为向净零未来转型提供资金（英）-世界经济论坛VIP专享VIP免费

下载本文档

阅读 355
格式 pdf
大小 7.11 MB
约46页
2023-04-18
收藏
点赞(0)
海报
举报

Financing the Transition

to a Net-Zero Future

INSIGHT REPORT

OCTOBER 2021

In Collaboration with

Oliver Wyman

Contents

Foreword

Executive summary

1 The transition ﬁnance challenge

1.1 The growing need for transition ﬁnance

1.2 An observed increase in capital ﬂows

1.3 Key unmitigated challenges

2 Innovative blueprints for capital mobilization

2.1 Innovative blueprints supported by an

enabling ecosystem

2.2 Transformative business models based on

industry-ﬁnance collaboration

3 Public intervention to accelerate progress

Conclusion

Contributors

Endnotes

Images: Getty Images

reserved. No part of this publication may

be reproduced or transmitted in any form

or by any means, including photocopying

and recording, or by any information

storage and retrieval system.

Disclaimer

This document is published by the

World Economic Forum as a contribution

to a project, insight area or interaction.

The ﬁndings, interpretations and

conclusions expressed herein are a result

of a collaborative process facilitated and

endorsed by the World Economic Forum

but whose results do not necessarily

represent the views of the World Economic

Forum, nor the entirety of its Members,

Partners or other stakeholders.

Financing the Transition to a Net-Zero Future 2

Foreword

The world stands at a crossroads: as the global

economy emerges from the pandemic-driven

economic crisis, humanity can choose to uphold

the status quo or resolve to “build back better”,

transforming existing structures to promote growth

in alignment with long-term sustainability objectives,

including targets established by the Paris Agreement

on climate change. Short of demonstrating concerted

and rapid action to countervail the climate crisis,

humanity will be confronted with a global disaster,

crushing our planet and its complex biosphere,

with life altering implications for humankind.

To tackle the crisis, public and private stakeholders

have announced ambitious pledges to reduce

greenhouse gas emissions. In parallel, technological

advances, such as the expansion of renewable

energy and the exploration of hydrogen, are

increasing the attainability of a net-zero future. The

proliferation of climate-related social movements

around the world is further energizing individuals,

institutions and nations to commit to net zero.

Nevertheless, the progress made to date is not

sufﬁcient. The Intergovernmental Panel on Climate

Change (IPCC) report released in August, entitled

Climate Change 2021: The Physical Science Basis,

reveals an alarming reality: the globe is nearly 1°

Celsius warmer than at any point in time in the

past 2,000 years, with total warming expected to

increase beyond 1.5°C by 2040. To limit global

warming to 1.5°C, innovative and bold solutions

enabling industrial decarbonization are required.

They are a prerequisite to allow the elimination of

the ﬁnal 40% approximately of global emissions.

This raises the question of what is preventing these

solutions from being deployed in the near future.

A few critical drivers provide an answer:

– Several solutions required for industrial

decarbonization are early-stage technologies

(e.g. green ammonia for shipping)

and require expansion through capital

ﬂows and thoughtful deployment.

– While a signiﬁcant amount of capital is

ﬂowing into climate solutions (e.g. renewable

energy), it appears that on the critical issue of

ﬁnancing technologies that will solve industrial

decarbonization, the ﬁnancing system will not

deliver as things stand.

– Since the issue is one of market failure, it will

not be resolved by the actions of individual

stakeholders alone; instead a mechanism is

needed for different stakeholders to co-design

solutions and coordinate climate action.

– A targeted analysis of speciﬁc decarbonization

technologies shows that some of the

technologies being relied upon to deliver

industrial decarbonization are not likely to

be ﬁnanceable in the next decade without a

signiﬁcant combination of green surcharges,

carbon taxes or public incentives.

– The private sector has a key role to play but its

efforts will need to be urgently complemented

by public-sector intervention, in particular

through multilateral development banks as

anchor investors.

The Financing the Transition to a Net-Zero

Future initiative of the World Economic Forum,

in collaboration with Oliver Wyman, was launched

in 2020 to accelerate the mobilization of capital

towards these early-stage decarbonization

technologies. The initiative has engaged a

multistakeholder community of ﬁnanciers, industry

stakeholders, philanthropists and public institutions

to analyse speciﬁc technologies in the steel,

aviation and shipping sectors to develop particular

mechanisms for the different stakeholders to co-

design solutions and identify policy interventions

necessary to mobilize private capital.

In this critical moment in the ﬁght against

climate change, we are grateful for the support

and contributions of the ﬁnancial sector and

development ﬁnance community, and our

industry collaborators from the Mission Possible

Partnership (MPP). We hope to continue

this dialogue at COP26, and beyond.

