121shouldworktowardinternationalconvergence.AmeasureofToovercomethis,nascentgreenbondmarketswillrelyonthethislackofconvergencetodayisthedispersionofgreenbondmaturingofgreentransitionframeworksandcapitalmarkets,issuancebycurrencyacrosseuros(45%),USdollars(26%)andandonoverallimprovementsinpoliticalstability.Experiencehasothercurrencies(29%).118,120Moreover,tolowerdefaultrisk,theshownthatgreenandothersustainablebondscanbeeffectiverisksofgreenbondsaretiedtotheissuer,notthegreenproject.capitalmobilizationtoolswhengrowthandtransitionobjectivesThisincidentallymakesthecredibilityoftheissuercentralalign(Box4).toriskassessments.Thus,politico-economicinstabilitycanBox4.GreenbondsinSouthAfricaHence,inApril2022,SouthAfricareleaseditsowngreentaxonomyinalignmentwiththeEUtaxonomy.123SouthAfricaisoneoftheleadingemergingeconomiesonDevelopmentbanksalsohaveakeyroletoplayinincreasingthegreenbondfrontthankstoitswell-developedfinancialthevolumeofgreenbondsinSouthAfrica.Indeed,thecostmarketswhichseesfrequentbondissuance.Thecountryofgreenbondslargelydependsontheissuer’scredibilitypioneeredgreenbondsamongemergingeconomieswith(andnottheproject’s)124anddevelopmentbankshavestrongafirstissuancein2014ofUS$143milliontohelpfundcleancreditratings.Finally,themajorityofissuanceinemerginginfrastructureprojectsinJohannesburg.CumulativeSouthcountries,andespeciallyinSouthAfrica(with84%share),AfricangreenbondissuancehasgrowntoUS$3billioninisinlocalcurrency.121Thiscancreatecurrencyrisksfor2022,butstilltrailsbehindthatofothercountrieswithlessinternationalinvestorswhothenfacehedgingcosts.Overall,developedfinancialmarketslikeBrazilorthePhilippines122SouthAfricacanovercomebarrierstogreenbondgrowthby(seethefollowingfigure).Thisgapinthevolumeofgreenshoringupitsmacroeconomicstabilityandunleashingtheandsustainability-linkedbondscalledforacertificationpotentialofitsalreadywell-functioningfinancialmarket.schemealignedwithinternationalenvironmentalcriteria.29028525US$billion20151050ChinaIndiaChileBrazilPolandSaudiArabiaPhilippinesThailandSouthAfricaCzechiaTurkeyColombiaQatarUkraineSerbiaBermudaPeruIsraelSource:ClimateBondsInitiative.11828FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionPortfoliodiversificationAhealthy,low-riskgreenPortfoliodiversificationisariskmanagementstrategythattransitionstrategyinvolvesspreadinginvestmentsacrossvariousassetstomitigateshouldencouragetheimpactofeachspecificassetonoverallportfolioperformanceinvestmentsacrossthe(Box5).However,portfoliodiversificationonlyworksifthefullspectrumofthereturnsoftheassetsareeffectivelyuncorrelated.Thisbearseconomyinsteadoftwoimplications.First,optimaldiversificationmeansinvestinginfocusingonaspecificvarioussectorsortechnology125andconversely,investingheavilypartofthevaluechain,ingreenprojectscanincreaseassetscorrelationsandmakeoraspecifictechnology.diversificationlesseffective.Second,duringcrisesormajoreventslikethe2022energypricecrisis,assetcorrelationsrise,whichcandulltheeffectofdiversification.126Knowingtheselimitations,portfoliodiversificationcanstillbesuccessfullyappliedtoreducerisksforgreentransitioninvestors.Asshownpreviously,thegreentransitionwillbethesumofmultiplesimultaneouschangesacrossdifferentsectorsoftheeconomy.Ahealthy,low-riskgreentransitionstrategyshouldthusencourageinvestmentsacrossthefullspectrumoftheeconomyinsteadoffocusingonaspecificpartofthevaluechain,oraspecifictechnology,suchassolarpowerplants.Box5.ProjectriskreductionthankstoportfoliodiversificationCrucially,portfoliodiversificationcanreduceriskexposure,butcannoteliminateitfully(seethefollowingfigure).Allassetsaresubjecttosystematicrisksrelatingtobroadeconomicorgeopoliticalrisksthatcanaffecttheperformanceoftheassetsinthemarket.Awell-diversifiedportfolioshedsspecificriskslinkedtoaproject,industry,orsector,butwillalwaysbeexposedtosystematicrisk.125Toreducethisriskimpliesworkingtowardpoliticalandmarketsecurity,notablytoovercomethebarriersoutlinedinsection3previously.PortfolioriskAsset-speciﬁcriskMarketriskNumberofassetsintheportfolioSource:Illustrativeexamplebasedon2degreesinvestinginitiative.12529FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionBridgingthecostgapbetweengreenandBox6.Casestudy:Impactofgrantsupportonthefossiltechnologieslevelizedcostofelectricity(LCOE)ReducingtheupfrontcostofsustainableassetsTheEUInnovationFund131aimstobringnewlow-carbonTwostrandsofdirectmeasurestoreduceupfrontcostsfortechnologiestocommercialmaturitybyprovidinggrantsgreenprojectsarerelevant:upfrontcostreductionsthroughthatcoverupto60%ofthecapitalcostsofeligibleR&D(costreductionsviainnovation)andinvestmentsubsidies.projects.Toalargeextent,thefundfocusesonaidingThesemeasurescanreduceprojectdevelopmentcostsinthecleanhydrogenprojectsacrosstheirentirevaluechain.shortrun,andtriggersystem-widecostreductionsinthelongThisfundusesCO2quotaauctionrevenuesfromtheEUrun.R&DsupportcanbringdowncoststohelpscaleupemergingEmissionsTradingSystem(EUETS),expectedtorecycletechnologies,easesinvestmentsbymakingnew-technologyuptoUS$21.6billion(€20billion,dependingontheprojectsmorebankableandhelpsbuildupaskilledworkforce.127CO2price)ofCO2quotasintocleantechnologysupportAdditionally,investmentsupportmechanismscanplayakeyroleduringtheperiodfrom2020to2030.GrantsupportslikeinmakingprojectsbankablebytakingonsomeoftheupfronttheInnovationFundcanhelpreducetheaveragecostcosts.Asexplainedinsection3,thiscanbeespeciallyrelevantofsupply(forinstanceLCOEforelectricityproduction)inemergingmarketswherepotentialinvestorsarefinanciallybyloweringinvestmentcosts,butalsofinancingcosts,constrained.Therearemanyfundsthatsupportclean-energyaslesscapitalmustberaised.Thefollowingfigureprojectsbyfinancingapartoftheircapitalexpenditures,whichshowshowsuchasupportcanreducethelevelizedcostultimatelyhelpssomegreenprojectsbridgethecostgapwithofaproject,bothbyreducingtheovernightcosts(thefossiltechnologies(Box6).investmentcostofaproject,assumingitwasdoneinovernight,meaningwithnointerest)directlyandthePenalizingGHG-intensiveassetsfinancingcostsindirectly.ThistypeoffinancialsupportCarbonpricingisanumbrellatermforvariouspolicyschemesthatcanbeeffectiveinemergingeconomies,wherefinancingputapriceonGHGemissionstointernalizetheircosttosocietycostscanbehigh.132,133andincentivizetheirreduction.Thetwomainstrandsofcarbonpricingschemesarecarbontaxes,whichsetafixedpriceonGHG41.8emissions,andcap-and-tradesystems,whichsetafixedquantityofGHGemissionpermitsandletparticipantstradepermits.InUS$/MWh23.2bothcases,GHGemissionsareassignedacost,encouraging24.3participantstoinvestincleanertechnologiesandpracticestocutexpensesor,withcap-and-trade,tosellexcesspermits11.6(Box7).Additionally,publicrevenuefromcarbonpricingcanberedirectedtoclimate-relatedinitiatives.Doingsowouldtransfer11.8revenuesfromfossilassetstotheirgreencounterparts128and5.9couldalsoservetoeasetheimpactoffossiljoborassetclosure(strandedassetsandpeople).Thisisoneofthegoalsofthe‘EU6.96.9EmissionsTradingSystem’(EUETS),whoserevenuesgoinparttothe‘ModernisationFund’whichsupportsthetransitioninpoorerReferenceInvestmentorfossil-dependentEUregions.129Today,mostofthedevelopingcasesupportworldandsomericheconomiesliketheUnitedStateslackacomprehensivenationwidecarbonpricingscheme.130AdegreeofOperatingcostUpfrontcostFinancingcostTotalregionalharmonizationinemerginggreenpolicieswillberequiredtohelpavoideconomicallyharmfulindustrialrelocations.ForSource:DeloitteanalysisofsolarproductioninSouthernAfricaexample,ifMexicotaxesGHGemissionsatUS$100/tCO2eqbutbasedontherenewableendowmentsfromthereanalysisofGuatemaladoesnot,aSouthMexicanindustrialcouldrelocateCopernicus-ERA5hourlysolarPVcapacityfactorsdatabase,134justafewkilometersintoGuatemalaandavoidtaxation.Incurrenttechnologycostsforrenewablesandelectrolyzersfromsummary,carbonpricingservestobridgethegreen-fossilcostIRENA135andIEA136costdatarespectivelyandcountry-specificgapbyincreasingthecostoffossilassetsandpotentiallybycostsofcapitalalignedwithIRENA’slowerandupperboundtransferringfossiltaxationtogreensupport.estimations.135Grantsupportisassumedtoaccountfora50%reductioninupfrontcosts.30FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionBox7.CarbontaxinSwedenBox8.Casestudy:CfDsforenergysupplySwedenpioneeredcarbontaxationgloballybyContractsfordifferencewereintroducedtothepowerintroducinganaboutUS$26/tCO2taxin1991.ThetaxsectorintheUKin2014andhavebeensuccessfulinhassinceincreasedtoexceedUS$130/tCO2andgrownreducingpowerproducers’marketriskexposurebytocover95%ofSwedishGHGemissionsjointlywithkeepingthesalepriceofelectricityconstant.146Likewise,theEUETS.137,138TheSwedishcarbontaxhasbroughtFiTshaveproventheireffectivenessinhelpingtoimportantCO2emissionreductions.139,140However,itsfosterrenewabledevelopmentinEuropeandChina.147overlapwiththeEUETSalsoencouragedindustrialstoHowever,the“reversible”aspectofCfDsmakesthemincreasetheiremissionstocrosstheminimumemissionjustaseffectiveasFiTswhenmarketpricesaretoothresholdtofallundertheEUETS,wherethepricein€/low,butalsobringstaxrevenuewhenmarketpricestCO2wasforalongtimelowerthantheSwedishcarbonarehigh.Thus,CfDscanbeeasierforgovernmentstotax.TheSwedishcarbontaxalsoaffectedindustrialbalanceoutonabudget,makingthemanattractivesectorsthatcompetedinternationallywithfirmsthatoptiontosubsidizecleanenergydeployment.Inthisdidnotfacecarbonpricing,promptingexemptionsandvein,GermanyisstartinganewbillionCarbonCfD(CCfD)taxrebatesfor,asanexample,Swedishsteelmakers.programtocompensatedevelopersfortheextracostsLastly,theSwedishcarbontaxdisproportionatelyoflow-carbontechnologies.148Thisnewschemeplanstoaffectspoorerhouseholds,whotendtospendaaward15-yearcontractsviaanauctionwhereprojectslargershareoftheirbudgetsonfuel.Concernsofwillbidastrikepricein€peravoidedtonofCO2(€/internationalcompetitiveness141andsocialjustice142cantCO2avoided).Thefollowingfigureshowshow(C)CfDsdiscreditcarbonpricingdespiteitsbenefits.Therefore,(workingasoperationalsupport)andcarbonpricingcancarbonpricingmeasuresshouldnotbeintroducedastiltthescalesforthelevelizedcostsofgreenhydrogenstandalonepolicies,especiallyindevelopingcountriesproductioninsouthernEurope.Crucially,CfDsalsowhereafueltaxincreasewouldhitsmallbusinessesandhavedownsides:theydonothedgevolumerisk,theypoorhouseholdshardest.Instead,carbonpricingshouldmobilizeadministrativecapacityandtheirincentivesforbesetuptogetherwithredistributivemeasures,142producerstoreducecostsarenotreinforcedthroughoutandaplanforhelpingthelocalindustryagainstunfairthecontract’slifetime.internationalcompetition.143IntheEU,thisplanhastakentheformoftheCarbonBorderAdjustment5.1Mechanism,144whichputsacarbonpriceonproductsenteringthetradeblock.5Operationalpremiumstoguaranteebreakeven1.8US$/kgH21.8Theprevioussub-section(De-riskingsustainableandgreen43.3projects)presentedoperatingsupportschemesasawayto3reducerevenueriskinordertohelpclean-energyprojectsbreak3.2even.Anincreasinglycommonsolutiontoimprovethebankability2.3ofgreenprojectsis(carbon)contractsfordifference,or(C)CfD.22.32.1Thepartiesofa(C)CfDagreeonastrikeprice,andthesellerpaysthedifferencebetweenthemarketandstrikepriceifthemarket1priceishigherandreceivesthedifferenceifthemarketpriceislower.ThestrikepriceofaCfDisoftendeterminedthrough1.01.00.7auctionswheredevelopersbidastrikepricefortheirprojects,andCfDsareallocatedinascendingorderofbidsuntiltheauction’s0targetisreached.145AsthetechnologysupportedbytheCfDmaturesovertime,eligibilitycriteriacanevolvetotriggercost-1-1.9reductionsviaincreasedcompetition.145A(C)CfDworkslikeaCfD,exceptpricesaremeasuredpertonofavoidedCO2,tohelp-2ProductionProductionfromincentivizedecarbonizedsolutions.Box8discussestheeconomicReferencesupportnaturalgaseffectof(C)CfDsongreenhydrogenprojectsandhowtheydiffercasefromthemoreorthodoxfeed-intariffs(FiTs).OperatingcostUpfrontcostFinancingcostCarbontaxPremiumTotalSource:DeloitteanalysisbasedonthedatausedinBox6.AcarbonpriceofUS$220/tCO2ischosenbasedonShirizadehandQuirion(2021)149thatconcludethatreachingclimateneutralitywouldrequireacarbonpriceofatleast€200/tCO2.ThepremiumisbasedonIRA45V32andaccountsforUS$3/kgH2over10years.31FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionCuttingfossilfuelstheattractivenessofGHG-intensiveactivitieslikecoalpowergenerationbyreducingtheimplicitsubsidiesthattheyreceive.151EndingpublicsupportforfossilassetsInpractice,thiswouldrequirevast,costlyandtime-consumingDespitetheirincompatibilitywithanet-zeroby2050trajectory,fiscalreforms.However,itcouldalsounlockpublicrevenuesfossilfuelsubsidiesaccountedforUS$7trillionin2022,7.1%ofofaroundUS$4.2trilliongloballyandUS$3trillioninemergingglobalGDPin2022,150upfromUS$5.9billionor6.8%ofglobaleconomiesin2025151—numbersclosetotheUS$5trillionofGDPin2020.151Fossilfuelsubsidiescanbeexplicit(directinvestmentsneededtoreachnet-zerointheIRENA’sscenario.12cashflows)orimplicit(taxrebates,etc.).EconomistsexplainthatImplementationremainsakeyproblem,andcompoundedbythefullsocialcostofcarbonconsistsofdirectsubsidiespaidbythecontroversialityoffossilfueltaxes.Fossilinvestmentsarestillthestate,andenvironmentaldamagethatisincurredbysocietyattractiveindevelopingcountries,wherefossilassetdebtissuanceasimplicitsubsidieswhennottaxedbythestate(Figure7).152hasmorethandoubledsince2015.154ThepictureappearstoThismakesimplicitsubsidiesoftenmonetarilylargerthanexplicitbethesameinG20countries,wherefossilfuelsubsidieshavesubsidies,153asmostcountries’fossilfuelpricesdonotfullyreflecthoveredaroundUS$160billiondespitephase-outpromises.155pollutionorclimatechangecosts.151IncorporatingthefullsocialNonetheless,theupsidehereisarecentspreadofnewcarboncostoffossilfuelsintotheirpricecanthereforeeffectivelylowerpricingandgreentaxonomiesmeasuresaroundtheglobe.154Figure7.DecompositionofthefullsocialcostofafossilfuelOtherGlobalwarmingcostsExternalcostsImplicitsubsidiesLocalairpollutioncostsSocialcostsTaxreliefSupplycostsExplicitsubsidiesFinalcostforconsumerIncurredbysocietyIncurredbygovernmentSource:InternationalMonetaryFund15432FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionDealingwithstrandedassetsDealingwithstrandedpeopleInthecontextoftheglobalenergytransition,strandedassetsTheenergysectoraccountedforover65millionjobsin2019.98arefossilassets(infrastructure,resources)thatlose(potentiallyTheIEAestimatesthattheenergytransitionwillcreatemoreall)valueprematurely,i.e.,beforetheendoftheirassetlifetime.jobsthanitwilldestroy.168However,cuttingfossilassetswilllikelyThiscouldbeduetounforeseenchangesinregulation(e.g.,achangetheemploymentlandscape,ascanalreadybeseeninthenewcarbontax),markets(e.g.,EVsbecomecheaperthanICEs),coalsector.Forinstance,intheUS,thenumberofjobsinthecoalsocialnorms(e.g.,lessairtravel),availabletechnologies,financialsectordecreasedby57%between2011and2021,impactingmorecontext,orduetophysicalexpositiontoclimatechange.156,157than50,000workers.169WhilecoalworkerswillbethefirstonesStrandedassetsarealiability,andakeychallengeistodecidehitbythetransition,othersectorscanexpecttobeimpactedwhowillbearit.Managingstrandingassetsthusentailsidentifyinginthecomingyears,likeoilandgasandsomeheavyindustries.strandedassets,asbanksdoviaclimatestresstests(seeBoxThismakesjobtransformationandretrainingstrategies9)andchoosingwhoshouldbearthelosses.Inthatregard,paramount.SouthAfrica’sJETIP170includesanationwidestrategygovernmentcanchoosetofully,partially,ornotcompensatefortoanticipateandcoordinatethechangeinemploymentneedsstrandedassetslosses.158However,unplannedstrandingcouldforajusttransition.Thisplanemphasizesthecreationofajobhurttheeconomyduetothevalueoffossilassets.159TheWorldmarketplatformforcoal,renewableenergy,electricvehiclesBankestimatesthatunplannedstrandingcouldcost30%ofglobalandhydrogensectors,tomaptheskillsupplyinrelationtoGDP.160Asexplainedinsection3.3themainriskwithstrandedcurrentandfuturedemand.TheJETIPplanaimstounlockassetscomesfromthecostofinaction.DelayingstrandedaroundUS$140milliontodeveloptherequiredskillsfrom2023assetmanagementuntilafterstrandingoccursonlymakestheto2027.Furthermore,theimperativetofosternewskillsandjobcostgoup.161Governmentscanthuspreventivelycushiontheopportunitiespresentsachancetopromoteinclusivity.InChile,budgetaryimpactofassetsatriskofstranding,asisthecasein,theEnergíamásMujerinitiativewasimplementedtoinclude5,000e.g.,IndonesiaviatheClimateInvestmentFundsAcceleratingCoalmorewomenintheenergysectorby2030,171astheyonlymakeTransition.162Germany’scoalexitplanalsoincludesaprecisecoalup23%ofthesector’sworkforce.172Finally,inGermany,thecoalpowerplantshutdownscheduleandmorethanUS$4.5billionexitplancontainsamorethanUS$5billion(€5billion)payment(€4.35billion)packagetohelpcompensatecoalplantoperatorsplanuntil2048forolderligniteandcoalminersandpowerplantfortheirlosses.163workerswholosetheirjobs.163Box9.2022climateriskstresstestoftheECBIn2022,theEuropeanCentralBankcarriedoutaclimateriskstresstest(CST)164aspartofitsnewstrategicprioritiesfor2023to2025.165Therisksanalyzedincludedphysicalrisks,i.e.,therisksrelatedtoclimateeventslikewildfiresandfloods,andtransitionrisks,i.e.,therisksassociatedwithstrandingfossilassetsamidstthegreentransition.166TheCentralBank’sCSTassessesEuropeanbanks’physicalandtransitionrisksaswellasprogressontheirownCSTframework.ThisCSTfoundthataround60%ofbanksdidnothavetheirownwell-functioningCST,eventhough60%ofnon-financialcorporateinterestincomecamefromhigh-emittingindustries.164Inotherwords,theEuropeanbankingsectorishighlyexposedtotransitionrisksandill-preparedtomanagethem.TheCentralBank’sCSTalsofoundthatlossesarehigherinscenariosofdisorderlyfossilfuelcuts.Thismeansthatbankshaveastrongeconomicincentivetoproactivelyimplementlong-termgreeninvestmentplans.16733FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.Fosteringinvestmentsinthegreentransition4.2.FocusondevelopingeconomiesGreenandsustainabletechnologiesareoftenmoreonlyaccesstoinvestments,butalsoaccesstoaffordablefinancecapital-intensivethantheirconventionalcounterpartsarethekeyenablersforgreenandsustainableprojects,especially(section2.2),thereforefinancingcostsandconditionsbearforthoselocatedindevelopingmarketswithhighpoliticalrisks.considerableweightingreenprojectinvestmentdecisions.Developingcountriesoftenfacehigherofftaker,marketliquidity,Forinstance,producinggreenhydrogenimpliesbuildingcurrencyandinflationrisks.112Theseareallfactorsimpactingprojects’renewablepowerplants,installingelectrolyzersandsettingupfinancingcosts,makingcapital-intensiveenergytransitionprojectselectricitysupply.Assuch,developinggreenhydrogenmeansdisproportionatelyexpensive.Whiledevelopingregionsoftenincurringvastinvestmentcosts,i.e.,raisinglargesumsofdebthavebetterrenewableendowments,theyalsofacehighercapitalandequity.Thismakestheavailabilityofliquiditycrucialwhencosts,leadingtohigheroverallproductioncosts(Box10).112Thus,developinggreenhydrogen.Illiquidmarketsraisefinancingcosts,makinggreenprojectsbankableandattractinginvestmentsismorewhichdamagestheeconomicprospectsofcapital-intensivegreenchallengingindevelopingeconomies.Furthermore,asdevelopinghydrogen.Akeydriveroffinancingcostsistherisksassociatedcountriesoftenoperateontighterstatebudgets,10bringinginwiththelocalpoliticalenvironmentandlegalframeworks,132whichmultilateraldevelopmentbanks(MDBs)anddevelopmentfinancecanoffsettheproductivityadvantageofsomeoftheworld’sinstitutions(DFIs)couldmarkedlyfacilitateinvestments.Therefore,twobestlocationsforrenewables.Privatecapitalprovidersexpectkeychallengesareattractinginvestmentsandaccessingconcessionalhigherreturnstocompensateforgreaterrisk.Thistranslatesintofinance(lowcostofcapital).Developinglocalcapitalmarketsandahigherweightedaveragecostofcapital(WACC),raisingoverallworkingwithfacilitatorslikeMDBsandDFIscanbeakeyenablerofprojectcostsbyincreasingtheirfinancingcomponents.Thus,notprivatecapitalmobilizationandofcostofcapitalreductions.Box10.Casestudy:Impactofthecostofcapitalonthe5.25.1levelizedcostofgreenhydrogenproductioninSouthernEurope(developedeconomies)and5SouthernAfrica(developingeconomies)SolarirradiationinSouthernAfricacanbetwiceas3.81.8highasinthesunniestpartsofSouthernEurope.173Therefore,thecostofgreenhydrogenproductionis42.7expectedtobelowerasthesamesolarPV-to-hydrogensystemproducesmorehydrogeninSouthernAfrica1.3thaninSouthernEurope.Nevertheless,incurrent3financingconditions,greenhydrogenmadeinSouthernUS$/kgH2Africaisslightlycostlierthantheoneproducedin2.3SouthernEurope(seethefollowingfigure).Thisisdue2tothehighercostofcapitalinSouthernAfrica.Whilefinancingcostsrepresent35%oftheLCOHinSouthern1.71.7Europe,theyadduptoalmost50%oftheLCOHinSouthernAfrica.Thisappliestootherenergyproducts1inotherdevelopingregions:a2023IEAreportfindsthatfinancingcostsaddupto50%oftheLCOEofsolar0.80.81.0powerindevelopingcountries,butonly25%-30%inadvancedeconomiesandChina.91Inthisexample,06%WACC6%WACCloweringtheSouthernAfricancostofcapitalto6%(its11%WACCSouthernEuropecurrentlevelsinEurope)reducesLCOHby26%,enoughtomakeSouthernAfricangreenhydrogen25%cheaperSouthernAfricathanitsSouthernEurope-madeequivalent.Hence,improvingfinancingconditionsandtherebyreducingOperatingcostUpfrontcostFinancingcostTotalthecostofcapitalisaneffectivewaytoencouragegreeninvestmentsindevelopingcountries.Source:DeloitteanalysisbasedontherenewableendowmentsfromthereanalysisofCopernicus-ERA5hourlysolarPVcapacityfactorsdatabase,134currenttechnologycostsforrenewablesandelectrolyzersfromIRENA135andIEA136costdatarespectivelyandcountry-specificcostsofcapitalalignedwithIRENA’slowerandupperboundestimations.13534FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionAftertheadoptionoftheAddisAbabaActionAgenda174in2015,theunder-mobilizationofprivatecapital.ThisiswhereinitiativesthefocuspivotedtomobilizingprivatecapitaltomakethejumpliketheH2Globalhydrogenauctionplatform(Box11)andsubsidyfrom“billionstotrillions”indevelopmentfinanceinvestments.schemeareneeded.H2GlobalreducesofftakerisksontheBlendedfinancecouldguidethisleap,buta2023G20studyfoundsupplysidewithlong-termcontracts,andtransitionrisksonthethatitscurrentprivatecapitalmobilizationratiowas0.6privatedemandsidewithshort-termcontracts.Furthermore,growingUS$investedforeachUS$lentbyMDBs.175Anotherstudyfoundpleas175,179toinitiatetheshiftfrom“originatetohold”to“originatethat,oftheUS$4.1ofcommercialcapitalraisedforeachUS$1toshareorsell”180modelscanbeobserved.Finally,standardizingofconcessionalcapital,onlyUS$1.8camefromprivatecapitalDFIassetscouldeasetheirpooling,allowingDFIswithdifferentproviders.176Thus,becauseblendedfinanceseemstoattractriskpreferencestoworktogether.179Overall,makingmoregreenmoreDFIcapitalthanprivatecapital,177itisoftenperceivedasprojectsbankable,initiatingtheshiftto“originatetoshareorsell”“alltalkandlittleaction”today.178Thelackofbankableprojects,businessmodelandenablingDFIassetstandardizationcanhelpespeciallyinlowerincomecountries(LICs),isanothercauseofmaximizeprivatecapitalmobilization.Box11.FocusonH2GlobalH2GlobalisafacilitatingplatformforSeller10-yeargreenhydrogenimportstoGermany.pricecontractItisatwo-sidedauctionsystemwhichactsasabuffer,match-makerandBuyerH2Globalcost-bridgerbetweensupplyandpricepricedemandsides.Todoso,itestablishesaphysicalintermediary,theHydrogencompensationIntermediaryCompany(Hintco).Onthesupplyside,itallocateslong-1-yeartermcontractsthroughacompetitivecontractbiddingprocesstolowerthepurchaseBuyerCprice.Onthedemandside,H2GlobalBuyerBissuesshort-termsalescontractstoBuyerAthehighestbidder.Then,GermanSellerAgovernmentfundsthegapbetweenSellerBsellers’productioncostsandbuyers’SellerCwillingnesstopayforgreenhydrogen.H2Globallauncheditsfirstauctionforgreenammonia,methanolande-fuelimportsinDecember2022.TheresultswerenotmadepublicbutencouragedtheEUtograduallyincorporateH2GlobalattheEU-level.181Source:DeloitteillustrationbasedonH2GlobalStiftung18135FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.Fosteringinvestmentsinthegreentransition4.3.InvestmentIntheabsenceofconcessionalfinanceindevelopingeconomies,implicationssuchatransitionscenariowouldrequirenearlyUS$200trillionthrough2050(aboutUS$7trillion/yearonaverage)consideringTheIEA’snet-zeropathway44isthechosenenergytransitioncleanenergy,feedstock,end-usetechnologiesandefficiencyscenariothatcoverscoveringboththeentireenergy-measures.Theinvestmentrequirementsamountto5.7%ofindustrynexusandtheuseofenergycommoditiesasglobalGDPin2030and3%ofitin2050.Thelion’sshareoffeedstockinindustriesandtransport.investmentsthrough2050goestoelectricityproductionandefficiencymeasuresandend-usetechnologyexpenditures(43%Thisscenarioalsodepictstheprofoundtransitionofourglobaleach).Oftheseinvestments,about70%shouldtakeplaceinlow-economiesfromthefossilfuel-centricmodeltoanewenergyandmiddle-incomeeconomies.Reducingthecostofcapitalcansystemlargelybasedonrenewablesandelectrification.Globalsignificantlyenhancetheabilityofdevelopingcountriestokeepprimaryenergysupplyinthisscenariofallsfromcurrentlevelsthetrackofthetransition.of620EJtoabout530EJby2050(Figure8.a).Theshareofrenewablesinprimaryenergysupplyincreasesfrom12%inReducingthecostofcapitalcanbothfacilitatetheflowofprivate2021to70%by2050.Windandsolarpowerarethedriverscapitaltowardthetransitionandreduceitscost.Incaseofsimilaroftheenergytransition,togetherrepresenting40%ofthefinancialconditionsindevelopinganddevelopedcountries,theprimaryenergysupplyby2050.Ontheconsumptionside,transitioncostcouldfallbymorethan25%,reachingaboutUS$5.5globalfinalenergydemandfallsbymorethan100EJinlessthantrillion/year(Figure9).Accessingsuchlevelsoflow-costfinance30years,reaching337EJ,thankstoefficiencyimprovements,wouldrequirethehelpofconcessionalfinanceenablers.Activeconsumer-sideeffortsandshifttomoreefficientelectricend-involvementofDFIs,internationalstandardization,increaseddebtuseappliances(Figure8.b).Infact,electricityrepresents52%oftoequityratio(vianotablysubordinatedloansandmezzaninefinalenergydemand,becomingthekeyend-useenergycarrierinstruments)andinnovativeguaranteemechanisms(suchasfirst-(vs.20%in2021).Theshareofoil,naturalgasandcoalinfinallosstranches)canreduceinvestorriskssignificantlyandreduceenergyconsumptionexperiencesasteepdeclinefromaboutthecostofbothequityanddebt.Ontopofclear-cutreductiontwo-thirdsin2021tolessthanone-fifthin2050.Hydrogenandoffinancingcostsdirectly,thesetoolscouldalsofacilitatehydrogen-basedmoleculesrepresentalmost10%offinalenergyinvestmentsintogreenprojectsindevelopingeconomies,consumptionby2050,partiallyreplacingfossilcommodities.improvingtheaccessoftheseregionstocapitalwhichwouldalsointurnreduceprojectrisks.Figure8.Globalprimaryandfinalenergymixalignedwithnet-zerothrough2050a)PrimaryEnergysupplyb)Finalenergydemand600600400400EJEJ2002000203020402050020302040205020212021HydrogenWindenergySolarEnergyHydroelectricityNuclearenergyElectricityBiogasBiofuelSolidbioenergyOtherBioenergiesOtherrenewablesAmmoniaOilNaturalgasCoalNaturalgasOilCoalHeatTraditionalbiomassSource:DeloitteanalysisbasedonInternationalEnergyAgency’snet-zeroemissionpathway4436FinancingtheGreenEnergyTransition:AUS$50trillioncatch4.FosteringinvestmentsinthegreentransitionFigure9.AverageannualinvestmentsinadvancedandElectrificationimpliesasignificantshiftinanimportantproportiondevelopingeconomiesthroughtheperiodtoofendusesinallsectors.Thisleadstoanimportanttechnological2050withandwithoutenablingconcessionalshiftintheend-usetechnologies(shifttoelectricvehicles,financeindevelopingcountriesheatingpumps,industrialprocesses,etc.)andincreaseintheshareofelectricityinthefinalenergyconsumption.Therefore,7.3investmentsinend-usetechnologies(includingefficiencymeasures)andcleanelectricityproductionmakeupthelargest2.45.5sharesofallinvestments—togetheraccountingforabout80%ofallinvestmentsbothinadvancedanddevelopingeconomies.Averageannualinvestments2.4Productionofcleanfuelssuchashydrogenandsyntheticfuels(US$trillion/year)capturesthesmallestpartintheinvestmentneeds,accountingfor4.9about4%oftheinvestmentneeds.3.1Theneededinvestmentsarehuge,andthefinancingcostsCurrentﬁnanceConcessionalﬁnancecanmorethandoubletheneededfunds.ForarealovernightindevelopingeconomiescostlevelofaboutUS$100trillionwithnofinancingcosts,thecurrentcostsofequityanddebt,withthecurrentratiosbetweenDevelopingeconomiesAdvancedeconomiesTotalthem183wouldalmostdoubletheneededfundsforcleanenergySource:Deloitteanalysis182investments.Blendedfinanceisthetooldesignedtohelpreducethesefinancingcosts.Currently,US$1ofconcessionalcapitalcanmobilizeoverUS$4ofcommercialcapital(leverageratio),includingnearlyUS$2fromprivateinvestors(privatecapitalmobilizationratio).177Moreover,privatecapitalmobilizationratiosalsoseemtoincreasewithinvestmentvaluation.177Largerprojectsthereforemayneedlesssubsidization.Thisconfirmsthatblendedfinancecanbeanappropriatetoolforfundinglarge-scaleenergyinfrastructureprojects.Poolingsubsidizedandcommercialcapitaltogethercanhelpfighthighfinancingcostsindevelopingregionstoenablethegrowthofaglobalnet-zero-compatibleeconomy.Figure10.Totalcumulativeinvestmentsthroughtheperiodto2050inthenet-zeropathwayinadvancedanddevelopedeconomiesbyinvestmentcategory,inUS$trilliona)Advancedeconomiesb)Developingeconomies173933734016437EﬃciencyandendusesInfrastructureCleanfuelsCleanelectricitySource:Deloitteanalysis182FinancingtheGreenEnergyTransition:AUS$50trillioncatch5.Acallforaction5.Acallforaction38FinancingtheGreenEnergyTransition:AUS$50trillioncatch5.AcallforactionCurrently,greenprojectsstilllackbankability,andinvestmentspressureonthecostofcapital.Section4identifiesanddetails(includingplannedones)arefarfromtherequiredlevels.Morethefinancialinstrumentstoimprovethebankabilityofgreenprecisely,projectssufferfromhighinvestmentcosts,missingandsustainableprojects,groupingthemintothreekeyactionfinancialincentives,uncertainreturnsoninvestment,lackofskilledlevers:de-riskinggreenprojects,bridgingthecostgapbetweenworkforce,significantmarket,politicalandtechnologicalrisks,lackgreenandfossiltechnologiesandcuttingfossilfuels.Figure11ofdataandmetricsandlimitedaccesstotherequiredfundings.Insummarizestheseinstrumentsandtheirimpactlevers,aswellasdevelopingeconomies,accesstofundingisevenmorechallengingtheirgeographicalandtechnologicalcomprehensiveness.andpoliticalriskstendtobegreater,puttingevenmoreupwardFigure11.FinancialtoolstofosterinvestmentsingreenandsustainableprojectsToolsandInstrumentsHowdoesitworkParameterinfluencedEffectivenessReducepoliticalrisksTechnologyRegionalGreenConv.LICsMICsHICsImplementSetclimateProvidesmarkettransparencypolicystrategiesandregulatoryclarityframeworksLossProtecttheinvestorsReducetheriskofdefaultreservesagainstlossesGuaranteemechanismMarketcreationFacilitateaccesstoanReducerevenueriskexchangemarketDe-riskingOfftakecontractsGuaranteeasellpricefortheReducerevenuerisksustainableand(PPA,CfD,FiT…)producergreenprojectsDevelopadomesticIncreaseconfidence,LowerborrowingcostsfinancialmarketinformationtransparencyLowerborrowingcosts,Bonds(green,blue,Categorizetheend-usegivestransparencysustainability-linked)ofbondsPortfolioapproachDiversifyinvestmentsReduceportfolioriskUpfrontcostR&DsupportActivatetheFinancialReduceinvestmentcostsandreductionexperiencesupportfinancingcostscurveMakefossilalternativemoreexpensiveBridgingtheCarbonpricingPutapriceoncostgapGHGemissionsOperationalpremiumsIncreasetherevenuelinkedtoMakecleanenergy(CfD,taxreduction)thesaleoftheproducttechnologiesmoreprofitableReducingtheEndingpublicsupportStopdirectsociallyuntargetedMakefossilalternativemoreuseoffossilfuelsforfossilassetssupporttofossilfuelsexpensiveCompensateforstrandedassetsCompensatetheEasetheeconomicunanticipateddevaluationimpactonthesocietyDoClimatestresstestoffossilassetsAvoidunanticipatedlossesSupportjobtransformationandallowdevaluationAssesstheexposureofmanagementportfoliototransitionriskProvideskilllaborfortheImplementtrainingprogramstransitionandsocialbenefitandjobreallocationSource:Deloitteanalysis.Thissectionprovidesinstrumentstofacilitatetransitionfromafossil-intensiveenergysystemtoacleanenergysystem.ForLICs,mostofthedevelopmentoftheenergysystemhasnotalreadyoccurredandtheyhavetheopportunitytodeveloptheirenergysystemdirectlyusingcleantechnologieswithoutdevelopingfossilfueldependency.Inotherwords,theycan“leapfrogdirectlyintoagreenerfuture”,asWernerHoyer,EIBPresidentsaid.18439FinancingtheGreenEnergyTransition:AUS$50trillioncatch5.AcallforactionAchievingclimategoalsisaformidablechallenge.Decisiveandcoordinatedpolicysupport,andcollectiveactionfrominvestorsandpolicymakersareparamounttoguideinvestmentstowardgreenandsustainableprojects.Theenergytransitionmustcommencethroughouttheglobetoday,butitwillcostunfathomablesumsofmoney,requiringprivatecapitalwhichislargelydeterredbytherisksofinvestingingreenprojects.Thesolutionsarehere,nowistheHowever,theenergytransitionwillCurrently,privatecapitalproviderstimetoimplementthem.Researchcosttoomuchforgovernmentstoaredeterredfrominvestingintheandfieldworkhaveclearlyidentifiedafforditalone;privatecapitalshouldgreentransitionbecauseitisriskiertechnologicalsolutionstodecarbonizealsobemobilized.Thequestsforthanalternativeinvestments.Thelackeachsectorofourglobaleconomy.Thoseeconomicgrowthandclimateneutralityofclearregulation,transparencyandsolutions,i.e.,renewables,cleanelectricity,convergeinaimingtomakegreengeneralcertaintyontheviabilityofandgreenhydrogen,arehighly-capitalinvestmentseconomicallyviable.Thisgreenmarketsismakingprivatecapitalintensiveandfacemanyinvestmentalignmentwillforgethepathofajust,providersthinktwiceaboutinvestinginbarriers.Nowisthetimetoarticulatecost-efficientandsuccessfultransition.greenprojects.TheircontributionwilleffectiveimplementationstrategiestoGovernmentsandespeciallydevelopinghoweverbepivotaltoachievenetzerosupportthegrowthofgreeneconomies.countriescannotsingle-handedlyfundby2050.therequiredseveraltrillionUS$peryearofrequiredinvestments.Privatecapitalprovidersmustbemobilized.Therefore,ourglobalinstitutionsmustprioritizetwosimultaneousactions:First,governmentsandregulatorsshouldreducetherisksSecond,concessionalcapitalprovidersmustmaximizethethatthreatenthebankabilityofgreenandsustainablepotentialofblendedfinancetomobilizeprivatecapital.investments.Allunderlyingrisks,fromunreliableoff-taketoUndertoday’srates,reachingnetzeroby2050willcostoverunstablemacroeconomics,raisefinancingcosts.De-riskingtheUS$7trillion/year.Concessionalfinanceviainnovativefinancinginvestmentlandscapewillunlockthelow-costcapitalthatcanstructurescanreducethecostofthetransitionbynearly40%formakethecostlyandcapital-intensiveenergytransitionmoredevelopingcountries,loweringglobalinvestmentneedstoUS$5.5affordable.Overall,governmentswillbepivotalinmakingmoretrillion/year.greenprojectsbankable.Onthisjourney,policymakerswillneedtobalancelocalconstraintswithglobalgreenpolicytrends:Atthemicro-level,thetoolstoreachnet-zeromustbeAtthemacro-level,greenpolicyguidelinesandframeworksadaptedtotheirlocalsetting.Experiencehasshownthatmustbeharmonizedglobally.Theglobaltransitiontoframeworksshouldbetailoredtospecificgeographiesandnetzeroshouldbemorethanthesumofindividualnationaltechnologies.Thereisnoone-size-fits-allsolution,andthecontributions.Itsachievementwilltakeunprecedentedlevelstransitionneedstobemulti-solution,oritwillfailtotakeoff.ofinternationalcooperation.Thiscallsforthedevelopmentandglobalharmonizationofstandardsforgreenpolicies,technologiesandfinancialinstruments.Dissonantframeworkscancreateunaffordableinefficiencies.40InvestorsandlendersshouldbereadytofaceThestruggletofosterthechallengeahead:sustainableinvestmentsisapressingchallengetoSocietiesandcapitalprovidersshoulddealwithhugeremedyandthefindingsupfrontinvestmentstoday,reapingthebenefitslater.ofthisstudysuggestThetransitionisanunprecedentedfinancingchallenge,butthethatthereisaneedforcostofinactionishigherthantheburdenofasmooth,plannedallactorsoftheprojecttransitioninitiatedtoday.ThegreentransitioncanincreasethefinanceenvironmentworldeconomybyUS$43trillionbetween2021and2070.185tomutualizetheirkeyRequiredinvestmentlevelsremainbelow6%ofglobalGDPlearningsfromyearsofannually,however,acurrentpolicypathway(alignedwith+3°Cexperienceinthefield.ofglobalwarming)wouldentailalmost8%ofglobalGDPlossbyThisreport’sfindings2070.Delayingthestartofthetransitionwillonlymaketheriseofcallforpoolingpracticalgreenandfalloffossilmorechallengingandcostly.knowledgeongreenfinanceandthecreationMorethanever,investorsshouldchannelgreenfundsofnewfinanceecosystemtodevelopingeconomies.Currently,lessthanhalfofgreenmodelstohelplaytheinvestmentstakeplaceindevelopingcountries.ExcludingChina,foundationsforaglobalwhichaccountsforone-thirdofgreeninvestments,thefiguresustainablegreenfinanceshrinksto16%.40Toreachclimategoals,some70%ofthegreenenvironmentalignedwithinvestmentsneedtohappenindevelopingcountriesby2030.climateambitions.ThiscanbepossiblethroughactiveparticipationofDFI/MDBsandinternationalcooperation.41FinancingtheGreenEnergyTransition:AUS$50trillioncatchAppendicesAppendicesAppendix1.CalculationoflevelizedcostofelectricityandhydrogenElectricitygenerationiscalculatedusingyearlywindspeedandsolarirradiationtimeseriesfromtheCopernicus-ERA5dataset.134Fixedground-mountedPVsystemswithoptimizedtiltangleswereconsideredtorepresentsolarpowerplantsinthemodeltocomputetheirannualaverageyieldsintheconsideredcells.Inthecaseofhydrogenproduction,theoutputiscalculatedwithaPythonscripttogettheoptimalelectrolyzercapacityoverPVcapacityratioandannualgreenhydrogenproductionperunitinstalledelectrolyzercapacity.Figure12summarizesthekeytechno-economicparametersconsideredinthecalculationofthecostofhydrogenproductionviaelectrolyzersandsteamreformationofnaturalgas.Figure12.Techno-economicparametersofhydrogenproductiontechnologiesTechnologyEfficiencyLifetimeOvernightcostVariableO&McostsFixedO&McostSolarPV100%25649US$/MWe0US$/MWhe14US$/MWheAlkalineelectrolyzers62.50%20793US$/MWe0.53US$/MWhe11.9US$/MWhe𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑙𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)=𝑡𝑡=1𝑙𝑙𝑡𝑡Steammethane∑𝑂𝑂𝑂𝑙𝑡𝑙𝑡𝑂𝑡=𝑡𝑂𝑂1𝑋𝑋𝑂𝑓𝑂𝑓𝑂𝑓𝑂𝑓𝑓𝑂𝑓𝑂𝑓𝑋𝑓𝑓𝑋𝑓𝑓,𝑓𝑡𝑓𝑡𝑓0𝑓+(𝑓𝑓.1𝑂𝑓0𝑂𝑓+𝑓𝑂8,𝑂𝑊𝑡𝑂𝑡𝑊𝑂+U𝑋𝑊𝑋𝑂𝑊S𝑣𝑂𝑊𝑣𝑂𝑊𝑣$𝐶𝑂𝑣𝐶𝑂𝑣/𝑡𝑂𝑣𝑡G𝑋,)𝑡𝑋𝑡𝑡×𝑡𝑣J𝑣𝑣𝐸𝑣𝐸𝑣𝑡𝑣𝑡,𝑡𝑡×𝐸𝐸𝑡𝑡∑𝑡𝑡=1(1+𝑊𝑊reformers90%20869US𝐶𝐶$𝐶𝐶/𝐶k𝐶𝐶W𝐶𝐶𝐶H+240.8US$/kWH2𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)𝐶𝐶𝐶=𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑙𝑡𝑡Source:Owncalculations,basedonIEA(2019),186B𝐿o𝐿𝐿la𝐿t𝐿𝐿a(n𝐻d𝐻Th𝑜𝑜ie𝑜𝑜l(𝐸2𝐸0)14=),187Hydrogen4𝑡𝑡E=U1𝑙𝑙(𝑡𝑡20𝐶∑2𝐶𝐶2𝑙𝑡𝑙𝑡𝐶𝑡=)𝑡𝐶,𝐶118𝐶𝐸((8𝐶𝐸11𝐶I𝑡𝐶𝑡R+++E𝑊𝑊N𝑊𝑊∑𝐸𝑊𝑊𝐸A𝑊𝑊𝑡𝑙𝑡𝑡𝑙𝑊𝑡𝑊𝑡=𝑊𝑊𝑡(𝐶𝐶2𝐶1𝐶𝑡𝑡0𝑡𝑡𝑂))𝑂2𝑡𝑡𝑂𝑡𝑡2𝑂𝑂)𝑂1𝑋3𝑋5𝑓𝑓𝑓𝑓𝑓(𝑓𝑓1𝑓𝑓+𝑓,𝑊𝑡𝑡𝑊+𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝐶𝑂𝐶𝑂𝑂𝑋)𝑋𝑡𝑡𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)=∑𝑡𝑡=1(1+𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑙𝑙𝑡𝑡𝑡𝑡)𝑡𝑡𝑂∑𝑂𝑂𝑙𝑂𝑙𝑡𝑂𝑡𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝐸𝑓𝐸,𝑡𝑡𝑡𝑡+𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑡𝑣𝑡𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑡𝑡=1𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑡𝑡=1(1+(1𝑊𝑊+𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝑊𝐶𝑊𝑡𝑡𝑊)𝐶𝑡𝐶𝑡𝑡𝑡)𝑡𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑙𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)=Thelevelizedcostofhydrogen(LCOH)andthelevelizedcostofelectricity(LCOE)can𝐿b𝐿𝐿e𝐿𝐿c∑𝐿a(𝑙𝑡l𝑙𝑡𝑡c𝐻=𝑡u𝐻1l(𝑜a1𝑜t+𝑜e𝑜𝑊d𝑊𝐸𝐸𝑊𝐸𝐸𝑊a𝑡𝑡)𝑊𝑊s𝐶𝐶=i𝑡𝑡n)𝑡𝑡Eq.𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋1:𝑡𝑡𝑓=𝑓𝑓1𝑓𝑙𝑓𝑙𝑓𝑡𝑡𝑓𝑓𝑓𝑓,𝑡𝐶𝑡𝐶𝐶𝐶𝐶𝐸(𝐶𝐸1𝐶𝑡𝑡𝐶+𝐶𝑊𝐶+𝑊𝑊𝑊∑𝑊𝑊𝐶𝑙𝑡𝑙𝑡𝐶𝑡=𝑡𝑡𝑡)1𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝐶𝐶𝐶𝐶𝐶+𝐶𝐶𝑂𝑂𝐶𝑂𝐶𝑂𝑂𝐶𝑂𝑋𝑋×𝐸𝐸𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)=∑𝑡𝑡=1(1+𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡(1+𝑊𝑊𝑊𝑊𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)=𝐶𝐶𝐶𝐶𝐶𝐶𝑙𝑙𝐶𝑡𝑡𝐶𝐶𝐶𝑂+𝑂𝑂𝑂∑𝑂𝑂𝑋𝑙𝑡𝑙𝑡𝑋𝑡=𝑡𝑓𝑓1𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝐶,𝐶𝑡𝑡𝐶+𝑓𝐶𝑓𝑂𝐶𝑓𝑂𝑓𝑓𝑂𝑂𝐶(𝑓𝑂𝑓1𝐶𝑂𝑂𝑓𝑂𝑓𝐶𝑂+𝑋𝑓𝐶𝑂,𝑋𝑊𝑡𝐶𝑣𝑂𝑡𝑊𝑣𝑂𝑣𝑊𝑣𝑊𝑋𝑣𝑣𝑊𝑋,𝑊𝑡𝐶𝑡𝐶×𝑡𝑡𝐸)𝐸𝑡𝑡𝑡𝑣𝑡𝑣𝐶𝑣𝑣𝐶𝑣𝑣𝐶,𝑡𝐶𝑡𝐶𝐶𝐶𝑡𝑡𝐶𝐶𝐶𝑡𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑡𝑡=1𝐸𝐸𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡∑𝑙𝑡𝑙𝑡𝑡=𝑡1(1+𝑊𝑊𝐸𝑊𝐸𝑊𝑡𝑡𝑊𝑊𝐶𝐶)∑𝑙𝑡𝑙𝑡(𝑡=𝑡11+𝑂(𝑊1𝑂𝑊𝑂+𝑊𝑂𝑊𝑊𝑂𝑊𝑊𝑊𝑂𝐶𝑊𝐶𝑋𝑊𝑡𝑡𝑡𝑊𝑡𝑋𝑊)𝑓𝐶𝑡𝑓𝐶𝑡𝑓𝑡𝑓𝑡𝑓)𝑓𝑡𝑓𝑡𝑓𝑓𝑓,𝑡𝑡𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿(𝐻𝐻𝑜𝑜𝑜𝑜𝐸𝐸)=∑𝑙𝑡𝑙𝑡𝑡=𝑡1(1+𝑊𝑊𝐸𝑊𝐸𝑊𝑡𝑡𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡𝑡𝑡𝐶𝐶𝐶𝑂𝐶𝑂𝐶𝑂𝐶𝑂𝐶𝑂𝐶𝑂𝐶𝑋𝐶𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡(Eq.1)𝑡𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑂𝑣𝑂𝑣,𝑂𝑡𝑡𝑡𝑡𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡Where𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶istheovernightcosts(inve𝑂s𝑂t𝑂m𝑂𝑂e𝑂n𝑋𝑋tsatthebeginningoftheproject),𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡is𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐸𝐶𝐸𝐶𝑡𝐶𝑡𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡thefixedoc𝐶o𝐶p𝐶se𝐶t𝐶r𝐶tah𝐶t𝐶ia𝑂o𝐶t𝑂𝐶n𝑂d𝑂ae𝑂n𝑂p𝑋de𝑋𝑓nm𝑓𝑓d𝑓𝑓a𝑓s𝑓i𝑓no𝑓𝑓tn,e𝑡𝑡nthaencecost(inannualbasi𝐸s𝐸)𝑡𝑡inyear𝑡𝑡,𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡isthevariableoperationandm𝑂𝑂a𝑂𝑂in𝑂t𝑂e𝑋𝑊n𝑋𝑓𝑊𝑓a𝑓𝑊𝑓n𝑓𝑊𝑓c𝑓𝑊𝑓e𝑊𝑓𝑓𝑊,𝑊𝑡𝑡productionlevel,ion𝑡𝑡𝐸𝐸istheannualhydrogenproductout𝑡𝑡putinthecalculationofLCOHLCOE,is𝑂𝑂t𝑂h𝐸𝑂𝐸e𝑂𝑡𝑡𝑂w𝑋𝑋e𝑣𝑣ig𝑣𝑣h𝑣𝑣t,𝑡e𝑡da𝑂𝑂n𝑂d𝑂𝑂t𝑂h𝑋e𝑋𝑓𝑓a𝑓𝑓𝑓n𝑓𝑓n𝑓𝑓u𝑓,a𝑡𝑡lelectricityproductionfor𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊averagecostofcapitalinyear𝑡𝑡and𝑙𝑙𝑙𝑙isthelifet𝑡i𝑡meoftheproductionfacility.𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡𝑙𝑙𝑙𝑙𝐸𝐸𝑡𝑡𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝐸𝐸𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡𝑙𝑙𝑙𝑙𝑊𝑊𝑙𝑙𝑊𝑙𝑊𝑙𝑊𝑊𝑊𝑊𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑡𝑙𝑡𝑡=𝑡1𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂(𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝐸𝑣𝐸𝑣𝑡𝑣𝑡𝑣𝑣𝑣,𝑡𝑡𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝐸𝐸𝑡𝑡𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+𝐶𝐶∑𝐶𝐶𝐶𝑙𝑙𝐶𝑡𝑡+∑𝑂𝑂𝑂𝑙𝑡𝑙𝑡𝑂𝑡=𝑡𝑂𝑂1𝑋𝑋𝑂𝑓𝑂𝑓𝑂𝑓𝑂𝑓𝑓𝑂𝑓𝑂𝑓𝑋𝑓𝑓𝑋𝑓𝑓𝑓,𝑡𝑓𝑡𝑓𝑓+𝑓𝑓𝑂𝑓𝑂𝑓𝑂𝑓𝑂,𝑡𝑂𝑡𝑂+𝑋𝑋𝑂𝑣𝑂𝑣𝑂𝑣𝑂𝑣(𝑂𝑣1𝑂𝑣𝑋,𝑡+𝑋𝑡×𝑣𝑊𝑣𝑣𝐸𝑊𝑣𝐸𝑣𝑊𝑡𝑣𝑡𝑊,−𝑊𝑡𝑡𝑊×𝐻𝐶𝐶𝐻𝐸𝑡2𝑡𝐸)𝑡𝑝𝑡𝑡𝑝−𝑡𝑝𝑝𝐻𝑝𝑝𝐻𝑝2𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝×𝑝𝑝𝑝𝐸𝑝𝐸𝑝𝑡𝑝𝑡𝑝×𝐸𝐸𝑡𝑡∑𝑙𝑡𝑙𝑡𝑡=𝑡1(1+𝑊𝑊𝐸𝐸𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑙𝑊𝑙𝑙𝑙𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝑙𝑙𝑙𝑙𝑡𝑡=1𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑙𝐶𝑙𝑡𝐶𝑡𝐶+∑∑𝑙𝑡𝑙𝑡𝑡=𝑙𝑡𝑡𝑙𝑡𝑡=𝑡1(1𝐸(1𝐸1𝑂𝑡𝑂+𝑡+𝑂𝑊𝑂𝑊𝑂𝑊𝑊𝑂𝐸𝑋𝑊𝑊𝐸𝑊𝑋𝑊𝑡𝑊𝑓𝑡𝑊𝑊𝑓𝑊𝑓𝐶𝐶𝑓𝐶𝑓𝐶𝑡𝑓𝑡𝑡𝑓𝑡)𝑓)𝑓𝑡𝑡𝑡𝑓𝑡,𝑡𝑡+𝑂𝑂𝑂𝑂(𝑂1𝑂𝑋+𝑋𝑣𝑊𝑣𝑣𝑊𝑣𝑣𝑊𝑣𝑊,𝑊𝑡𝑡𝑊×𝐶𝐶𝐸𝐸)𝑡𝑡𝑡−𝑡𝐻𝐻2𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=∑𝑡𝑡=1𝑡𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶−𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼_𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑(𝑙𝑙𝑡1𝑡+𝑊𝑂𝑂𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝑋𝐶𝑋𝐶𝑓𝑡𝑓𝑡𝑓)𝑓𝑓𝑓𝑓∑𝑓𝑓𝑓𝑙𝑡,𝑙𝑡𝑡𝑡=𝑡𝑡+1𝑂(𝑂1𝑂𝑂+𝑂𝑂𝑊𝑋𝑊𝑋𝐸𝑣𝑊𝐸𝑣𝑊𝑡𝑣𝑡𝑊𝑣𝑊𝑣𝐶𝑣𝐶,𝑡𝑡×)𝑡𝐸𝑡𝐸𝑡𝑡−𝐻𝐻2𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝×𝐸𝐸𝑡𝑡𝑡𝑡4𝑙𝑙2𝑙𝑙𝑡𝑡=1𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑡𝑡+𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋×𝐸𝐸𝑙𝑙𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶−𝐶𝐶𝐼𝐶𝐼𝐶𝐼𝐶𝐼𝐶𝐼𝐼−𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼_𝑠𝐼𝑠𝐼𝑠𝐼𝑠𝐼𝑠𝐼𝑠𝐼_𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠+𝑠𝑠∑𝑠𝑠𝑠𝑙𝑠𝑙∑𝑡𝑠𝑡+𝑙𝑙𝑡∑𝑡𝑂𝑂𝑂𝑙𝑡𝑙𝑡𝑂𝑡=𝑡𝑂𝑂1𝑋𝑋𝑓𝐶𝑓𝐶𝑓(𝐸𝑓𝐶𝑓1𝐸𝑓𝐶𝑡𝑓+𝑡𝐶𝑓𝐶𝑓𝑊𝑓𝐶𝑓,𝑓𝑊𝐶𝑡𝑓𝑡𝐶𝑓𝑊𝑓+𝐶(𝑊𝑓𝑓𝑊+1𝑂𝑓𝑊𝑂𝑓+𝐶𝑂𝑓∑𝐶𝑂,𝑡𝑊𝑡𝑂𝑡𝑙𝑡)𝑊𝑂𝑙𝑡𝑡=𝑋𝑡𝑊𝑋𝑊1𝑣𝑊𝑣𝑊𝑂𝑣𝐶𝑂𝑣𝐶𝑣𝑂𝑡𝑣𝑂𝑡,)𝑂𝑡𝑡𝑂𝑡×𝑡𝑣𝑋𝑣𝑋𝑣𝐸𝑓𝑣𝐸𝑓𝑣𝑡𝑓𝑣𝑡𝑓,𝑓𝑡𝑓𝑡𝑓𝑓𝑓𝑓,𝑡𝑡𝑡𝑡+𝑂𝑂𝑂𝑂(𝑂1𝑂𝑋+𝑋𝑣𝑂𝑊𝑣𝑂𝑣𝑊𝑂𝑣𝑂𝑣𝑊𝑂𝑣𝑊,𝑂𝑊𝑡𝑋𝑡𝑊×𝑋𝐶𝐶𝐸𝑡𝑡𝐸)𝑡𝑡𝑡−𝑡𝐻𝐻2+𝑝𝑝𝑂𝑝𝑝𝑂𝑝𝑂𝑝𝑂𝑝𝑂𝑝𝑂∑𝑝𝑋𝑝𝑝𝑋𝑡𝑝𝑣𝑡𝑝𝑣=𝑣𝑝𝑣1𝑣×𝑣(,𝐸𝑡1𝑡𝐸𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝑡𝑡=𝑡1𝑡=1()𝑡𝑡𝑡𝑡𝑙𝑙𝑡𝑡𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋+𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋×𝐸𝐸−𝐻𝐻𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝×𝐸𝐸∑𝑙𝑙𝑡𝑡𝐸𝐸𝑡𝑡1+𝑊𝑊𝑊(𝑊1𝑊𝑊+𝐶𝐶𝑊𝑡𝑡𝑊𝑊𝑊𝑙𝑙𝑊𝑡𝑊𝑡𝐶𝐶𝑡𝑡𝑂)𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝐶𝑓𝐶𝑓𝑓𝐶𝑓𝐶𝑓𝐶,𝑙𝑡𝑙𝐶𝑡𝐶𝑡+𝐶𝐶𝑂𝐶𝑂𝑂+𝑂𝑂∑𝑂𝑋𝑋𝑡𝑡𝐸𝑣=𝑣𝐸𝑣𝑡1𝑡𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝑡𝐶𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑣𝑓𝑣𝑓𝑣𝑓𝑓𝑣𝑓𝑣𝑓𝑣𝑓,𝑡𝑓𝑡𝑓,𝑡𝑡FinancingtheGreenEnergyTransition:AUS$50trillioncatchAppendices𝐸𝑡𝑡𝐸𝑡𝑡𝑊𝑂𝑂𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝑋𝑊𝑋𝑊𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡A𝑙𝐸𝑙𝐸𝑙𝑙𝑡p𝑡remiumontheproductionisnormallyconstantovertime,withoutanyindexationtoinflationordiscountinge𝑊f𝑊fe𝑊𝑊c𝑊t𝑊.𝑊T𝑊hepremiumisincludedinLCOHcalculationtoshowitsdirecteffectontheoverallLCOHreduction(Eq.2).𝑙𝑙𝑙𝑙𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑡𝑙𝑡𝑡=𝑡1𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂(𝑂1𝑂𝑋+𝑋𝑣𝑊𝑣𝑣𝑊𝑣𝑣𝑊𝑣𝑊,𝑊𝑡𝑡𝑊×𝐶𝐶𝐸𝑡𝑡𝐸)𝑡𝑡𝑡−𝑡𝐻𝐻2𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝×𝐸𝐸𝑡𝑡(Eq.2)𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=∑𝑙𝑡𝑙𝑡𝑡=𝑡1(1+𝑊𝑊𝐸𝑊𝐸𝑊𝑡𝑡𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡(Eq.3)𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑡𝑙𝑡𝑡=𝑡1𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂(𝑂1𝑂𝑋+𝑋𝑣𝑊𝑣𝑣𝑊𝑣𝑙𝑣𝑊𝑙𝑡𝑣𝑊𝑡,𝑊𝑡𝑡𝑊×𝐶𝑂𝐶𝐸𝑂𝑡𝑡𝐸𝑂)𝑡𝑂𝑡𝑡𝑂−𝑡𝑂𝑋𝐻𝑋𝐻𝑓2𝑓𝑓𝑓𝑝𝑓𝑝𝑓𝑝𝑓𝑝𝑓𝑝𝑓𝑝𝑓𝑝,𝑡𝑝𝑡+𝑝𝑝𝑝𝑝𝑂𝑝𝑂𝑂𝑝𝑂×𝑂𝑂𝐸𝑋𝐸𝑋𝑡𝑣𝑡𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡Oi𝐿𝐿n𝐿𝐿𝐿𝐿nte𝐿𝐿𝐿𝐿trh𝐿𝐿e𝐿𝐿es𝐿𝐿tcr==oantet𝐶r𝐶s𝐶a𝐶.r𝐶T𝐶y𝐶h,𝐶𝐶te𝐶h−ien𝐼𝐼c𝐼in𝐼l𝐼u𝐼v𝐼se𝐼𝐼i𝐼so𝐼𝐼t𝐼nm𝐼o𝐼e𝐼𝐼fn𝐼∑t𝐼𝐼th_𝑙𝑡𝑙𝑡𝑠s𝑡i=𝑠𝑡s𝑠u1𝑠𝑠sp𝑠u𝑠p𝑠p𝑠o𝑠p𝑠r𝑠𝐸𝑠to𝐸𝑠𝑡+𝑡irst∑gi𝑡n𝑡i=v𝑡𝑡t1ehneaLtCyOeHa(1r+i0s𝑊,r𝑊we𝑊𝑊p𝑊h𝑊𝐶ri𝐶ce𝑡𝑡h)s𝑡𝑡ehnatsednobydeEpqr.e3c.iationimpactbecauseofthe∑(𝑙𝑡1𝑙𝑡𝑡=𝑡+1𝑊(𝑊1𝑊+𝑊𝑊𝑊𝑊𝐶𝑊𝐶𝐸𝑡𝑊𝐸𝑡𝑊𝑡)𝑡𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝑑𝑑𝐶𝑑𝐶𝑑−𝑑𝑑𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝑑𝐼𝐼_𝐼𝑟𝐼𝑟𝑟𝐼𝑟𝐼𝑟𝐼𝑟𝐼𝑟𝑟𝐼×𝐼𝐼_𝐶𝑠𝐶𝑠𝐶𝑠𝐶𝑠𝐶𝑠𝐶𝑠𝐶𝑠𝑠𝐶𝑠𝐶𝑠𝐶𝑠×𝑠𝑠𝑠(+𝑑𝑑∑𝑑𝑑𝑑𝑙𝑡𝑑𝑙𝑡𝑑𝑡=𝑡𝑑𝑑1𝑑𝑑𝑂𝑑𝑂𝑑𝑂𝑑𝑂𝑑𝑂𝑑𝑂_𝑋𝑟𝑋𝑟𝑓𝑟𝑓𝑟𝑓𝑓𝑟𝑓𝑟(𝑓𝑟𝑓1𝑟𝑓𝑓×+𝑓,𝑊𝑐𝑡𝑡𝑐𝑊+𝑐𝑊𝑐𝑂𝑐𝑊𝑐𝑂𝑊𝑐𝑂𝑊𝑐𝐶𝑂𝑐𝐶𝑂𝑐𝑂𝑐𝑋)𝑐𝑋𝑐𝑡𝑡𝑣𝑐𝑣𝑐𝑣𝑐𝑣𝑐𝑣𝑐𝑣𝑐,𝑐𝑡𝑡𝑐×𝑐𝑐𝐸𝑐𝐸_𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡+1)𝑎𝐿𝐿𝑎𝐿𝑎𝐿𝑎𝐿𝑎𝑎𝐿𝑎𝐿𝑎𝐿𝑎𝑎𝑎𝑎=𝑎𝑎=𝑡𝑡1−∑𝑙𝑙(𝑡𝑡1+𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝐸𝑑𝐸𝑑𝑡𝑑𝑡𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟)−𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡=1(1+𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡T𝑑𝑎𝑎𝑑h𝑎𝑑𝑑e𝑎𝑑𝑑𝑎𝑑𝑎c𝑑𝑎o𝑑𝑎𝑑s𝑎𝑑𝑎𝑑𝑎t𝑎𝑑𝑎o𝑑𝑎𝑑f𝑑_c=𝑟a𝑟p𝑟𝑟i𝑟t𝑟𝑑a𝑑𝑟𝑑𝑟l𝑑𝑑u𝑑𝑑=𝑑s𝑑𝑑e𝑑𝑑d𝑑𝑐𝑑𝑐𝑑a𝑐𝑑𝑐_s𝑐𝑟𝑐𝑟t𝑟𝑐h𝑟𝑐𝑟_𝑟e𝑟𝑜𝑟𝑜×d𝑜𝑜𝐶i1s𝐶_𝐶c𝑑−𝐶o𝐶𝑑𝐶𝑑(u𝐶𝑑𝐶1𝑑n𝐶𝑑+𝐶𝑑t×𝑑𝑑r𝑑(𝑑a×𝑑𝑑𝑑𝑑t𝑑𝑑𝑑e𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑠d𝑑𝑑𝑠𝑑𝑑ℎe𝑑𝑑𝑑𝑑p𝑑𝑎𝑑𝑑𝑑𝑎e𝑑_𝑎𝑑𝑟n𝑎𝑑𝑟_𝑎𝑟d𝑎𝑟𝑟𝑟𝑟_𝑟𝑟s𝑟𝑟𝑜𝑟𝑟𝑜o𝑟)𝑜𝑟−𝑟n𝑜×_𝑙𝑙𝑙r𝑑𝑐𝑙𝑙𝑐e𝑑𝑙𝑐𝑙𝑑𝑐g𝑙𝑐𝑑𝑙𝑐𝑙𝑑u𝑐𝑙𝑑𝑐𝑙l𝑙𝑐𝑑𝑙a𝑐𝑑𝑙𝑐𝑙t𝑐𝑐o+𝑐𝑐r𝑐𝑐y𝑐𝑐𝑐𝑐r𝑐𝑐i𝑐𝑐s𝑐𝑐𝑐k𝑐_𝑐𝑡s𝑐𝑡𝑡𝑐,𝑡_p𝑡𝑜𝑡𝑡o𝑜𝑡𝑜+l𝑜it_1i𝑒c)𝑒a𝑒𝑒l𝑒r𝑒i𝑒s𝑒𝑒k𝑒s𝑒𝑒,×off𝑠t𝑠aℎk𝑎e𝑎r𝑎𝑎r𝑎𝑎is_k𝑜𝑜s𝑜,𝑜c_u𝑒𝑒r𝑒r𝑒e𝑒𝑒n𝑒𝑒c𝑒𝑒y𝑒𝑒risksandotherland,resourceandtechnicalrisks.Amongtheseelements,themostimportantonesareregulatoryandpoliticalrisks,thatcanaccountforuptohalfoftheweightoftheriskelements.132Theconsideredweighteda𝑑𝑑v𝑑e𝑑𝑑𝑑r𝑑a𝑑𝑑g𝑑e𝑑𝑑c𝑑𝑑o𝑑𝑑s_t𝑟o𝑟𝑟f𝑟𝑟c𝑟𝑟a𝑟pi=talv𝑐𝑐a𝑐l𝑐u𝑐𝑐e𝑐𝑐s_𝑜fo𝑜𝑜r𝑜_S𝑑o𝑑𝑑u𝑑t𝑑h𝑑𝑑e𝑑r×nEu𝑠𝑠rℎo𝑎p𝑎𝑎e𝑎𝑎a𝑎_n𝑜d𝑜𝑜S𝑜_o𝑑u𝑑𝑑t𝑑h𝑑𝑑e𝑑r𝑑n+Afr𝑐i𝑐c𝑐a𝑐𝑐𝑐a𝑐𝑐r_e𝑜𝑜6𝑜%𝑜_𝑒a𝑒𝑒n𝑒d𝑒𝑒𝑒1𝑒𝑒1𝑒%𝑒𝑒×res𝑠p𝑠ℎe𝑎c𝑎t𝑎i𝑎v𝑎𝑎e_ly𝑜𝑜.𝑜T𝑜h_𝑒e𝑒𝑒s𝑒e𝑒𝑒c𝑒𝑒o𝑒𝑒s𝑒𝑒tofcapitalvaluesarealignedwithIRENA’slowerandupperboundestimations.135Appendix2.Deloitte’sEnergyTransitionInvestmentCalculatorDeloitte’sEnergyTransitionInvestmentCalculatorquantifiesthecostofthegreenenergytransition.ItusestheIEA’sNet-ZeroEmissions(NZE)pathway44asakeyenergy,feedstockandindustrialactivities’transitionscenariotocomputethetotalinvestmentneededannuallyuntil2050.Bothenergydemandandfeedstockusesofenergycommoditiesareconsideredtocalculaterequiredinvestmentsinphysicalassets.Totalenergydemandisdividedbysector(industry,buildingsandtransport)andsubsector(steelmaking,cement,aviation,etc.)andIEA’sfuturedemandestimationsfor2030,2040and2050areused.Deloitte’sEnergyTransitionInvestmentCalculatorcomputesthetotalinvestmentcostsusingthefollowingmethodology:01.First,additionalcapacitiesineachsubsectorareretrievedbasedontheevolutionofannualenergydemandintheNZEpathway.Additionalcapacitiesinphysicalassetsaredividedintocategories:end-use,electricitygeneration,energyinfrastructureandlow-emissionfuels.Eachofthesecategoriesincludesthemeansofdecarbonizationandthustheinvestmentsneededinbuildings(e.g.,retrofits,heatpumps,renewableheating),transport(e.g.,electricvehiclesandfuel-cellvehicles,aviation,shipping),carbonremovals(i.e.,carboncaptureandutilizationorstorage),industry(i.e.,steel,cement,chemicalsandlightindustry),powergeneration(i.e.,renewables,nuclearandotherlow-carbongeneration)andinfrastructuredevelopment(i.e.,networks,storagesassetsandvehiclecharginginfrastructures).02.Then,aninvestmentcost(orovernightcost)isassociatedtotheadditionalcapacity.CostdataofDeloitte’sEnergyTransitionInvestmentCalculatorarebasedonIEA’s“WorldEnergyOutlook2022”NZEscenario,44theEuropeanCommission’s“JointResearchCentre(JRC)DataCatalogue”,189IEA’s“GlobalHydrogenReview:Assumptionsannex”190andArgonneNationalLaboratory’sdatabase.191Theovernightcostsevolveduringtheconsideredperiodbasedontechnicalmaturityexpectedorchangeinmaterialcosts.AllcostdataareconvertedinUS$2021.43𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝐸𝐸𝑊𝑡𝑡𝑊𝑊𝑊𝑊𝑊𝑊𝑙𝑙𝑙𝑙F𝑙𝑙i𝑙n𝑙ancingtheGreenEnergyTransition:AUS$50catchAppendices𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊trillion𝑙𝑙𝑙𝑙𝑙𝑙𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡−𝐻𝐻2𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶+∑𝑙𝑡𝑙𝑡𝑡=𝑡1𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂(𝑂1𝑂𝑋+𝑋𝑣𝑊𝑣𝑣𝑊𝑣𝑣𝑊𝑣𝑊,𝑊𝑡𝑡𝑊×𝐶𝐶𝐸𝑡𝑡𝐸)𝑡𝑡𝑡−𝑡𝐻𝐻2𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝐶𝐶𝑝𝐶𝑝𝑝𝐶𝑝𝐶𝑝𝐶𝑝𝐶𝑝𝐶×𝐶𝐶𝐸+𝐸𝑡𝑡∑𝑡𝑡=1∑𝑙𝑙𝑡𝑡(1+𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡𝐸𝐸𝑡𝑡03.Finally,theinvestmen𝑂𝑂t𝑂𝑂c𝑂𝑂o𝑋𝑋st∑is𝑙𝑡𝑙𝑡𝑡=𝑡a1s(+s1i+𝑂g𝑂𝑊𝑂n𝑂𝑊𝑂𝐸e𝑊𝑂𝐸𝑊𝑋𝑡d𝑡𝑊𝑋𝑊𝐶t𝐶𝑡o𝑡)𝑡t𝑡h×e𝐸𝐸y−e𝐻a𝐻r𝑝𝑝w𝑝𝑝𝑝h𝑝𝑝e𝑝𝑝n𝑝𝑝𝑝𝑝it𝑝×is𝐸𝐸incurredusin𝑡g𝑡=a1n(1a+n𝑊𝑊n𝑊𝑊u𝑊𝑊i𝐶t𝐶y𝑡𝑡)f𝑡𝑡ormula.Thetotalinvestm𝐶e𝐶𝐶n𝐶𝐶t𝐶𝐶c𝐶o𝐶𝐶s+t∑in𝑙𝑡𝑙𝑡𝑡=c𝑡l1udes𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡𝑡𝑡2𝑡𝑡costs.financingcostsdependonthetechnologycost,𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=capitalspe(n1+t𝑊a𝑊n𝑊𝑊d𝑊𝑊𝐶f𝐶i𝑡𝑡n)𝑡a𝑡ncingThe+𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋×𝐸𝐸𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋tchoensctarpua𝐶c𝐶c𝐶t𝐶iiot𝐶𝐶yn𝐶𝐶i𝐶np𝐶−setr𝐼a𝐼i𝐼o𝐼ll𝐼ed𝐼𝐼d𝐼s𝐼𝐼,𝐼a𝐼c𝐼no𝐼ds𝐼𝐼t𝐼t𝐼∑oh𝐼𝐼_fe𝑙𝑡𝑙𝑡𝑠𝑡=𝑠𝑡e𝑠c1𝑠qo𝑠(𝑠u1s𝑠+𝑠it𝑠t𝑊𝑠yo𝑠𝑊𝑠,𝐸𝑠f𝑊𝐸𝑠c𝑊𝑡+c𝑡𝑊o𝑊a∑𝐶s𝐶p𝑡t𝑙𝑡𝑙𝑡)𝑡i=𝑡o𝑡t𝐿𝑡a1𝐿f𝑂𝐿l𝑂d.