Matthew Blake

Head of Shaping the Future

of Financial and Monetary

Systems, World Economic

Forum LLC

Ted Moynihan

Managing Partner and Global

Head of Industries, Oliver

Wyman, United Kingdom

Financing the Transition to a Net-Zero Future 3

/46

下载本文档

文本预览下载提示常见问题

FinancingtheTransitiontoaNet-ZeroFutureINSIGHTREPORTOCTOBER2021InCollaborationwithOliverWymanContentsForewordExecutivesummary1Thetransitionfinancechallenge1.1Thegrowingneedfortransitionfinance1.2Anobservedincreaseincapitalflows1.3Keyunmitigatedchallenges2Innovativeblueprintsforcapitalmobilization2.1Innovativeblueprintssupportedbyanenablingecosystem2.2Transformativebusinessmodelsbasedonindustry-financecollaboration3PublicinterventiontoaccelerateprogressConclusionContributorsEndnotes3468101315162036414244Images:GettyImages©2021WorldEconomicForum.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,includingphotocopyingandrecording,orbyanyinformationstorageandretrievalsystem.DisclaimerThisdocumentispublishedbytheWorldEconomicForumasacontributiontoaproject,insightareaorinteraction.Thefindings,interpretationsandconclusionsexpressedhereinarearesultofacollaborativeprocessfacilitatedandendorsedbytheWorldEconomicForumbutwhoseresultsdonotnecessarilyrepresenttheviewsoftheWorldEconomicForum,northeentiretyofitsMembers,Partnersorotherstakeholders.FinancingtheTransitiontoaNet-ZeroFuture2ForewordTheworldstandsatacrossroads:astheglobaleconomyemergesfromthepandemic-driveneconomiccrisis,humanitycanchoosetoupholdthestatusquoorresolveto“buildbackbetter”,transformingexistingstructurestopromotegrowthinalignmentwithlong-termsustainabilityobjectives,includingtargetsestablishedbytheParisAgreementonclimatechange.Shortofdemonstratingconcertedandrapidactiontocountervailtheclimatecrisis,humanitywillbeconfrontedwithaglobaldisaster,crushingourplanetanditscomplexbiosphere,withlifealteringimplicationsforhumankind.Totacklethecrisis,publicandprivatestakeholdershaveannouncedambitiouspledgestoreducegreenhousegasemissions.Inparallel,technologicaladvances,suchastheexpansionofrenewableenergyandtheexplorationofhydrogen,areincreasingtheattainabilityofanet-zerofuture.Theproliferationofclimate-relatedsocialmovementsaroundtheworldisfurtherenergizingindividuals,institutionsandnationstocommittonetzero.Nevertheless,theprogressmadetodateisnotsufficient.TheIntergovernmentalPanelonClimateChange(IPCC)reportreleasedinAugust,entitledClimateChange2021:ThePhysicalScienceBasis,revealsanalarmingreality:theglobeisnearly1°Celsiuswarmerthanatanypointintimeinthepast2,000years,withtotalwarmingexpectedtoincreasebeyond1.5°Cby2040.Tolimitglobalwarmingto1.5°C,innovativeandboldsolutionsenablingindustrialdecarbonizationarerequired.Theyareaprerequisitetoallowtheeliminationofthefinal40%approximatelyofglobalemissions.Thisraisesthequestionofwhatispreventingthesesolutionsfrombeingdeployedinthenearfuture.Afewcriticaldriversprovideananswer:–Severalsolutionsrequiredforindustrialdecarbonizationareearly-stagetechnologies(e.g.greenammoniaforshipping)andrequireexpansionthroughcapitalflowsandthoughtfuldeployment.–Whileasignificantamountofcapitalisflowingintoclimatesolutions(e.g.renewableenergy),itappearsthatonthecriticalissueoffinancingtechnologiesthatwillsolveindustrialdecarbonization,thefinancingsystemwillnotdeliverasthingsstand.–Sincetheissueisoneofmarketfailure,itwillnotberesolvedbytheactionsofindividualstakeholdersalone;insteadamechanismisneededfordifferentstakeholderstoco-designsolutionsandcoordinateclimateaction.–Atargetedanalysisofspecificdecarbonizationtechnologiesshowsthatsomeofthetechnologiesbeingreliedupontodeliverindustrialdecarbonizationarenotlikelytobefinanceableinthenextdecadewithoutasignificantcombinationofgreensurcharges,carbontaxesorpublicincentives.–Theprivatesectorhasakeyroletoplaybutitseffortswillneedtobeurgentlycomplementedbypublic-sectorintervention,inparticularthroughmultilateraldevelopmentbanksasanchorinvestors.TheFinancingtheTransitiontoaNet-ZeroFutureinitiativeoftheWorldEconomicForum,incollaborationwithOliverWyman,waslaunchedin2020toacceleratethemobilizationofcapitaltowardstheseearly-stagedecarbonizationtechnologies.Theinitiativehasengagedamultistakeholdercommunityoffinanciers,industrystakeholders,philanthropistsandpublicinstitutionstoanalysespecifictechnologiesinthesteel,aviationandshippingsectorstodevelopparticularmechanismsforthedifferentstakeholderstoco-designsolutionsandidentifypolicyinterventionsnecessarytomobilizeprivatecapital.Inthiscriticalmomentinthefightagainstclimatechange,wearegratefulforthesupportandcontributionsofthefinancialsectoranddevelopmentfinancecommunity,andourindustrycollaboratorsfromtheMissionPossiblePartnership(MPP).WehopetocontinuethisdialogueatCOP26,andbeyond.MatthewBlakeHeadofShapingtheFutureofFinancialandMonetarySystems,WorldEconomicForumLLCTedMoynihanManagingPartnerandGlobalHeadofIndustries,OliverWyman,UnitedKingdomFinancingtheTransitiontoaNet-ZeroFuture3Individualstakeholderactionwillnotsolvethepotentialmarketfailures,resultinginsignificantinvestmentgaps.Theco-designofsolutionsfocusedoninnovativefinancingapproaches,newwaysofdoingbusinessandde-riskingmeasuresarenecessary.Today,mechanismsrequiredtobringtogetherstakeholdersacrosstheecosystemtocollaborativelyco-designsolutionsdonotexiststructurally.Mechanismsallowingcollectiveactionaretheneedofthehour.Approximately$50trillioninincrementalinvestmentsisrequiredby2050totransitiontheglobaleconomytonet-zeroemissionsandavertaclimatecatastrophe.1Muchoftheemissionsabatementpre-2030willbedrivenbyexistingtechnologies(e.g.solar),butpost-2030abatementreliesonbreakthroughtechnologies,suchasenergyefficiencysolutions,hydrogen-basedfuels,bioenergyandcarboncapture/utilization/storagesolutions,amongothers.Aprerequisitetothesuccessfulexpansionanddeploymentinthe2030sisvalidationofthesebreakthroughtechnologiesatcommercialscaleinthe2020s.Significantcapitalneedstobesteeredforthetimelyindustrialdecarbonizationofhard-to-abatesectorsandaglobalenergytransition.Severaltechnologiesarenotyetcompetitivewiththeirgreenhouse-gas-emittingalternativesandareintheearlystagesofdevelopment.Theytypicallyexperienceamarketfailurecalled“valleyofdeath”,characterizedas“aninabilityofbusinessestosecurefinancingfortheinitialcommercial-scaledeployment”ofprojectsandassets.2Furthermore,investmentsinthesetechnologiescanbecapitalintensiveandhighrisk,whichwillresultinaglobalfinancingshortfall,asthingsstand.Thewidespreadconsensusisthattheclimatecrisiscannotbesolvedbypubliccapitalalone.Asuccessfulandsustainabletransitionrequiresthemobilizationofprivatecapital.Whiletheglobalfinancialcommunityisrisingtothischallenge,aninvestmentgapremainsduetosupply-anddemand-sidefinanceissues.Onthesupplyside,firms,especiallynon-investmentgradecounterparties,lookingtodeploybreakthroughtechnologieshavehighlighteddifficultiesinsecuringaffordablefinancing.Capitaliseithertooexpensive,short-datedornotflowingsufficiently.Thisisdrivenbyamismatchoffinancierriskappetiteandinadequatede-risking.Onthedemandside,investorsflagthelackof“bankable”opportunitiesandalimitedpipeline.Theseissuesarefurtherexacerbatedbypolicy/regulatoryuncertainty,limitedclarityandgranularityontransitionpathwaysandalackofdatatoinformdecisionsandtrackprogress.Thisreportdiscussesthreefundamentalfindingsthathelpovercomekeychallengesbysolvingforincreasedbankabilitythroughreplicableblueprintsandcollectiveaction.1.Theinnovativeblendingofcapitalsupportedbyanenablingecosystemisneeded,wheredifferentsourcesofpublicandprivatecapitalarebroughttogetherintechnology-specificfinancingblueprints.Todothiseffectively,mechanismsthatactivatecollaborationamongmultiplestakeholdersarenecessary.2.Transformativebusinessmodelsareessential,whereindustryparticipantsandcapitalprovidersworktogethertoestablishnewcontractsandwaysofdoingbusinesstoincreasetheprobabilityofcommercialsuccess.Transformationcanbeachievedthroughmeasurestostimulatedemandandestablishreliable,scalablesupply.3.Targetedpublicinterventioniscritical,focusedonthedesignofincentiveschemesrewardingearlymoversadoptinginnovativetechnologicalsolutionsandde-riskingschemestomitigateinvestmentrisksuniquetotheseinnovativesolutions.Theinnovativeblendingofcapital:Sophisticatedcapitalstructures,whichblenddifferentsourcesofpublicandprivatecapital,arenecessarytoclosetheinvestmentgapforthedeploymentofbreakthroughtechnologies.Thesewillallowfinancingtobeoffered,consistentwithstakeholderinvestmentframeworksandriskappetite.Overall,afarmorestrategicapproachtoriskallocationisnecessaryforinnovativesolutionsthanforconventionalprojects.Aprerequisitetothiscollaborativefinancingapproachisactivationofinvolvementfromvariousstakeholdersinthetransitionfinanceecosystem.SuchcollectiveactionExecutivesummaryAmultifoldincreaseinprivatecapitalflowsisneededtodeploy,validateandexpandcriticalbreakthroughtechnologiesinthenextdecade.FinancingtheTransitiontoaNet-ZeroFuture4canbeachievedthroughcoordinationbyanchorinvestors.Multilateraldevelopmentbanksarebestpositionedtoplaythisrolebutwillneedtoworkwiththeprivatesectortoestablishspecificsolutionsandstructurebankableopportunities.Transformativebusinessmodels:Mechanismstoallowbusinessestoestablishbankableprojectsaretheneedofthehour.Businessesshouldlooktoidentifykeyperformancedrivers,sometimesinpartnershipwithcapitalproviderstobettercommercializeoperationsbasedonbreakthroughtechnologies,andreducethecostsofinnovation,andasaresultunlockgreaterflowsofcapital.Thisinvolvesidentifyingthegreatestinnovationandinvestmentrisksandsubsequentlynewwaysofdoingbusinesstoimproveunderlyingcashflows.Companieswillberequiredtointroducedemand-andsupply-sidecontracts(e.g.offtakeagreements,tollingstructures,availability-basedpayments,feedstockguarantees),insomesectorsmovingawayfromspotpricing,andingeneralidentifymechanismsthatallowsystemicreplicationofcommercialsuccess.Businessmodelswillneedtoalsoproactivelyde-riskthegreatestareasofinnovationrisk,co-developingsolutionswithstakeholdersacrosstheclimateecosystem.Targetedpublicintervention:Theneedtoofferincentivesforearlymovers,significantlyde-riskinvestmentsininnovativesolutionsandestablishclearpolicysignalsisurgent.Fourthematicenablerscansupportprogressonthisfront:A.Improvetherisk-returnprofileofbreakthroughdecarbonizationprojects,byofferingpredictable,adequateandlong-datedincentivesandde-riskingmeasures.B.Coalesceamultistakeholderecosystemforcollectiveaction,catalysingdiversesourcesofpublicandprivatecapitalthroughenhancedinvestmentframeworksandstrategicriskallocation/sharing,withmultilateraldevelopmentbanksplayingtheanchorinvestorrole.C.Establishclearpathways,standardsandmandatesglobally,tofocuseffortsonthemostimpactfulclimatesolutions,mitigatetheriskofstrandedassets,avoidfinanciershavingtopick“winnersandlosers”andensurealevel-playingfieldwithconsistentschemesandmandates.D.Designawayperverseincentivesandoutcomes,wherepolicies/regulatoryactivitiesmayunintentionallydivertcapitalawayfromthe“greening”ofhard-to-abatesectorsand/oremergingmarketsanddevelopingcountries.Whilethetransitionwilllikelybecomplex,thereisarealappetitefromindustryforthoughtfulpartnershipandforcollaborationbetweenprivateandpubliccapitalproviders.Itismissioncriticaltocapitalizeuponthisappetiteimmediatelythroughmeaningful,structuralaction.Byproposinganinitialsetoffinancingapproachesandde-riskingsolutions,thisreportseekstoinitiateanimportantdiscussiononhowtorapidlyacceleratethedeploymentofcapitaltowardsbreakthroughtechnologies.FinancingtheTransitiontoaNet-ZeroFuture5Thetransitionfinancechallenge1Emissionsabatementpost-2030primarilyreliesonbreakthroughtechnologies.Theseneedtobetestedandvalidatedatcommercialscaleinthecomingdecade.FinancingtheTransitiontoaNet-ZeroFuture6FIGURE1Asthingsstand,thefinancialsectorisnotlikelytodelivertheradicalincreaseininvestmentrequiredinthenextfewyearstowardstheseinnovativesolutions.Severalbarriersexist,drivenbydemand-andsupply-sidefinancingissues.Thiswilllikelyleadtosignificantinvestmentgapsandasubsequentmarketfailuretodelivernetzero.Theyear2021isexpectedtobeamilestoneintheglobalfightagainstclimatechange,withtremendousmomentumaheadoftheUnitedNationsClimateChangeConference(COP26)inGlasgow.Atotalof193countrieshaveadoptedtheSustainableDevelopmentGoals(SDGs)3and192countrieshavesubmittednationallydeterminedcontributionsoutliningplannedclimateactionsandambitions.4Inparallel,nationalnet-zerocommitmentsarebeingstrengthenedthroughtargetedregulation;inJuly2020,theEuropeanCommissionadoptedlegislativeproposalsoutliningthepathtoEUclimateneutralityby2050,withanintermediatetargetofa55%reductioninemissionsby2030.5Still,theprogressmadetodateandcurrenttrajectoriesarenotenoughtoachievethetargetoftheParisAgreementonclimatechangeoflimitingglobalwarmingto1.5°C.Toavertacatastrophicclimatedisaster,moreneedstobedonetoaidindustrialdecarbonization.Globalcleanenergyinvestmentsofapproximately$4-5trillionarerequiredannuallyby2030–morethanthreetimesthecurrentrate.6Tosolvethetransitionchallenge,breakthroughtechnologiesarerequiredforbothenergytransitionandindustrialdecarbonization.Technologiesthatarecurrentlyunderdevelopmentwillberesponsibleforover40%ofglobalgreenhousegas(GHG)emissionreductionsin2050(Figure1).Industrialdecarbonizationrequiresnew,innovativetechnologies,suchascarboncaptureandstorage(CCS),greenhydrogen,sustainableaviationfuels(SAF)andgreenammonia,amongothers.However,severaltechnologiesarenotyetmatureorcompetitivewiththeirGHGemittingalternativesandaretypicallyintheearlystagesofdevelopmentandvalidation.IntheleaduptotheParisClimateConferencein2015,thefocuswasonestimatingtheR&Dneedacrosssectorsandtechnologies.Throughsuccessfulventurefunding,thesetechnologieshavemovedpasttheearlyR&Dstagebutarenotyetmatureenoughformarket-basedfunding.Capitaltosupporttheircommercial-scaledeploymentandtestingisurgentlyrequired.AttributionofCO2emissionsreductiontoselectpathwaysintheInternationalEnergyAgency’sNetZeroby2050scenario205020300%10%20%30%40%50%60%70%80%90%100%TechnologiesinthemarketTechnologiesunderdevelopmentBehaviourchangesSource:InternationalEnergyAgency,NetZeroby2050,2021,p.16.Humanitycanillaffordtowaitfortheinnovationandfinancingecosystemaroundindustrialdecarbonizationtodevelopnaturally.Thesuccessesofrenewableenergymustbereplicated,suchassolarandwind,infiveyearsinsteadof30.Mobilizingcapitaltowardsbreakthroughtechnologiesforindustrialdecarbonizationatthescaleandspeedneededwillrequirenewwaysofdoingbusiness.Innovativefinancingmechanismsbackedbyriskcapital,strategicprojectstructuringandcollaborationwithcorporatesarenecessarytomovethesetechnologiesonthetechnologyreadinesscurve.AsBillGates’notes,“toacceleratethevirtuouscycleofinnovation,weneedanewmodelforfinancing,producing,andbuyingnewclean-energytechnology”.7TheFinancingtheTransitiontoaNet-ZeroFutureinitiative,acollaborationbetweentheWorldEconomicForumandOliverWyman,waslaunchedin2020tobeginidentifyingsolutionsthatwouldacceleratefinancingtowardsinnovativebreakthroughtechnologiesinkeyhard-to-abatesectors.Mobilizingcapitaltowardsbreakthroughtechnologiesforindustrialdecarbonizationatthescaleandspeedneededwillrequirenewwaysofdoingbusiness.FinancingtheTransitiontoaNet-ZeroFuture7Thisinitiativeengagesover50leadingfinancialinstitutions,includingbanks,insurers,multilateraldevelopmentbanks(MDBs),developmentfinanceinstitutions(DFIs)andassetowners/managers.TheinitiativesitswithintheMissionPossiblePartnership(MPP)FinanceHubandreliesonindustrycollaborationthroughitssectorverticals.Thisreport,aninterimoutputoftheinitiative,seekstostartadialogueonthesolutionsandmechanismsnecessarytosteercapitaltobreakthroughtechnologies.Itfocusesonfoursector-technologypairs:–Aviation:Sustainableaviationfuelviagasification/Fischer-Tropsch(GAS-FT)–Steel:Carboncaptureandstorage(CCS)–Steel:Hydrogen-baseddirectreducediron(H2-DRI)–Shipping:Ammonia-poweredshipThesepairshavebeenprioritizedtocurateamixoftechnologiesinhigh-impactsectorstoyieldcross-cuttinginsights.Morebroadly,theseinsightsarebasedoninputgatheredfromthefollowingsources:–10workshopswithcorporatesfromhard-to-abatesectors–20workshopswithpublicandprivatecapitalproviders–Severalbilateralmeetingswiththefinancialsector,MDBsandcorporatesInthetransitiontonetzero,sectorswilltransitionatdifferentspeeds.Heavyindustryandheavy-dutytransportcomprise25%ofglobalCO2emissions,asharethatcoulddoubleby2050.8Thesesectorsfaceuniquelydifficultjourneystonetzero,giventheearly-stagenatureofreplacementtechnologiesandthehighcostassociatedwithreplacingexistingassetsandprocesses.Theyrequiremassivecapitalinvestmentstoscaleupbreakthroughproductsandprocessestoapointwheretheycaneffectivelycompeteagainstexistinghigh-emissionalternatives(Figure2).Projectswithinthesesectorswillbecharacterizedbyhighoperatingexpenses,givenexpensiveproductioninputs(e.g.hydrogen),andarelikelytorequiresignificantfinancingforcapitalandoperatingexpenditures.Theserealitiescombinedwithunmitigatedtechnologyandperformanceriskscreateauniqueinvestmentchallenge.ThegrowingneedfortransitionfinanceScaleandnatureofthechallenge1.1AnnualaveragecapitalinvestmentintheNetZeroby2050scenario(in$trillion)FIGURE2InfrastructureIndustryTransportBuildingsFuelproductionElectricitygenerationElectriﬁcationElectricitysystemHydrogenCCUSFossilfuelsOtherBioenergyOtherrenewablesEfﬁciencyNote:CCUS:carboncapture,utilizationandstorage.Source:InternationalEnergyAgency,NetZeroby2050,2021,p.81.US$trillion2016-20203020402050BysectorBytechnologyarea345012US$trillion2016-20203020402050345012FinancingtheTransitiontoaNet-ZeroFuture8Publicsupportthroughmechanismssuchaspartiallyenablealevelplayingfieldbetweengreenandbrowntechnologies.Policy-makersupportinestablishingamarketpricingmechanism,suchasthecarbonborderadjustmentmechanism(CBAM),willhelpinjectcapitalintothestructureoftheseopportunitiesasproducersbeginpricingincarboncostsandexternalities.9However,withoutaglobaladjustmentmechanismandfurthertechnologicalmaturity,breakthroughtechnologieswillnotbecompetitivebasedoncarbonvaluationalone.Intargetstate,globalcarbonmarketsandamaterialpriceoncarbonwillbetteralignincentives.Intheirabsence,otherinterimmechanismsmustbeleveragedtocatalyseprivatefinancerapidlytoprogressbreakthroughtechnologies.Acrossthein-scopesectorsofsteel,aviationandshipping,rapidadvancesinthedevelopmentoftechnologieshavecreatedmeaningfulpathstowardsnetzero(Figure3).Thesesectorscollectivelyaccountforupto15%ofannualCO2emissions.10Thescaleoftransitionnecessaryacrossthesesectorsisimmense,whichcreatesanannualinvestmentopportunityof$0.8trillionto$1.1trillion.11Investmentopportunityacrossin-scopesectorsSelectedtransitionpathwaystowardsnetzeroforin-scopesectorsFIGURE3Source:WorldEconomicForumandOliverWymanwithinputfromtheMissionPossiblePartnership.Useofpurehydrogeninplaceofmethane/syngasasthereductantintheproductionofDirectReducedIronCaptureandstoreCO2beforereleasingintoatmosphereorcaptureandrecycleCO2forfurtheruseUseofcharcoalinsteadoffuelasafeedstockinFurnace-BasicOxygenFurnace(BF-BOF)productionReduceironoreviadirectelectrolysisTransitionalsolution,allowspassengersandairlinestoinvestincarbonreductionprojectsthroughadditionalfeesAircraftpoweredbyelectricity,potentiallyproducedthroughfuelcellscombininghydrogenwithoxygenfromtheairtogenerateelectricityFuelproducedfromrenewablesources(e.g.,agriculturalresidue,recycledcarbon,usedcookingoils)CarrierpoweredbybiofueltankorinternalcombustionengineCarrierpoweredbyammonia,producedwithzero-carbonhydrogenAviationShippingSteelHydrogen-BasedDirectReducedIron(H2-DRI)CarbonCaptureandStorageorUse(CCS/CCU)BiomassUseElectrolysisCarbonOffsettingElectricandHydrogenFuelCell(HFC)AviationSustainableAviationFuel(SAF)BiofuelsAmmoniaFocusofreportFinancingtheTransitiontoaNet-ZeroFuture9InApril,PresidentBidenconvenedalandmarkLeaders’SummitonClimatewithapledge“tolaunchaninternationalclimatefinanceplantohelpunderwritethetransitiontoadecarbonizedglobaleconomy”.12TheUnitedNationsSecretary-Generalemphasizedthatto“buildatrulyglobalnet-zerocoalition,weneedabreakthroughonfinance”.13Thesedevelopmentssendaclearmessage:financehasacriticalroletoplayindevelopingasustainableglobaleconomy.Thefinancialcommunityisrisingtothischallenge.Inrecentyears,astepchangehasoccurredinthecommunity’sambitiononsustainablefinanceandresponsibleinvesting.Sustainablelendingtotalled$321.4billioninthefirsthalfof2021,settingafirsthalfall-timerecord.AccordingtoBloombergdata,in2020,despitethepandemic,globalflowstowardsenergytransitioninvestmentstotalledapproximately$501billion.Inthefirsthalfof2021,about$552billioninsustainablefinancebondswereissued,a76%increase.14Inparallel,momentumacrossthefinancialcommunityisalsobeingbuiltthroughambitiouscommitmentsonnetzero.LeadingMDBsmadesignificantpledgestoclimatealignedandtransitionfinanceopportunitieswitheightinstitutionscommittingatleast$66billioninclimatefinancingcommitments.15Acrosstheprivatesector,morethan250institutionsrepresentingover$80trillioninassetsundermanagementhavecommittedtoalignportfolioswithnet-zeropathwaysby2050throughtheGlasgowFinancialAllianceforNetZero.Thesecommitmentsareacrossthespectrumofprivatecapitalproviders,includingbanks,assetownersandassetmanagers,withsub-sectoralliances,suchastheNet-ZeroBankingAlliance,Net-ZeroAssetOwnerAlliance,Net-ZeroAssetManagersinitiative,Net-ZeroInsuranceAllianceandParisAlignedInvestmentInitiative,amongothers.Appetiteandinterestacrossthefinancialsectorexistandneedtobeharnessed.Whiletheupwardtrajectoryincapitalflowstoclimate-aligned,breakthroughopportunitiesisencouraging,thetargetbothonscaleandcoverageofinvestmentisnotbeingmet.GlobalinvestmentinbreakthroughtechnologiessuchasCCSandhydrogenisinthelowbillions.Thesecapitalflowsarehighlyskewedbyahandfuloflargedealsandarenotreflectiveofbreakthroughtechnologiesbeingfinancedanddeployedatscale.Investmentsincriticaldecarbonizationsolutions,specificallycarboncapture,utilizationandstorage,hydrogenandbioenergy,totalledonlyabout$16billionin2020.16Whileittookadecadetodoubleglobalenergytransitioninvestmentsfrom$235billionin2010to$500billionin2020,17investmentsinthesecriticalbreakthroughtechnologiesmustgrowmorethanmultifoldinthenextdecade(Figure4).Toaddressthehighlylikelyinvestmentgap,immediatemarket-widestakeholderactionbackedbyenablingpublicpoliciesistheneedofthehour.AnobservedincreaseincapitalflowsAmbitionandscaleofcapitalflows1.2InvestmentneedsintheInternationalEnergyAgency’sNetZeroby2050scenarioandcurrentlevelsFIGURE4Source:InternationalEnergyAgency,NetZeroby2050,2021;BloombergNEF,EnergyTransitionInvestmentTrends,2021;OliverWymananalysis.1.Decarbonizationtechnologieshereareinclusiveofcarboncapture,utilizationandstorage(CCUS),hydrogenandbioenergy.2.Theinvestmentlevelisreﬂectiveofaverageinvestmentfrom2016to2020.TotalannualaveragecapitalinvestmentProjected2030Estimated20202Projected2030Estimated2020Annualaveragecapitalinvestmentforbreakthroughdecarbonizationtechnologies1~US$4.3trillion~3xincreaserequired>10xincreaserequired~US$1.4trillion~US$300-500billion~US$16billionWhiletheupwardtrajectoryincapitalflowsisencouraging,thetargetbothonthescaleandcoverageofinvestmentisnotbeingmet.FinancingtheTransitiontoaNet-ZeroFuture10ProfileofcapitalflowsThereisnodoubtthattheinnovative,cleantechnologiesthatarenecessaryforindustrialdecarbonizationarenotreceivingthequantumofinvestmentrequired.Theinvestigationforthisreportsuggeststhattheprofileofcurrentflowsisalsonotadequatetoexpandbreakthroughtechnologies.Lookingatonesegmentofflows–climate-alignedbonds–revealsthatabout90%offlowsareinvestmentgradeandratedBBBorbetter18(Figure5)while,inpractice,non-investmentgradecompanies(e.g.SMEs)requiresignificantfinancing,withtheirfinancingneedscurrentlyunmet.Climate-alignedbondsarealsoheavilyskewedtowardsthetransportsector,withover70%issuedgloballybytransportcompanies.Withintransport,over90%ofthevolumeismadeupoflargerailwaycompaniesratherthansub-sectorsatgreaterneedoftransitionfinancingsuchasaviation,shippingandpublictransport.Thesechallengesareindicativeofabroadermismatchbetweenneedsandcurrentflows.Ratingofclimate-alignedbondsbytenor(in$billions)FIGURE5Source:Giorgi,Amanda,andCarlottaMichetti,ClimateInvestmentOpportunities:Climate-AlignedBonds&Issuers2020,ClimateBondsInitiative,July2021,p.6.US$billionsPerpetual>20Y05010015020025030035010-20Y5-10Y0-5YAAAAAABBBCBBBSo,whatisdrivingthemismatch?Thisisbothasupplyanddemandissue.Globaleconomiestodayrelyonbillionsofdollars’worthofproperty,plantandequipment,andhaveoptimizedcrucialactivitiesoveryearstoreachmaximumefficiency.Newzero-carbontechnologiesrequirebillionsofupfrontcapitalinvestment,butalsoexperiencenewunmitigatedrisksandnear-termcompetitivedisadvantages.Thesechallengesarereflectedintheirhighercostscomparedtocurrentbrowntechnologies.Thisdifferenceincosts,termedasthe“greenpremium”,canbereducedastechnologiesmatureandarecommercializedthroughlarge-scaleinvestment.However,thiswillrequirediversesourcesofcapitaldependentonthetechnology’smaturity,alsoknownasthe“technologyreadinesslevel”(Figure6).Specifically,severalbreakthroughtechnologiesareintheseconddevelopmentstage:PilotProjectsandEarlyDeployment.Atthisstageofmaturity,breakthroughtechnologiescannotbereliablyincreasedbasedoncapitalmarketsalone(e.g.bondmarkets,carbonprices).Loweringthecostofproductionanddrivingdowngreenpremiumstoimproveuptakerequiresthemobilizationofcapitalwithdiverserisk-returnprofiles,tenorsandfeatures.Theserequireacombinationofconcessionarypubliccapital,philanthropiccapital,subpardebtandequityfrompubliccapitalprovidersandmission-basedinstitutions.FinancingtheTransitiontoaNet-ZeroFuture11MappingofcapitalsourcestothetechnologyreadinessofprojectsFIGURE6DevelopmentstageResearchandDevelopmentGreenPremiumPilotProjectsandEarlyDeploymentAtScaleCommercialDeploymentTechnologyreadinesslevel(TRL)TypicalsourcesofcapitalSource:WorldEconomicForumandOliverWyman;adaptedfromNationalAcademiesofSciences,EngineeringandMedicine,ThePowerofChange:InnovationforDevelopmentandDeploymentofIncreasinglyCleanElectricPowerTechnologies,NationalAcademiesPress,2016.1.2.3.4.5.AB6.7.8.9.ABCDECDEFocusofreportConcessionarypublicandphilanthropiccapital(e.g.grants)Subparcapitalfromdev.ﬁnance&multilateralinstitutionsEquityDebtCapitalmarketsExploratoryresearchtransitioningbasicscienceintolaboratoryapplicationsTechnologyconceptsand/orapplicationformulatedProof-of-conceptvalidationSubsystemorcomponentvalidationinalaboratoryenvironmenttosimulateserviceconditionsEarlysystemvalidationdemonstratedinalaboratoryorlimitedﬁeldapplicationEarlyﬁelddemonstrationandsystemreﬁnementscompletedCompletesystemdemonstrationinanoperationalenvironmentEarlycommercialdeploymentWide-scalecommercialdeploymentFinancingtheTransitiontoaNet-ZeroFuture12Whiletrillionsindollarsincapitalhavebeencommittedinrecentyears,thedeploymentofcommittedcapitalhasbeenslow.Thesolutionrequiressteeringasignificantportionofprivatecapitaltowardsclimatetechnologiesandsupportinginfrastructure,butbothsupply-anddemand-sidefinanceissuesremain(Figure7).Keyunmitigatedchallenges1.3KeychallengesslowingprivatecapitaldeploymenttowardsbreakthroughtechnologiesFIGURE7Source:WorldEconomicForumandOliverWyman,basedonFinancingtheTransitiontoaNet-ZeroFutureinitiativeinsights.1.MismatchintheproﬁleofopportunitiesLimitedpipelineof"bankableprojects"2.Politicalandregulatoryuncertainty3.Limiteddataandclarityonpathways4.1.MismatchintheprofileofopportunitiesbetweencapitalsupplyanddemandCompanieshaveidentifieddifficultiesinsecuringaffordablefinancingtodeploybreakthroughtechnologies.Keydriverslimitingfinancinginclude:–Returnsarenotcommensuratewiththelevelsofriskposed:Acombinationofhighcapitalrequirements,hightechnologyriskandgeneralvolatilityinthepriceofproductioninputsandoutputsinpilotprojectsmeansfinancialinstitutionsacrossthespectrumarenotable/willingtofinancetheseopportunitiesatlowlevelsofreturns.–Amismatchbetweenoffereddebtfinancingtenorsandfinancingneeds:Banks,whicharerequiredtofinancesignificantdebtlevels,haverelativelyshorttenorsof5to7yearsonaverage,givencapitaltreatmentpressuresandbroaderriskappetite.Theseopportunities,however,requirelonger-termfinancingduetosizeableconstructionperiodsandtheslowrampuponoperationstoprofitablelevels.–Limitedliquiditywhenfinancingsustainable,decarbonizationinfrastructure:Multipleinvestmentopportunities,especiallyearly-stagevalidationprojects,willbefairlyilliquid.Consequently,theinvestmentsposealiquidityrisk,especiallyintheabsenceofadequatesecuritizationsolutionsassecuritizationmarketsforsustainableinfrastructureprojectshavenotyetdeveloped.Thefinancingneedsoftheseprojectsrangefrom10-20yearsinduration,creatingamismatchbetweenprojectfinancingneedsandtheaverageappetiteofinfrastructureinvestors.FinancingtheTransitiontoaNet-ZeroFuture13–Thefiduciarydutyoflonger-terminstitutionalinvestors:Exacerbatingtheissue,investorssuchaspensionfundsandassetmanagershaveafiduciarydutyandareunwillingtotakeonsignificantlevelsofriskwithoutde-riskingmeasures.Theytypicallylookforlowbutstablereturns,whichtheseopportunitiesdonotguaranteegiventherisklevelsinvolved.2.LimitedpipelineofbankableprojectsOnthedemandside,investorsflagthelackof“bankable”opportunitiesandalimitedpipelineofprojects.Whiletherisk-returncurvemaypartlyexplainlimitedbankability,akeydriverisalsolimiteddemandbycompaniesthemselves.COVID-19associatedeconomicdisruptionhasresultedinstressedbalancesheetsforseveralfirms,especiallyinhard-to-abatesectors.Additionally,manyproductioninputsarestillexpensive,withno“first-moveradvantage”tobegained.Consequently,firmsmaychoosetodelayprojectsuntilthepriceandvolatilityofcriticalinputshavedeclined.Finally,capacityandresourceconstraintswithinfinancialinstitutionsareleadingtoapreferenceforinvestmentsina“portfolioofreadyprojects”and“counterparty-levelfinancing”asopposedtoproject-specificfinancing,whichtendstorequiresignificanttime,effortandtheupskillingoffrontofficeteams.Thesefactorspotentiallylimitinvestorsfromactivelystructuringandoriginatingtheseopportunitiestohelpcreateapipelineofviableprojects.4.LimiteddataandclarityonpathwaysAmidsttherapiddevelopmentofinnovativetechnologies,investorsarefacedwithanabsenceofcriticaldataandinformationinputsthatwouldotherwiseinformtheirfinancingstrategies.Withnouniversallyagreedupontransitionpathwayforeachsector,investorsareexpectedtoidentify“moonshottechnologies”,andpickwinnersandlosers.Withoutsectorpoliciesandtransitionpathways,thescalabilityoffinancingwillbediminishedasinvestorsmaydivergeintheirselectionofsolutions.Exacerbatingtheinformationgaps,financiersseekingcrediblemethodologiesandmetricstoassessportfolioalignmentandtheimpactsofinvestingaremetwithweakornon-existentdata,including:–Limiteddataontheemissionsreductionpotentialofnewopportunities–Lackofgranularsectortransitionplans–Inconsistentorincompleteclimate-relateddisclosures–LimiteddataonthepastperformanceofcomparableinvestmentsAddressingthesekeychallengesthatthefinancialsectorfaceswillbekeytomobilizingthecapitalnecessary.Thenextsectionillustratespotentialapproachestomitigatesomeofthechallengesoutlinedthroughtechnology-specificfinancingblueprintsanddealstructures.3.PoliticalandregulatoryuncertaintyMostjurisdictionsfacepoliticaluncertainty,withpoliticiansconsideringtheimplementationofprogressivepolicies,suchasacarbontaxorgreenfuelmandate,facingpotentialfalloutandbacklash.Consequently,thepossibilityofpoliticalrollbackswilllikelyresultinanincreasedriskofstrandedassets.Furthermore,currentshort-datedpoliciesandincentiveschemesintroduceunpredictabilityindemandandsupplydrivers.Consequently,investorsareunabletoeffectivelyhedgerisksaroundlonger-terminvestments(e.g.commoditypricerisksforgreenfuels)andthushesitatetoinvestsizeablesumsinnon-recourseopportunities.Ontheregulatoryend,frameworksarenotyetcoordinatedorconsistent,addingtoinvestorhesitanceregardinggreeninvestments.Anabsenceofcodified,widelyacceptedcertificationschemes,standards,methodologiesandtaxonomiesaddstothechallenge.Withnoclearcriteriafor“greenactivities”and“greentechnologies”,anabsenceofdefinitionsandguidelinesforclimate-alignedinvestmentispotentiallyhinderingfurtherinvestmentactivity.Further,dissonanceinpoliciesandframeworksacrossjurisdictionscaninadvertentlyhindercapitalflowstoemergingmarketsanddevelopingcountries(EMDCs).ThesurgeofgreenbondissuanceindevelopedeconomieshasnotbeenmirroredinEMDCs,withlessthan20%ofgreenbondissuanceindevelopingcountries.19Theneedforajusttransitionwillonlycontinuetogrowasenergyaccessexpandsglobally.20Thesechallenges,ifnotaddressed,willlimitcapitalflowstotheregionsthatarelikelytohavethegreatestneedforbreakthroughtechnologies.Companieshaveidentifieddifficultiesinsecuringaffordablefinancingtodeploybreakthroughtechnologies.FinancingtheTransitiontoaNet-ZeroFuture14Innovativeblueprintsforcapitalmobilization2Learningfromthemixedsuccessesofsolarenergyexpansion,itisclearthatreplicableblueprintsarenecessarytoimprovethebankabilityofprojectsrapidly.FinancingtheTransitiontoaNet-ZeroFuture15Thefindingsforthisreporthighlightkeysolutionsforbreakthroughtechnologyblueprints.Theseinclude:–Sophisticatedcapitalstructuresthatblenddifferentsourcesofpublicandprivatecapital,operatingwithinstakeholderrisk-returnframeworks–Theactivationofinvolvementfromvariousstakeholdersinthefinance,industryandpublicsectorsinanenablingecosystem.MDBsarebestpositionedtocoordinatetheseactivitiesandprocesses.