𝐿𝑂I𝐿𝑂en𝑂𝐿𝑂bv𝑋𝐿𝑋te𝐿𝑓𝑓as𝑓𝑓=𝑓tn(𝑓m𝑓1d𝑓𝑓+𝑓𝐶e,𝑊e𝐶𝑡𝑡𝐶n𝑊+q𝐶𝑊t𝐶𝑂𝑊u𝐶s𝑂𝑊𝐶𝑂𝑊i𝐶𝐶𝑂ta𝐶𝐶𝑂y𝑂𝐶r𝑋)−-e𝑋𝑡d𝑡𝑣𝐼𝑣t𝐼𝑣e𝐼𝑣r𝐼𝑣ba𝑣𝐼,𝐼𝑡tn𝐼𝑡×𝐼r𝐼s𝐼𝐸a𝐼l𝐸𝐼a𝑡𝐼t𝑡it𝐼oe𝐼𝐼.d𝐼T𝐼𝐼ih𝐼n_e𝑠t𝑠o𝑠𝑠a𝑠an𝑠𝑠nn𝑠𝑠nu𝑠𝑠u𝑠i𝑠t𝑠iy+tiei∑ss𝑙𝑡𝑙𝑡c𝑡=𝑡ion1mclupduitn𝑓e𝑓g𝑓d𝑓𝑓(𝑓t𝑓1w𝑓h𝑓+𝑓ei,𝑊𝑡t𝑡i𝑊hr𝑊𝑊lt𝑊ih𝑊f𝐶e𝐶e𝑡t𝑡)im𝑡𝑡𝑣𝑣𝑣e𝑣𝑣𝑣s,𝑡,𝑡𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝑡𝑡∑𝑙𝑡𝑙𝑡𝑡=𝑡1(1+𝑊𝑊𝐸𝑊𝐸𝑊𝑡𝑡𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡followingequation:∑𝑙𝑙𝑡𝑡𝑂𝑂𝑂𝑂𝑂𝐸𝑂𝐸𝑋𝑡𝑋𝑡𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡+𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐶𝐶(𝐶𝐶𝐻𝐶𝐻𝐶𝐶𝐶𝑜𝐶𝑜𝐶𝑜−𝑜𝐼𝐸𝐼𝐼𝐸𝐼)𝐼𝐼𝐼𝐼=𝐼𝐼𝐼𝐼𝐼𝐶𝐼𝐶𝐶𝐼𝐶𝐼𝐼𝐶𝐼𝐶𝐼𝐶𝐼𝐶_𝐶𝑠𝐶𝑠𝑠+𝑠𝑠𝑠𝑡∑𝑡𝑠=𝑠𝑙𝑡𝑙𝑡𝑠1𝑡=𝑠𝑡(𝑠1𝑠1𝑠𝑠++𝑊∑𝑊𝑊𝑙𝑡𝑊𝑙𝑡𝑡=𝑊𝑡𝑊𝐶1𝐶𝑂𝑡(𝑡𝑂)1𝑂𝑡𝑂𝑡+𝑂𝑂𝑊𝑋𝑊𝑋𝑓𝑊𝑓𝑊𝑓𝑓𝑊𝑓𝑊(𝑓𝐶𝑓1𝐶𝑓𝑡𝑓+𝑡𝑓),𝑊𝑡𝑡𝑊+𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝐶𝑂𝐶𝑂𝑂𝑋)𝑋𝑡𝑡𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟×𝐶𝐶𝐶∑𝐶𝐶𝐶𝑙𝑙𝐶𝑡𝑡𝐶𝐶𝐶∑×𝑙𝑡𝑙𝑡(𝑡=𝑡𝑑𝑑1𝑑𝑑(𝐸𝑑1𝐸𝑑𝑡𝑑𝑡+𝑑𝑎𝑑𝑊𝑑𝑎𝑑𝑊𝑎𝐸𝑑𝑊𝑎𝐸𝑑𝑊𝑡𝑑𝑎𝑡𝑊𝑑𝑎𝑊𝑑𝐶𝑎_𝐶𝑎𝑟𝑡𝑡𝑟𝑎)𝑟𝑎𝑡𝑟𝑎𝑡𝑟𝑎𝑟𝑎𝑟𝑎𝑟×=𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑑𝑐𝑑𝑐𝑑𝑡𝑐𝑡𝑑𝑐𝑑𝑑𝑐𝑑𝑐𝑑𝑐𝑑𝑐𝑑𝑐𝑑𝑐𝑐𝑑𝑐𝑑𝑐𝑑𝑐𝑑𝑐𝑑𝑐__𝑟𝑡𝑟𝑡𝑟𝑡𝑟𝑡𝑟𝑡𝑟𝑡𝑟𝑡𝑟𝑡×+𝐶1𝐶𝐶)𝐶𝐶𝐶𝐶𝐶𝐶𝐶×(𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟×𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡+1)𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎=𝑡𝑡=1(1+𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶)𝑡𝑡1−(1+𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟)−𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙(Eq.4)1−(1+𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑡𝑡𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟)−𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙W𝑎𝑎𝑎h𝑎e𝑎𝑎r𝑎e𝑎𝑎𝐶𝑎𝑎𝐶𝑎𝐶𝑎𝐶𝑎𝐶𝐶=𝐶𝐶𝐶𝐶𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟×𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶×(𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟×𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡+1)E+q.5𝑐𝑐:𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_isthetotalovern1ig−ht(c1o+s𝑑t𝑑𝑑𝑑a𝑑𝑑n𝑑𝑑d𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑑𝑟𝑑𝑟𝑟𝑑𝑟𝑑𝑟𝑑𝑟𝑟𝑑𝑟𝑑)𝑑−𝑑𝑑𝑙𝑙_𝑙𝑙𝑟𝑙𝑙𝑟𝑙𝑟𝑙𝑙𝑟𝑙𝑟𝑙𝑙𝑟𝑙𝑟𝑙𝑟𝑙𝑙is=the𝑐𝑐w𝑐𝑐e𝑐𝑐i𝑐g𝑐_h𝑜t𝑜e𝑜d𝑜_a𝑑v𝑑𝑑e𝑑r𝑑a𝑑𝑑g𝑑e×cos𝑠t𝑠ℎo𝑎f𝑎c𝑎𝑎a𝑎p𝑎_it𝑜a𝑜𝑜l𝑜g_i𝑑v𝑑e𝑑n𝑑𝑑𝑑b𝑑𝑑y𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟=𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑+𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑂𝑂𝑂𝑂𝑂𝑂𝑋𝑋𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓,𝑡𝑡(Eq.5)𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟=𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑+𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑡𝑡Thecos𝑂t𝑂s𝑂𝑂o𝑂f𝑂𝑋d𝑋e𝑣𝑣b𝑣𝑣t𝑣𝑣a,𝑡𝑡ndequity,aswellastheequity-debtratioaretechnologyspecificanddifferbetweenemergingeconom𝐸𝐸i𝑡e𝑡sanddevelopedeconomiestoreflectdifferenceinriskpremia.ThelowerandupperboundofWACClevelsarederivedfromIEA’sWorldEnergyOutlook202244andareconsideredconstantuntil2050.𝑊𝑊𝑊𝑊𝑊𝑊𝑊𝑊Deloitte’sEnergyInvestmentCalculatoralsoallowstoaccesstothedistributionofinvestmentbetweenadvancedandde𝑙v𝑙𝑙e𝑙lopingeconomies.Thisisthekeyrequirementtoassesstheefficiencyofconcessionalfinance(notablythroughblendedfinancestructures)inloweringthecostoftheglobalgreentransition.Whenonlyglobaldataareavailableforcapacities,aweightingcorrectionfactorisappliedtorepresentarealisticdistributionofinvestmentbetweenthetwocategoriesofeconomiespreviouslymentioned.AstandardponderationfactorbasedonGDPisusedforaviation𝐶𝐶,𝐶m𝐶𝐶𝐶a𝐶𝐶r𝐶i𝐶t+im∑e𝑙𝑡𝑙𝑡𝑡=𝑡s1h𝑂𝑂ip𝑂𝑂𝑂p𝑂𝑋i𝑋n𝑓𝑓g𝑓𝑓𝑓𝑓a𝑓𝑓n𝑓𝑓d,𝑡𝑡+in𝑂𝑂d𝑂𝑂(u𝑂1𝑂𝑋s+𝑋t𝑣𝑊𝑣r𝑣𝑊i𝑣e𝑣𝑊𝑣𝑊,s𝑊𝑡𝑡𝑊×𝐶e𝐶𝐸x𝐸)𝑡c𝑡𝑡−𝑡e𝐻p𝐻2t𝑝s𝑝𝑝𝑝t𝑝e𝑝𝑝e𝑝𝑝l𝑝𝑝a𝑝𝑝n𝑝×d𝐸𝐸c𝑡𝑡ementproduction.Forcementandsteelproduc𝐿t𝐿i𝐿o𝐿n𝐿𝐿,𝐿a𝐿cu=stomratioisapplied∑to𝑙𝑙𝑡𝑡consid𝐸e𝐸𝑡r𝑡thege𝑡𝑡ographicpeculiarityofthesetwoindustrysectors,whicharenotcorrelatedwithGDP.Moreover,𝑡𝑡f=o1r(1th+𝑊e𝑊c𝑊𝑊o𝑊𝑊a𝐶𝐶l𝑡𝑡)in𝑡𝑡dustry,thiscorrectionfollowsthegeographicdistributionofthisindustrygivenbytheIEA.Finally,theponderationforheatingisbasedonthegeographicdistributionoftheenergyconsumed𝐶i𝐶n𝐶𝐶𝐶s𝐶p𝐶𝐶a𝐶𝐶c−e𝐼𝐼𝐼h𝐼𝐼e𝐼𝐼a𝐼𝐼t𝐼i𝐼n𝐼𝐼g𝐼𝐼,𝐼b𝐼𝐼a𝐼𝐼_s𝑠e𝑠𝑠d𝑠𝑠𝑠o𝑠𝑠n𝑠𝑠𝑠t𝑠𝑠h𝑠+e∑s𝑙𝑡a𝑙𝑡𝑡=𝑡m1𝑂e𝑂𝑂𝑂d𝑂𝑂a𝑋𝑋t𝑓a𝑓𝑓𝑓b𝑓(𝑓𝑓1a𝑓𝑓+s𝑓,e𝑊𝑡𝑡𝑊+.𝑊𝑂𝑊𝑂𝑊𝑂𝑊𝐶𝑂𝐶𝑂𝑂𝑋)𝑋𝑡𝑡𝑣𝑣𝑣𝑣𝑣𝑣,𝑡𝑡×𝐸𝐸𝑡𝑡𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿=𝑡𝑡TransitionInvestmentC∑a𝑙l𝑙c𝑡𝑡ulator𝐸𝐸a𝑡𝑡llowstostudythetofchangingthefinancingstructureDeloitte’sEnergy𝑡𝑡=1(1+𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑡𝑡)𝑡𝑡impaconthetotalcostoftheenergytransition.Thecostofcapitaldrivesannualinvestmentsbyimpactingannuities,wMhDicBhs)d𝑎a𝑎en𝑎c𝑎dr𝑎e𝑎f𝑎oa𝑎sr𝑎𝑎me𝑎𝑎𝑎w𝑎(ih.e=e.,netq𝑑h𝑑u𝑑e𝑑𝑑i𝑑t𝑑cy𝑑𝑑o,𝑑𝑑sd𝑑t𝑑e𝑑𝑑ob𝑑_ft𝑟,c𝑟𝑟ca𝑟𝑟op𝑟𝑟n𝑟i×tca𝐶el𝐶s𝐶d𝐶s𝐶e𝐶io𝐶f𝐶lna𝐶𝐶at×el,(s𝑑g.𝑑𝑑rT𝑑𝑑a𝑑h𝑑n𝑑e𝑑t𝑑)𝑑c𝑑o𝑑o𝑑f𝑑s𝑑a_t𝑟𝑟op𝑟𝑟fr𝑟𝑟oc𝑟𝑟aj×ep𝑐c𝑐i𝑐tt𝑐a’𝑐s𝑐l𝑐f𝑐i𝑐us𝑐𝑐n𝑐a𝑐d𝑐f𝑐f𝑐ie𝑐n𝑐𝑐cg𝑐𝑐t.𝑐e𝑐T𝑐d_h𝑡𝑡b𝑡e𝑡y𝑡m𝑡𝑡t𝑡ho+ed1eo)lraigllionw(is.et.o,pausbsleics,sptrhiveadteir,ect1−(1+𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟)−𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙𝑙impactofthecostoffinancingontotalinvestments.𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑_𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟=𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_𝑑𝑑𝑑𝑑𝑑𝑑𝑑𝑑+𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒×𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎_𝑜𝑜𝑜𝑜_𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒44FinancingtheGreenEnergyTransition:AUS$50trillioncatchEndnotesEndnotes1.IntergovernmentalPanelonclimateChange,“AR5ClimateChange:The28.GoldmanSachsEconomicResearch,“Thepathto2075–SlowerGlobalPhysicalScienceBasis–SummaryforPolicymakers”,2013.Growth,ButConvergenceRemainsIntact”,December2022.2.EuropeanCommission,“ConsequencesofClimateChange”,accessed29.TheWorldBank,“CarbonPricingDashboard”,accessedAugust2023.August2023.30.InstituteforClimateEconomics,“GlobalCarbonAccountsin2022”,3.IntergovernmentalPanelonclimateChange,“GlobalWarmingof1.5°C-September2022.SummaryforPolicymakers”,2018.31.TaskforceHydrogène,“Stratégieshydrogène”,accessedAugust2023.4.WorldResourcesInstitute,“4ChartsExplainGreenhouseGasEmissionsbyCountriesandSectors”,February2020.32.TheUSCongress,“InflationReductionActof2022”,August2022.5.JulianneDeAngeloetal.,“Energysystemsinscenariosatnet-zeroCO233.Accordingtoanopenlettersentby18organizationstofederalagencies.emissions”,NaturecommunicationsVol.12(1),2021.34.ClimateWatch,“Net-Zero-Tracker–TargetYear”,accessedAugust2023.6.OytunBabacanetal.,“Assessingthefeasibilityofcarbondioxidemitigationoptionsintermsofenergyusage”,NatureEnergyVol.5(9),2020.35.ClimateWatch,“Net-Zero-Tracker–TargetStatus”,accessedAugust2023.7.InternationalRenewableEnergyAgency,“GlobalHydrogenTradetoMeet36.InstituteforEnergyEconomicsandFinancialAnalysis,“FactSheet:Greenthe1.5°CClimateGoal:GreenHydrogenCostandPotential”,2022.taxonomiesexplained”,August2021.8.BehrangShirizadehetal.,“Theimpactofmethaneleakageontheroleof37.ClimateBondsInitiative,“Globalgreentaxonomydevelopment,alignment,naturalgasintheEuropeanenergytransition”,NatureCommunicationsandimplementation”,February2022.Vol.14,2023.38.FranziskaSchützeandJanStede,“TheEUsustainablefinancetaxonomy9.InternationalEnergyAgency,“WorldEnergyBalances:Overview”,accessedanditscontributiontoclimateneutrality”,JournalofSustainableFinance&August2023.Investment,2021.10.InternationalEnergyAgency,“Financingcleanenergytransitionin39.GermanInstituteofDevelopmentandSustainability,“UpscalingGreenemerginganddevelopingeconomies”,2023.BondMarkets:TheNeedforHarmonisedGreenBondStandards”,December2017.11.InternationalEnergyAgency,“NetZeroby2050–ARoadmapfortheGlobalEnergySector”,May2021.40.InternationalEnergyAgency,“WorldEnergyInvestment2023”,May2023.12.InternationalRenewableEnergyAgency,“Low-costfinancefortheenergy41.InternationalEnergyAgency,“CO2Emissionsin2022”,March2023transition”,2023.42.EmberClimate,“GlobalelectricityReview2022”,202213.TheWorldBank,“Scalinguptophasedown:financingenergytransitionindevelopingcountries”,2023.43.InternationalRenewableEnergyAgency,“WorldEnergyTransitionOutlook2023:1.5°CPathway”,202314.USGlobalLeadershipCoalition,“Climatechangeandthedevelopingworld:adisproportionateimpact”,2021.44.InternationalEnergyAgency,“WorldEnergyOutlook2022”,October202215.UnitedNations,“WorldPopulationData”,accessedAugust2023.45.AgoraEnergiewende,“No-regrethydrogen–ChartingearlystepsforH2infrastructureinEurope”,February202116.UNFCCC,“ParisAgreement–StatusofRatification”,accessedAugust2023.46.MartaVictoriaetal.,“EarlydecarbonisationoftheEuropeanenergysystem17.ClimateActionTracker,“Countries”,accessedAugust2023.paysoff”.NaturecommunicationsVol.11(1),2020.18.ClimateWatch,“NDCEnhancementTracker”,accessedAugust2023.47.BehrangShirizadehandPhilippeQuirion,“Theimportanceofrenewablegasinachievingcarbon-neutrality:Insightsfromanenergysystem19.WorldEconomicForum,“IstheParisClimateAgreementlegallybinding?optimizationmodel”,EnergyVol.255,2022.Expertsexplain”,November2021.48.OliverRuhnauetal.,“Directorindirectelectrification?Areviewofheat20.InternationalEnergyAgency,“FossilfuelsConsumptionSubsidies2022”,generationandroadtransportdecarbonisationscenariosforGermanyFebruary2023.2050”,EnergyVol.166,2019.21.XavierLabandeiraetal.,“Ameta-analysisonthepriceelasticityofenergy49.JoannaClarkeandJustinSearle,“ActiveBuildingdemonstratorsforalow-demand”,EnergyPolicyVol.102,2017.carbonfuture”,NatureEnergyVol.6(12),2021.22.Deloitte,“Transformtoreact:Climatepolicyinthenewworldorder”,50.TheskilledlaborrequirementintheinfographicaimsatprovidingtheJune2022.informationofhowmuchadditionalortrainedlaborforcewillbeneeded.Thelevelofdisruptivenessgivesaninformationovertherequirement23.MichaelTucker,“CarbondioxideemissionsandglobalGDP”,Ecologicalofthesolutionforaradicalreconfigurationofthesupplychain,theEconomicsVol.15,1995.businessmodel,orachangethatmarksamajortechnologicalbreakwithwhatalreadyexistintheindustry.Somesolutionsarenotdisruptivein24.InternationalMonetaryFund,“EmissionsandGrowth:TrendsandCyclesinthewaythattheydonotneedmassiveadaptationtobeimplemented.aGlobalizedWorld”,August2017Thecostcategorygivesanindicationofthetotalcostofimplementingthesolution.Thecoststructuretellswhenthecostofthesolutionisthe25.WaheedRidaetal.,“Thesurveyofeconomicgrowth,energyconsumptiongreatest.Substantialexpendituremayberequiredupfrontorbespreadandcarbonemission”,EnergyReportsVol.5,2019.outthroughthetechnology’slifetime.Thelatterismoregenerallythecasewhenthereishighoperationalexpenditure,likebuyingaclean-energy26.OurWorldinData,“Manycountrieshavedecoupledeconomicgrowthfuelorresource.Foreachsolution,thelevelofmaturityisgiven,togivesfromCO2emissions,evenifwetakeoffshoredproductionintoaccount”,informationonthestateofdevelopmentofthesolution,aswellastheDecember2021.“relevancefornetzero”.27.UnitedNationsDepartmentofEconomicandSocialAffairs,PopulationDivision,“WorldPopulationProspects2022”,accessedAugust2023.45FinancingtheGreenEnergyTransition:AUS$50trillioncatchEndnotes51.HenriWaismanetal.,“Keytechnologicalenablersforambitiousclimate84.CleanHydrogenPartnership,“GoingGlobal-AnupdateonHydrogengoals:insightsfromtheIPCCspecialreportonglobalwarmingofValleysandtheirroleinthenewhydrogeneconomy”,September2022.1.5C”,EnvironmentalResearchLettersVol.14(11),2019.85.EuropeanCommission,“Commissionrecommendationonspeedingup52.JoeriRogeljetal.,“Mitigationpathwayscompatiblewith1.5Cinthepermit-grantingproceduresforrenewableenergyprojectsandfacilitatingcontextofsustainabledevelopment”.InGlobalwarmingof1.5C,PowerPurchaseAgreements”,May2022.IntergovernmentalPanelonClimateChange,2018.86.EnergyMonitor,“ThepermittingproblemforEUwindfarms”,accessed53.MartonDunaiandGeertDeClercq,“Nuclearenergytooslow,tooJuly2023.expensivetosaveclimate:report”,inReuters,September2019.87.BenjaminK.Sovacool,“Clean,low-carbonbutcorrupt?Examining54.RobertW.BarronandMaryC.Hill,“AWedgeoraWeight?CriticallycorruptionrisksandsolutionsfortherenewableenergysectorinMexico,ExaminingNuclearPower’sViabilityasaLowCarbonEnergySourcefromMalaysia,KenyaandSouthAfrica”,EnergyStrategyReviewsVol.38,2021.anIntergenerationalPerspective”,EnergyResearch&SocialScienceVol.502019.88.CaterinaGennaioliandMassimoTavoni,“Cleanordirtyenergy:evidenceofcorruptionintherenewableenergysector”,PublicChoiceVol.166,2016.55.Deloitte,“Assessmentofgreenhydrogenforindustrialheat”,April202389.BenjaminA.OlkenandRohiniPande,“Corruptionindevelopingcountries“,56.Thiyagarajanetal.,“Back-to-monomerrecyclingofpolycondensationAnnualReviewofEconomicsVol.4,2012.polymers:opportunitiesforchemicalsandenzymes”,RoyalSocietyofChemisteryVol.12(2),2022.90.InternationalEnergyAgency,“FinancingCleanEnergyinAfrica”,2023.57.InternationalEnergyAgency,”CO2captureandutilization“,accessed91.InternationalEnergyAgency,“ProjectedCostsofGeneratingElectricityJune2023.2020”,2020.58.KokSiewNgetal.,“Techno-economicanalysisofpolygenerationsystems92.CharlesT.HowardandLouisJ.D’Antonio,“ThecostofhedgingandthewithcarboncaptureandstorageandCO2reuse”,ChemicalEngineeringoptimalhedgeratio”,TheJournalofFuturesMarkets,Vol.14,1994.JournalVol.219,2013.93.HydrogenInsight,“TwoofLondon’sthreehydrogenfillingstationswillclose59.Deloitte,“Pathwaystodecarbonization:Steel”,April2023thismonthduetoinsufficientdemand”,accessedJuly2023.60.AliAbdelshafyetal.,“TheroleofCCUSindecarbonizingthecement94.PeiyiSunetal.,“Areviewofbatteryfiresinelectricvehicles”,Fireindustry:aGermancasestudy”,OxfordInstituteforEnergyStudies,2022technologyVol.56,202061.Deloitte,“Pathwaystodecarbonization:Hydrogen”,2023.95.InternationalEnergyAgency,“GlobalHydrogenReview2022”,September2022.62.BjörnNykvistandOlleOlsson,“Thefeasibilityofheavybatteryelectrictrucks”,Joule,Vol.5(4),2021.96.ObservatoryofEconomicComplexity,“Kazakhstan”,accessedAugust2023.63.NathanGrayetal.,“Decarbonisingships,planesandtrucks:Ananalysis97.GregorSemieniuketal.,“Strandedfossil-fuelassetstranslatetomajorofsuitablelow-carbonfuelsforthemaritime,aviationandhaulagelossesforinvestorsinadvancedeconomies”,NatureClimateChangeVol.sectors”,AdvancesinAppliedEnergy,Vol.1,2021.12,2022.64.Deloitte&Shell,”Decarbonizingroadfreight:Gettingintogear“,2021.98.InternationalEnergyAgency,“Worldenergyemploymentreport”,September2022.65.Deloitte&Shell,”Decarbonizingaviation:Clearedfortake-off“,2021.99.JunRentschleretal.,“Underutilizedpotential:thebusinesscostof66.FortheCO2tobeconsideredclimateneutral,itshouldeitherhaveunreliableinfrastructureindevelopingcountries”,TheWorldBankPolicybiogenicsources(i.e.,originallyremovedfromtheatmospherebynaturalResearchWorkingPaper,June2019.processesandmeanttoberemittednaturallyduetobiogenicdegradationprocesses),ordirectlycapturedfromtheairusingchemicalprocesses100.Statista,“AveragedurationofelectricityoutagesperyearinAfricaasof(suchasdirectaircapture).2018,byselectcountry”,AccessedAugust2023.67.InternationalEnergyAgency,“Renewables2022”,December2022.101.DeVynneFarquharsonetal.,“Sustainabilityimplicationsofelectricityoutagesinsub-SaharanAfrica”,NatureSustainabilityVol.1,2018.68.InternationalEnergyAgency,“ETPCleanEnergyTechnologyGuide”,accessedAugust2023.102.InternationalEnergyAgency,“Nigeria”,accessedAugust2023.69.InternationalEnergyAgency,“Buildings”,accessedJuly2023.103.Reuters,“Bangladesh’sworstelectricitycrisisinadecade”,June2023.70.AdrienDeroubaixetal.,“Largeuncertaintiesintrendsofenergy104.OurWorldinData,“GlobalEducation”,accessedSeptember2023.demandforheatingandcoolingunderclimatechange”,Naturecommunications,Vol.12(1),2021.105.WorldEconomicForum,“FinancingtheTransitiontoaNet-ZeroFuture”,2021.71.InternationalEnergyAgency,“TheFutureofHeatPumps”,2022.106.ClimateBondsInitiative,“HowgreenbondscansupportSouthAfrica’senergytransition”,August2021.72.InternationalRenewableEnergyAgency,“Planningandprospectsforrenewablepower:NorthAfrica”,2023.107.ClimatecommissionofSouthAfrica,“SouthAfrica’sJustEnergyTransitionInvestmentplan”,accessedJuly2023.73.Britannica,“Hydrogen”,accessedJuly2023.108.TheClimateInvestmentFunds(CIF),“Homepage”,accessedOctober2023.74.HaoLietal.,“Safetyofhydrogenstorageandtransportation:Anoverviewonmechanisms,techniques,andchallenges”,EnergyReports,Vol.8,2022.109.TheClimateInvestmentFunds(CIF),“AboutCIF”,accessedJuly2023.75.ClimateChangeCommittee,“ANetZeroworkforce”,May2023.110.TheClimateInvestmentFunds(CIF),“Partnerships”,accessedJuly2023.76.InternationalEnergyAgency,"LevelisedCostofElectricityCalculator",111.Mezzanineinstrumentisahybridinstrumentbetweendebtandequity,itDecember2020.bridgesthegapbetweendebtandequityfinancingbybeingsubordinatedtoseniordebt(higherintermsofpriorityofrepayment)andseniortopure77.UnitedNationsTreatiesCollection,“ParisAgreement”,accessedequity(lowerintermsofpriority).August2023.112.Deloitte,“Greenhydrogen:energyzingthepathtonetzero–Deloitte’s78.UNFCCC,“MoroccanupdatedNDC2021”,June2021.2023globalgreenhydrogenoutlook”,June2023.79.Moroccangovernment,“StratégieNationaleDéveloppementDurable”,113.S&PGlobalPlatts,“Plattshydrogenpricewall”,accessedSeptember2023.June2017.114.BloombergNewEnergyFinance,“CorporationsBrushAsideEnergyCrisis,80.Moroccangovernment,“PlanClimatNational2030”,November2021.BuyRecordCleanPower”,February2023.81.EconomistIntelligenceUnit,“MoroccoCountryReport”,accessed115.LucLaevan,“TheDevelopmentofLocalCapitalMarkets:RationaleandAugust2023.Challenges”,InternationalMonetaryFundWorkingPaper,December2014.82.EconomistIntelligenceUnit,“LibyaCountryReport”,accessedAugust2023.116.InternationalFinanceCorporation,”Developingdomesticcapitalmarkets”,July2016.83.InternationalEnergyAgency,“Policiesdatabase:Libya”,accessedJuly2023.117.S.P.Kothari,“Theroleoffinancialreportinginreducingfinancialrisksinthemarket”,February200046FinancingtheGreenEnergyTransition:AUS$50trillioncatchEndnotes118.ClimateBondsInitiative,“SustainableDebt:GlobalStateoftheMarket”,2022.151.InternationalMonetaryFund,“StillNotGettingEnergyPricesRight:AGlobalandCountryUpdateofFossilFuelSubsidies”,September2021.119.Forinstance:theClimateBondsStandard,theASEANGreenBondsStandards,ortheGreenBondPrinciples.152.InternationalMonetaryFund,“IMFWorkingPaper–HowLargeAreGlobalEnergySubsidies?”,May2015120.EuropeanCentralBank,“Theroleoftheeuroinglobalgreenbondmarkets”,2020.153.InternationalMonetaryFund,“FossilFuelSubsidyDatabase”,2022121.InternationalFinanceCorporation,“EmergingMarketGreenBondsReport154.InternationalMonetaryFund,“GlobalFinancialStabilityReport:Navigating2021”,June2022.thehigh-inflationenvironment–Chapter2:ScalingupPrivateClimateFinanceinemergingMarketsandDevelopingEconomies”,October2022122.CEIC,“PhilippinesMarketCapitalization”,“BrazilMarketCapitalization”,“SouthAfricaMarketCapitalization”,accessedAugust2023.155.OECD,“Updateonrecentprogressinreformofinefficientfossil-fuelsubsidiesthatencouragewastefulconsumption2021”,2021123.RepublicofSouthAfrica,DepartmentNationalTreasury,“SouthAfricanGreenFinanceTaxonomy–1stEdition”,March2022.156.IDDRI,“Mappingissuesandoptionsonclimatefinancein2015”,2015124.OCDE,“Greenbonds:Mobilisingthedebtcapitalmarketsforalow-carbon157.UniversityofOxford,“StrandedAssetsandtheFossilFuelDivestmenttransition”,December2015.Campaign:WhatDoesDivestmentMeanfortheEvaluationofFossilFuelAssets?”,2013125.2degreesinvestinginitiative,“Optimaldiversificationandtheenergytransition”,July2014.158.Bos,Kyra,andJoyeetaGupta“Strandedassetsandstrandedresources:Implicationsforclimatechangemitigationandglobalsustainable126.CMGWealth,“Understandingcorrelationanddiversification”,2015.development.”,2019.127.OECD,“TheImpactofR&DInvestmentonEconomicPerformance:A159.Kepler-Chevreux,“Strandedassets,fossilisedrevenues”,2014.ReviewoftheEconometricEvidence”,April2015.160.TheWorldBank,“Data–GDP(currentUS$)”,2023.128.EmilienRavignéetal.,“Isafairenergytransitionpossible?EvidencefromtheFrenchlow-carbonstrategy”,EcologicalEconomics,Vol.196,2022.161.Decker,“Regulatingnetworksindecline”,2016.129.EuropeanCommission,“ModernisationFund”,accessedAugust2023.162.ClimateInvestmentFunds,“ClimateInvestmentFundsendorsesnewblueprintsunlocking$1billionforjusttransitionsinSouthAfricaand130.TheWorldBank,“CarbonPricingDashboard”,accessedAugust2023.Indonesia”,2022.131.EuropeanCommission,“InnovationFund”,accessedJuly2023.163.DeutscherBundestag,“Bundestagpassescoalphase-outlaw”,2020.132.InternationalEnergyAgency,“CostofCapitalObservatory”,accessed164.EuropeanCentralBank,“2022climateriskstresstest”,July2022.August2023.165.EuropeanCentralBank,“ECBBankingSupervision:SSMsupervisory133.InternationalRenewableEnergyAgency,“Low-costfinancefortheenergypriorities2023-2025”,December2022.transition”,2023.166.EuropeanCentralBank,“Managingclimate-relatedrisks”,accessed134.CopernicusClimateChangeService(C3S),“ERA5hourlydataonsingleAugust2023.levelsfrom1940topresent”,accessedAugust2023.167.EuropeanCentralBank,“ECBeconomy-wideclimatestresstest”,135.InternationalRenewableEnergyAgency,“RenewablePowerGenerationSeptember2021.Costsin2021”,July2022.168.InternationalEnergyAgency,“SkillsDevelopmentandInclusivityforClean136.InternationalEnergyAgency,“Electrolysers”,accessedAugust2023.EnergyTransitions”,September2022.137.GovernmentOfficesofSweden,“Sweden’scarbontax”,accessed169.EnergyInformationAdministration,“AnnualCoalReport2021”,June2023.October2022.138.GovernmentOfficesofSweden,MinistryofFinance,“CarbonTaxationin170.ThePresidencyRepublicofSouthAfrica,“SouthAfrica’sJustEnergySweden”,March2023.TransitionInvestmentPlan(JETIP)2023-2027”,November2022.139.JuliusJ.Andersson,“CarbontaxesandCO2emissions:Swedenasacase171.GeneradorasdeChile,“ProgramaEnergía+Mujerespretendeincorporar5study.”,AmericanEconomicJournal:EconomicPolicyVol.11,2019.millideresasparaelsectoral2030”,March2023.140.EcofysandAdelphi,“TheCarbonTaxinSweden”,September2018.172.MinisteriodeEnergía,“EnergíamásMujer”,accessedAugust2023.141.CarbonPricingLeadershipCoalition,“WhatistheImpactofCarbonPricing173.GlobalSolarAtlas,accessedAugust2023.onCompetitiveness?”,June2016.174.UnitedNations,“AddisAbabaActionAgenda”,2015.142.ThomasDouenneandAdrienFabre,“YellowVests,PessimisticBeliefs,andCarbonTaxAversion”,AmericanEconomicJournal:EconomicPolicy175.IEG-G20,“TheTripleAgenda”,2023.Vol.14,2022.176.ConvergenceBlendedGlobalFinance,“StateofBlendedFinance2022”,2022.143.Yu-HuanZhao,“TheStudyofEffectofCarbonTaxontheInternationalCompetitivenessofEnergy-intensiveIndustries:AnEmpiricalAnalysisof177.ConvergenceBlendedGlobalFinance,“HowDFIsDeployCatalyticalOECD21Countries,1992-2008”,EnergyProcediaVol.5,2011.Capital”,2022.144.EuropeanCommission,“CarbonBorderAdjustmentMechanism”,accessed178.HomiKharas,“TheFutureofExternalDevelopmentFinance”,DukeAugust2023.University’sConferenceonInternationalDevelopment,2018.145.PhillipWild,“Determiningcommerciallyviabletwo-wayandone-way179.CenterforGlobalDevelopment,“TakingStockofMDBandDFIInnovations‘Contract-for-Difference’strikepricesandrevenuereceipts”,EnergyPolicyforMobilizingPrivateCapitalforDevelopment”,2022.Vol.110,2017.180.Inthiscontext,an“originatetosell”modeliswhenaDFImakesa146.InternationalenergyAgency,“Policydatabase”,2023.concessionalloantoagreenprojectinitsinitial,riskierstage,andsellstheloantoadifferent(possiblyprivate)lenderwhentheprojectreachesa147.XiaolingOuyangandBoqiangLin,“Levelizedcostofelectricity(LCOE)ofmoremature,saferstage.renewableenergiesandrequiredsubsidiesinChina”EnergypolicyVol.70,2014.181.H2GlobalStiftung,“TheMarketRamp-UpofRenewableHydrogenanditsDerivatives-theRoleofH2Global”,2023148.BundesministeriumfürWirtschaftundKlimaschutz(BMWK),“FundingprogrammeforCCfD”,accessedJune2023.182.ModellingresultsofDeloitteEnergyTransitionInvestmentCalculatorbasedonIEA’sNet-ZeroEmissionsscenario.149.BehrangShirizadehandPhilippeQuirion,“Low-carbonoptionsfortheFrenchpowersector:Whatroleforrenewables,nuclearenergyand183.BasedonthenationalcentralbanklendingratesandtheWACCcarboncaptureandstorage?”,EnergyEconomicsVol.95,2021.compositionofrenewables(IRENA),weassumeanequity-debtratioof30:70inadvancedeconomiesand50:50fordevelopingones,andthe150.InternationalMonetaryFund,“FossilFuelSubsidiesData:2023Update”,overallWACCvaluesaccountfor4.9%inadvancedeconomiesand9%inAugust2023developingeconomies.47FinancingtheGreenEnergyTransition:AUS$50trillioncatchEndnotes184.UnitedNations,“WorldLeadersSummit-DialogueII:Inequality–IstheCOVID-19crisisreallyagame-changer?”,15thUnitedNationsConferenceonTradeandDevelopment,October2021.185.Deloitte,“TheTurningPoint–AGlobalSummary”,June2022.186.InternationalEnergyAgency,“InnovationGaps”,May2019.187.PelinBolatandChristianThiel,“Hydrogensupplychainarchitectureforbottom-upenergysystemsmodels.Part2:Techno-economicinputsforhydrogenproductionpathways”,InternationaljournalofhydrogenenergyVol.39(17),2014.188.Hydrogen4EU,“Chartingpathwaystoenablenetzero–2022edition”,December2022.189.EuropeanCommission,“JointResearchCentreDataCatalogue”,accessedAugust2023.190.InternationalEnergyAgency,“GlobalHydrogenReview:Assumptionsannex”,2021.191.ArgonneNationalLaboratory,“Open-AccessSoftwareandDatabase”,accessedAugust2023.48FinancingtheGreenEnergyTransition:AUS$50trillioncatchAuthorsAuthorsDr.JohannesTrübyDeloitteEconomicsInstituteProf.Dr.BernhardLorentzPartnerDeloitteFranceDeloitteCenterforSustainable+33155616211ProgressFoundingChairjtruby@deloitte.frManagingPartnerDeloitteGermany+4915114881437Dr.BehrangShirizadehblorentz@deloitte.deDeloitteFinancialAdvisoryManagerDeloitteFranceDr.PradeepPhilip+33670268419DeloitteEconomicsInstitutebshirizadeh@deloitte.frPartnerDeloitteAustralia+61416214760pphilip@deloitte.com.auClémentCartryClémenceLévêqueDeloitteFinancialAdvisoryDeloitteFinancialAdvisorySeniorConsultantDeloitteFranceConsultantDeloitteFrance+33140882817+33140882800ccartry@deloitte.frcleveque@deloitte.frVincentJacamonDeloitteFinancialAdvisoryConsultantDeloitteFrance+33140882800vjacamon@deloitte.fr49FinancingtheGreenEnergyTransition:AUS$50trillioncatchGlobalcontactsGlobalcontactsJenniferSteinmannGlobalSustainability&ClimatePracticeLeaderjsteinmann@deloitte.comNealBaumannGlobalFinancialServicesIndustryLeadernealbaumann@deloitte.comHans-JuergenWalterGlobalFinancialServicesIndustrySustainabilityLeaderhawalter@deloitte.deAspecialthankstothefollowingindividualswhoprovidedthesupporttomakethisreportpossible:AshishGuptaGrzegorzJurczyszynRichardBaileyBlytheAronowitzMeredithMazzottaSueHarveyBrownChaanahCrichtonMichaelStanfordTraceyMcQuearyDhairyaRajaMichelleVarneyUttkarshAsharFreedom-KaiPhillipsRebekahThomas50DeloitteCenterforSustainableProgressTheDeloitteCenterforSustainableProgress(DCSP)isfocusedonaddressingchallengesandidentifyingopportunitiesinlinewithreachingthegoalsoftheParisAgreement,bydrivingadaptationandmitigationactivities,fosteringresilience,andinformingdecarbonizationpathways.Byassemblingeminentleadersandinnovatingthinkers,theDeloitteCenterforSustainableProgressexploreseffectiveandground-breakingsolutionsandcollaboratestoenableactiononthecrucialglobalchallengesfacinghumanity.AboutthisPublicationDeloittereferstooneormoreofDeloitteToucheTohmatsuLimited(DTTL),itsglobalnetworkofmemberfirms,andtheirrelatedentities(collectively,the“Deloitteorganization”).DTTL(alsoreferredtoas“DeloitteGlobal”)andeachofitsmemberfirmsandrelatedentitiesarelegallyseparateandindependententities,whichcannotobligateorbindeachotherinrespectofthirdparties.DTTLandeachDTTLmemberfirmandrelatedentityisliableonlyforitsownactsandomissions,andnotthoseofeachother.DTTLdoesnotprovideservicestoclients.Pleaseseewww.deloitte.com/abouttolearnmore.Thiscommunicationcontainsgeneralinformationonly,andnoneofDeloitteToucheTohmatsuLimited(“DTTL”),itsglobalnetworkofmemberfirmsortheirrelatedentities(collectively,the“Deloitteorganization”)is,bymeansofthiscommunication,renderingprofessionaladviceorservices.Beforemakinganydecisionortakinganyactionthatmayaffectyourfinancesoryourbusiness,youshouldconsultaqualifiedprofessionaladviser.Norepresentations,warrantiesorundertakings(expressorimplied)aregivenastotheaccuracyorcompletenessoftheinformationinthiscommunication,andnoneofDTTL,itsmemberfirms,relatedentities,employeesoragentsshallbeliableorresponsibleforanylossordamagewhatsoeverarisingdirectlyorindirectlyinconnectionwithanypersonrelyingonthiscommunication.©2023.Forinformation,contactDeloitteGlobal.DesignedbyCoReCreativeServices.RITM1609765

1、当您付费下载文档后，您只拥有了使用权限，并不意味着购买了版权，文档只能用于自身使用，不得用于其他商业用途（如 [转卖]进行直接盈利或[编辑后售卖]进行间接盈利）。
2、本站所有内容均由合作方或网友上传，本站不对文档的完整性、权威性及其观点立场正确性做任何保证或承诺！文档内容仅供研究参考，付费前请自行鉴别。
3、如文档内容存在违规，或者侵犯商业秘密、侵犯著作权等，请点击“违规举报”。

碎片内容

碳中和的最新文档