–New,transformativebusinessmodels,reliantonspecificcontractsandmechanismsthatmitigatecashflowrisksandreducegreenpremiums.Thesewillinherentlyrequirecompaniestoworkmorecloselywiththeirfinanciers.Thissectionsynthesizeskeyfindingsonthedesignoftheblueprintthroughtwosubsections:–Capitalblendingblueprintsthroughacoordinatedmultistakeholderecosystem–TransformativebusinessmodelstoscalebreakthroughtechnologiesProjectsbasedonbreakthroughtechnologiesarecharacterizedbyarelativelyhigherriskprofile,inlargepartduetothelackofestablishedbusinessmodels.Investmentsinthisspaceareuniquelysensitivetorisks,withthekeyrisksencountereddetailedinFigure8.Ataprojectlevel,theevolutionofrisksthroughthelifecyclecanbemappedtomechanismsthatcanenhancethebankabilityofprojects.Theseareanalysedataproject/asset-leveltodecoupletheriskstofinancialviabilityofbreakthroughtechnologiesfromthatofcounterpartiesbeingfinanced.Thesemechanismstoenhancebankabilitycanbedesignedbasedontwocomponents:–Capitalblendingblueprintsthatrequirecapitalproviderstoeachplayauniquerole,consistentwiththeirrisk-returnframeworksandfinancingobjectives–New,transformativebusinessmodelsthatwillhelpscaleeachbreakthroughtechnologyThissubsectiondiscussesthefirstcomponent,outliningtheproposedroleeachstakeholdercouldplayintheenablingecosystem,aspartofthecollectiveactionnecessary.Innovativeblueprintssupportedbyanenablingecosystem2.1KeyinvestmentrisksacrosstheprojectlifecycleFIGURE8Source:WorldEconomicForumandOliverWyman,basedonFinancingtheTransitiontoaNet-ZeroFutureinitiativeinsights.TimePreparationMarket/structuralrisksTechnology/completionrisksPerformance/businessmodelrisksPolicy/regulatoryrisksOtherlong-termrisksDesign&constructionEarlyoperationsLateroperationsDEVELOPANENABLINGENVIRONMENTESTABLISH&OPERATEPROJECTSWITHSUPPORTMEASURESFinancingtheTransitiontoaNet-ZeroFuture16Market/structuralrisks:Theseincludemacroeconomicrisks(e.g.interestratefluctuations,exchangeratevolatility),sector-specificrisks(e.g.industrygrowthrate,marketconcentration),andriskswithinthecontextoftheexistingmarket(e.g.priceofsteel).Policy/regulatoryrisks:Thesearisefromthepotentialforchangeinpolicies,specificallyiftheseresultinalessfavourableregulatoryenvironmentforthetechnology/sector(e.g.changesinthedefinitionofclimate-alignedinvesting)and/orremovalofsupportiveincentives.Arbitrarygovernmentdecisionsonstateownershipandcontrolmayincreasethecostofcapitalgivenhighlevelsofunpredictability.Technology/completionrisks:Theseincludetechnicalchallengesinthetechnology’sdeploymentorfailureofthetechnologyaltogether.Alsoincludedaretypicaldesignandconstructionrisks,suchaspotentialplanninginsufficiencies,deficienttechnicalstandards,timedelays,overrunsincost,issueswithqualityandcompletionrisk.Performance/businessmodelrisks:Thesestemfromthenoveltyofthetechnology/businessmodel,andthequalityofoperationalperformanceofproductsandprocesses.Businessmodelriskscanbesegmentedintothefollowinggroups:1)demand-siderisks:uncertaintyaboutdemandsize,thepresenceofwillingofftakers(buyersofthegoodbeingproducedorservicebeingprovided),andtheilliquidityofdemand;2)supply-siderisks:uncertaintyandchallengesaroundprojectoperationsandkeyproductioninputs(e.g.theuninterruptedavailabilityofinputs,suchasmunicipalfeedstock,inputcommodityprices).Otherlong-termrisks:Someriskswillpersistacrosstheprojectlifecycle.Theseincludeproductsafetyandquality(e.g.thepotentialformalfunctionordefects),andrisksassociatedwiththestabilityoftheinvestorappetiteforthegiventechnologyovertime,whichinturnaffectstheabilitytorefinance.Anotherkeyriskisthatofstrandedassets,whichcanbeexacerbatedbylimitedclarityearlyonregardingnationaltransitionplansandpathways.Toeffectivelyovercomeand,insomecases,mitigatetheserisks,differentstakeholdersareneededtoplaycriticalrolesacrosstheprojectlifecycle.Mostimportantly,theecosystemofstakeholdersneedstofindnewwaysofworkingandcollaboratingtoensure:–Theproductionofsufficientrevenuesthroughnewtypesofcontracts–Consortium-ledapproaches,withrisksharingacrossstakeholderstoprovideaffordablefinancing–Targetedpublicandprivateinterventionwitheffectivede-riskingmeasuresWhilestakeholderrolesmayvaryacrossprojectsbecauseofvariationsintechnologyreadinesslevels,sectors,idiosyncraticprojectcharacteristicsandgeographies,commonalitiesintermsofthesolutionsandmechanismsrequiredareexpected.RecommendationsonstakeholderrolesareoutlinedinFigure9,andspecificfindingsunderthelensofsector-technologyopportunitiesarediscussedinsection2.2.FinancingtheTransitiontoaNet-ZeroFuture17Sourcesofcapitalandde-riskinginamultistakeholderecosystemFIGURE9Source:WorldEconomicForumandOliverWyman,basedonFinancingtheTransitiontoaNet-ZeroFutureinitiativeinsights.Note:SPV:specialpurposevehicleEcosystemstakeholdersBanksAlternativeinvestors/assetownersProjectowner(borrower)Projectcustomer/otherplayersTechnicalﬁrms/standardsettersGovernments/policy-makersMDBs/stateﬁnanciersExportcreditagenciesInsurersPreparationDesignandconstructionEarlyoperationsLateroperationsEstablish&operateprojectswithsupportmeasuresDevelopanenablingenvironmentNet-zeropledgeTransitionﬁnancecommitmentsNet-zeropledgeTransitionﬁnancecommitmentsNet-zeropledgeSustainabilitylinkedproductsNet-zeropledgeCertiﬁcationstandardsProcurementrequirementsLoanguaranteesGreenmandatesContractfordifference/feed-intariffCapital/taxincentivesTraditionaldebtﬁnancingDebtﬁnancingCarbontax/carbonpricingEquityinvestmentsDeconsolidategreenunitintoSPVsDebtﬁnancing(e.g.TermAloans,bondissuance)/reﬁnancingGreen/sustainabilitylinkedbondinvestmentsSaleofby-productsCreditenhancementsGreenbondinvestmentsEquityinvestmentsLoanguarantees/blendedﬁnance/subordinateddebttrancheFinancialguaranteesCreditinsuranceCapexgrantsOfftakeagreements/greenpremiumsEquity/taxequityinvestmentsTechandnormalriskmeasuresIndependentveriﬁcationoftechnologyPerformance/safetyassessmentsWarranties,equipmentperformanceguaranteesTechnicalassistance/capacitybuildingPortfolio/utilityapproachtocreatescaleTollingstructures/lowergreenpremiumsFinancing/primaryprojectactivitiesDe-riskingmeasuresFinancialinstitutionsPrivate-sectorinvolvementinfinancingandde-riskinginvestmentscantakeavarietyofforms.Net-zeropledgesandtangibletransitionfinancecommitmentscanhelpprovideclarityofambitionandplans,whilemakingdedicatedcapitalforhard-to-abatesectors,counterpartiesandinnovativesolutionsavailable.Relatedly,thedesignofnewsustainability-linkedproductscanincentivizethe“usersofcapital”todeployproceedsresponsiblyandtowardsareasofgreatestsustainabilityimpact.Withregardtofinancingandrefinancingofdecarbonizationprojects,stakeholderssuchasbanks,insurersandassetowners/managershaveauniqueroletoplayconsistentwiththeirrisk-rewardframeworks.Bankshavetraditionallyprovidedasignificantproportionoffinancingforgreeninfrastructure.Lookingahead,theyareexpectedtocontinuetoprovidethemajorityofdebtfinance,astheclimatebondandsecuritizationmarketsarescaledup.Expertsindicatefinancingtowardsdecarbonizationwillincrease,especiallyastop-downcommitmentsaremadeandopportunitiesareunderstoodbetter.Banksarealsoconsidering“originateanddistributemodels”andoptimalinstrumentsleadingtomuch-neededfinancialinnovationintheareaofclimatefinance.Still,expertshaveindicatedthatbanksareunlikelytotakefullconstruction/completionrisksorprovidefinancingoverlongertenors.Thisunderlinestheimportanceoftheblendingofcapitalfromvarioussources,intheabsenceofwhichinvestmentgapswillarise.FinancingtheTransitiontoaNet-ZeroFuture18Assetowners/managershaveamajorroletoplaygiventhelargepoolsofinstitutionalcapitaltheyhold.Historically,theirroleinfinancingbreakthroughtechnologieshasbeenlimitedgivenamismatchwiththeirrisk-returnframeworks.Institutionalinvestorstypicallylookforassetswithestablishedtrackrecords,whichearly-stagetechnologieswilllack.Furthermore,investorssuchaspensionfundsarerestrictedfromrelativelyilliquidlong-termdebtinvestmentsandhavetightlydefinedtargetinvestmentprofiles.Financingnewtypesofopportunitiesalsorequiresthemtodedicateresourcestobuildinginternalexpertiseandcapability.Itisessential,however,thattheybeengagedstrategicallyandthroughtargetedincentivesgiventhesizeableroletheycouldplayonasset/infrastructure-basedfinancing,andprovidelongertenorpatientcapitalaswellashelpscaletransformativebusinessmodelswhichinnovativecorporateswillestablish.Insurershaveauniqueroletoplaythroughacombinationoffinancingandde-riskingactions.Whileseveralinsurershavemadenet-zerocommitmentsandarefinancingsustainable/greenbonds,thefocushasbeguntoshifttothepotentialforimpactthroughunderwritingactivities.Itiscriticalthataroleforinsurersbedefined,otherwiseagreenprotectiongapwilldevelopintheabsenceofinsurancecoverforinvestmentsandtechnology/performancede-risking–bothessentialtoattractcapitalandexpertise.Specificallyattheprojectlevel,earlyengagementonengineeringandconstructionrisksassociatedwithemergingtransition/sustainabletechnologywillbeimportant,togetherwiththewillingnessofthetechnologyproviderstoguaranteeperformance.Theperformanceguaranteesmayalsobesupportedbyinsurersthroughtheprovisionofsuretybondsforconstruction,operationalperformanceandreclamation.Fromacredit,politicalandperformanceriskperspective,insurersplayaveryactiveroletodayinhelpingsecureequityandreducethecapitalcostsofdebtbyunderwritingrisk,whichneedstobeextendedtoinnovativeclimatesolutions,anareacurrentlyunderserved.Insurersindicatedhigherlikelihoodofprovidingtheseformsofinsurancefornewtechnologyinvestments,whenworkingunderthepreferredcreditorumbrellasofexportcreditagencies(ECAs)andMDBs.Still,underwritingactivitiescouldbebetterleveragedtosupporttransformativebusinessmodelsthroughtheirportfoliosteeringabilities.Itiscriticalforinsurerstobepartofthecollectiveactiontoaddressearlysignsofagreenprotectiongap,whichhasbeenobservedinsectorsvitalforclimatetransition.21FinancingtheTransitiontoaNet-ZeroFuture19Thissubsectiondiscussesbusinessmodelconsiderationsforfourtechnologiestoillustratepotentialleversthatcanbeemployedtoenablebankableprojectstobeestablished.KeymeasuresaresummarizedinTable1andexploredintechnology-specificdeepdivesinthecontextofhard-to-abatesectors.Thesearenotexhaustivebutareindicativeofsolutionsthatarelikelytoberequired.Technologiescoveredinthissectioninclude:–Aviation:SAF–Steel:CCS–Steel:H2-DRI–Shipping:Ammonia-poweredshipTransformativebusinessmodelsbasedonindustry-financecollaboration2.2IndustryCompaniescantakespecificactiontounlockgreaterflowsofcapital.Theycaninfluencethefinancialviabilityofprojectsthroughthoughtfulprojectstructuring(e.g.specialpurposevehicles[SPVs])andnewwaysofdoingbusiness.Carefulstrategicplanningisnecessarytoidentifyleversthatcangenerateeconomiesofscalethatareimportanttodrivedownthecostsofinnovationandassociatedgreenpremiums.Severalcompaniesareconsideringdevelopingaportfolioofprojectsinwhichtechnologiesareusedtoprovideutility-likeservicesand,consequently,diversifydemand.Companiescanfurthersolidifycashflowsunderthebusinessmodelbysellingby-products(e.g.synthesisgas)andco-producingcomplementaryproductswithestablishedincentives(e.g.biodiesel).De-riskingmeasures,suchasequipmentperformanceguaranties,performanceassessmentsandemployingindependenttechnicalfirms(e.g.engineering,procurementandconstruction(EPC)contractors)tocertifyandverifyunderlyingtechnologiesandtheirgreeneligibility,canfurtherenhanceattractiveness.Corporatecustomers(e.g.automakersforgreensteel)couldhelpreducerevenueuncertaintythroughcontracts,suchaslong-termofftakeagreements(acontractualarrangementwherethecustomerandtheproducercommittosellingandpurchasingafixedquantityofaproduct),tollingstructures(wherethefacility’sownerprovidesaserviceforafee),availability-basedpayments(whereperiodicpaymentsaremadebasedonthefacility’savailabilityatthespecifiedperformancelevel22)andpricinginvoluntarygreenpremiums.Thesemechanismswillallowbusinessestotransformandintroducenewwaysofdoingbusiness,whichinturnwillrequirefurthermarket-basedsolutionstobedesigned.PublicsectorThepublicsectorhasanequallycriticalroletoplaybydevelopingasupportiveenvironmentthroughtargetedincentiveschemesandde-riskingmeasures.Policy-makersshouldestablishtime-limitedincentivesforearlymovers.Thesecouldtaketheformofcarbontaxes/pricing(e.g.EuropeanUnionEmissionsTradingSystem(EUETS)rebates),contractsfordifference,capital/taxincentives,project-specificgrants,loanguaranteesandotherdemand-andcredit-enhancingmeasures.Specifically,MDBshaveakeyroletoplayasanchorinvestorsandcoordinators.Theycanusefinancingabilitiestosyndicateflowsandactivatecapitalflowsfromacrossstakeholders.Theyshouldalsoplayabroaderrolebygivingcredibilitytobreakthroughtechnologies,providingtargetedconcessionarycapital,providingtechnicalassistanceanddevelopingapipelineofinvestableopportunities.Similarly,ECAscanhelpaddressmarketfailuresbyextendingtargeteddebtfinancingandprovidingcreditinsurance/enhancements.23ECAs,MDBsand,increasingly,DFIsdistributesomeoftherisktheyassumeintothecommercialcreditandpoliticalriskinsurancemarket.Insurersseetheirprimaryroleasreducingrisktheywouldnototherwiseunderwritecommercially.Whenproperlyunderstood,thismechanismcanbeapowerfulwayforpubliccapitaltomobilizeandleveragecommercialcapitalatlowercosttothepublicpurse.Eachoftheseactionswouldcatalyseprivateflowsbutwouldneedtobeconsideredcarefullyinthecontextofthegivencountry/sector/technologytoensuretheefficientuseofpubliccapital.Thespecificenablingactionsthepublicsectorcantakearediscussedinmoredetailinsection3.MDBshaveakeyroletoplayasanchorinvestorsandcoordinators.Theycanusefinancingabilitiestosyndicateflowsandactivatecapitalflowsfromacrossstakeholders.FinancingtheTransitiontoaNet-ZeroFuture20SummaryoffinancingblueprintsTABLE1–SAFproducer–SteelmakertoestablishSPVforCCSmodule–Bankswouldexpectsteelmaker/jointventurepartnerstoprovide30-40%equity–OptionforportfolioapproachwhereCCSissetupasautilityaroundindustrialclustersPrivatecapital–ExpectedtobefinancedusingTermA/Bloansorprojectfinance–Upto60%bankdebt,with5-7yeartenor–RangeofequityprovidersexpectedPubliccapital–Subpardebt/capitalgrantnecessaryforaffordablecostofcapital–Alternatively,municipalbondshistoricallyusedPrivatecapital–Typicallyfinancedusingprojectfinance–Upto60%debt–~8-yeartenorPubliccapital–Subordinateddebt/patientcapitalnecessaryforaffordablecostofcapitalandlongertenorsDemand–Offtakeagreementswithairlineswithin-builtgreenpremium–Voluntarygreenpremiumfrompassengers–PurchaseofSAFcertificatebycorporatecustomers–Tollingstructurewithairlines(littleshort-termappetitefromairlines)Supply–Contractwithmunicipalityforfeedstock–Affordablesupplyofrenewableenergy–BiofuelcertificationDemand–Offtakeagreementsforgreensteelin-builtgreenpremium–SaleofCO2by-productsSupply–GuaranteedCO2supplytoring-fencedSPV–IndependentverificationofCCStechnologybyEPCfirmsECAmeasures–ECA-backedloans/loanguaranteesPolicyenablers–Atleast10%blendingmandate–Contractfordifferencescheme–Incentiveschemes(e.g.renewablefuelstandards,blender’staxcredit)Privatemeasures–Revenuede-riskingthroughco-productionofotherfuels(e.g.biodiesel)–Construction/performanceinsuranceECAmeasures–Upto100%ECAequipmentguaranteeforCCSmodulePolicyenablers–Publicprocurement–Incentiveschemes(e.g.EUETSrebate,contractfordifference)–SubsidieswithborderprotectionmeasuresPrivatemeasures–Riskinsurance,especiallyforconstruction,transportationandstoragerisks–Creditenhancements–InflationhedgesSAFforaviationCCSforsteelCapitalArchetypeContractsDe-riskingmeasuresOwner/equityproviderSummaryoffinancingblueprints(Continued)TABLE1–Steelmaker–Hydrogenplantandinfrastructureprovider–Vesselowner/operator–Potentialforcargoownerand/orfueldevelopertoprovideequityNotes:CCS:carboncaptureandstorage;ECA:exportcreditagency;EPC:engineering,procurementandconstruction;EUETS:EuropeanUnionEmissionsTradingSystem;H2-DRI:hydrogen-baseddirectreducediron;MDB:multilateraldevelopmentbank;SAF:sustainableaviationfuel;SPV:specialpurposevehicleSource:WorldEconomicForumandOliverWyman–Optionfora)consolidatedfinancingstructureorb)separatefinancingforsteelplantandhydrogenfacilitiesPrivatecapital–Typicallyfinancedusingprojectfinance–Steelplant:–Upto60%debt–5-8yeartenor–Hydrogenplant:–Upto65%debt–8-12yeartenorPubliccapital–Subordinateddebt/patientcapitalnecessaryforaffordablecostofcapitalandlongertenors–Upto14-yeartenorPrivatecapital–TypicalinstrumentsusedforshipfinancingPubliccapital–Subordinateddebt/patientcapitalnecessaryforaffordablecostofcapitalandlongertenors–Upto50%debtDemand–Offtakeagreementsforgreensteelwithgreenpremium–Tollingstructureforhydrogenplant–Availability-basedpaymentsandpass-throughoperationandmaintenancecostsfromsteelmakerSupply–Affordablesupplyofrenewableenergy–IndependentverificationofH2-DRItechnologybyEPC–EPCconstructionorequipmentguaranteesDemand–Offtakeagreementswithgreenpremiumsacrossvaluechain–Long-term(15+years)charteringagreementsSupply–Affordablesupplyofgreenammonia–EPCoversightofenginedevelopment–StorageandprovisionofgreenammoniabybunkeringsupplierECAmeasures–ECA-backedloans/loanguaranteesPolicyenablers–Publicprocurement–Capital/constructiongrants–Incentivescheme(e.g.EUETSrebate)–Pricesupportsubsidiesforsteel(e.g.contractfordifference)Privatemeasures–Technology/engineeringinsurance–ConstructionriskinsuranceECAmeasures–ECA-backedloans/loanguaranteesandspecificcreditenhancementmeasuresPolicyenablers–Globalregulatoryframework(e.g.taxonemissions,fuelmandate)byInternationalMaritimeOrganizationPrivatemeasures–Technologyandperformanceriskinsurance–Creditenhancements–Maintenanceofdual-fuelenginecapabilitybyvesselownerH2-DRIbasedsteelGreenammoniaforshippingAviationSAFSectorandtechnologyoverviewAlthoughthepandemichasbroughtunprecedentedchallenges,aviationactivityisexpectedtoexceedpre-pandemiclevels,whichmakestheimplementationoftransitionpathwaysveryimportantfornetzeroby2050.SAFarethemostpromisingnear-termdecarbonizationsolution,giventheirpotentialtoreducebetween70%and99%ofGHGemissionscomparedtoconventionaljetfuelonalife-cyclebasis.24Inviewofthelimitedtechnologicalreadinesslevelsofnext-generationdecarbonizationtechnologieslikebattery-electricandhydrogen-poweredflight,SAFistheimmediatelyavailableemissionsabatementsolution,especiallyformedium-tolong-haulairtransportation.SAFcanbeproducedfromvariousformsoffeedstock,allowingdifferentregionstoselectthetechnologypathwaybasedonoptimizingforthefeedstockthatismostreadilyavailable.Asadrop-infuel,SAFiscompatiblewithexistingfueldeliveryinfrastructure,withnoneedforsignificantinfrastructureinvestments,andcanbeblendedindirectlywithconventionalfossil-basedjetfuel.SAFiscurrentlyconstrainedbythelimitedcapacityofproductionfacilitiesandnascentfeedstocksupplychains.Additionally,itspricehindersfurtheradoption,withSAFgenerallycostingapproximately2-6timesmorethantraditionaljetfuel,dependingontheproductionpathway.25BuildingoutadditionalSAFproductionfacilitiesandreducingthecostdifferentialtoconventionaljetfuelwillbecriticalinacceleratingtheaviation’stransitiontonetzero.Oftheproductionpathways,GAS-FTisaparticularlypromisingtechnology.Whileitisloweronthetechnologicalreadinessscalethanhydroprocessedestersandfattyacids(HEFA)-basedSAF,GAS-FTleveragesreadilyavailablemunicipalwasteandagriculturalandforestryresidues.Inthiscontext,themechanismskeytoscalingupGAS-FT-basedSAFproductionfacilitiesareexplored.ChallengesandrisksSAFproductionishighlycapitalintensive.Givenbuildcostscanrangefromhundredsofmillionstolowbillions,banksareunlikelytofinancewith100%debtortakeondesignandconstructionrisks.Unlessthecounterpartyisabletoabsorbrisksitself,avarietyofcapitalsourcesareexpectedtoberequiredtofinanceSAFprojects,especiallynon-recourseopportunities.SpecificchallengesandrisksareoutlinedinFigure10.Theseareexpectedtodrivethedesignofmechanismsthatwillbestpositionbusinessmodelsforsuccessandattractfinancing.SustainableAviationFuel:keyrisksacrossprojectlifecycleFIGURE10PreparationDesignandconstructionEarlyoperationsLateroperationsMarket/structuralrisksAbsenceofaglobalmarketsscheme,unclearspeciﬁcations/blendlimits,andlimitedcurrentscaleofproductionpreventinglarge-scaleuptakebyairlinesPolicy/regulatoryrisksInconsistentglobalapproachestoblendingrequirementsandincentives;evolvingpoliciesriskinvestmentsinfuelthatdonotqualifyas‘green’;betterincentivesforotherrenewablefuels(e.g.biodiesel)resultinginrepurposingofSAFfacilitiesTechnology/completionrisksConstructionandproductiondevelopment-relatedrisks;absenceofstandardcertiﬁcationschemesgloballyandfewlong-termfeasibilitystudiesPolicy/regulatoryrisksConcernsoffuelqualityandsafetygiveninfancyofmarketPerformance/businessmodelrisksDemand:LackofaliquiddemandmarketgloballyPricing/marginrisks:Signiﬁcantmarginexposureforinvestors;signiﬁcantgreenpremiumrequiredasSAFis2-4xcostlierthantraditionaljetfuelBusinessmodelrisks:Feedstockavailability,logisticalchallengesrelatingtofueltransportation,andpotentialforfragmentationofproducersSource:WorldEconomicForumandOliverWyman.Unlessthecounterpartyisabletoabsorbrisksitself,avarietyofcapitalsourcesareexpectedtoberequiredtofinanceSAFprojects,especiallynon-recourseopportunities.FinancingtheTransitiontoaNet-ZeroFuture23–Debtservicecoverageratio:Minimumof1.15x–Debt-to-equity:Upto60%debtfinancingfrombanks;equitynecessarygivenhighmarginofrisk–Financinginstruments:Varietyindicated,includingTermA/Bloans,bonds,projectfinance–Tenor/amortizationperiod:5-8yearsforcommercialbankdebt–Othercapitalsources:Municipalbonds,ECAandMDBcapitallikelytoberequired.Potentialforgovernmentgrantbasedonborrowerprofile(e.g.state-owned/innovativeengineeringcompaniesenteringSAFproduction)CapitalCapitalproviders’perspectiveonfinancingillustrativeSAFinvestmentopportunitiesContractsDemand:Airlines,corporateandindividualcustomerscanallplayimportantrolesinsustainingdemandwithin-builtgreenpremiums.Revenuecertaintywillfundamentallybedrivenbyofftakeagreementswithairlines.Earlymoverairlinescouldberewardedfortheirinitialsupportthroughreducedgreenpremiumsinlateryears.Thisensuressustained,long-termdemand,allowingSAFproducerstodevelopbusinessmodelsrootedinapredictablerevenuestream.Greenpremiumscanalsobeincurredbyretailandcorporatepassengers.CorporatecustomerscouldalsopurchaseaSAFcertificate,anaccountinginstrumentthatprovidesamarket-basedmechanismforcorporatestoclaimtheemissionsreductionsresultingfromSAFusewhilepromotingtheuseofSAF-basedflights.26Tollingstructuresbetweenairlinesandfuelproducerscanalsomitigatedemandrisk.Aprecedentforthesetollingagreementscanbefoundinliquefiednaturalgas(LNG)plants,wheregasproducershistoricallypaida“toll”totheLNGplantownertoliquefyandtransportgastocompanies,industrialcustomersandpowerplants.WhilethesestructureswouldmitigatemarginriskfortheSAFproducerextensively,airlineshaveindicatedalackofappetiteforthesecontractsintheshorttomediumterm.Businessmodelscanbefurtherstrengthenedthroughproductdiversification.Productionfacilitiescanbeusedtoproducerenewablebiodieselandotherby-products,suchaslightends(lighthydrocarbongasesandliquidsthatcondenseduringthepetroleumrefiningprocess)andnaphtha(aflammableliquidproducedthroughthedistillationofpetroleum).Furthertoincreasingrevenues,thiscouldalsoenableproducerstotakeadvantageoftheincentivesnon-SAFbiofuelsareoffered.Supply:Securingaccesstoanuninterruptedsupplyofmunicipalfeedstockandanaffordablesupplyofgreenenergyiscriticaltobusinessmodels.ToensuregreenSAFproductionandsupply,municipalitiesneedtoestablishandguaranteesufficientwastematerialsupply—otherwisefurtheragriculturallandorforestmatterwillbeused.Additionally,technicalcertificationofSAFthroughsustainablebiofuelcertificationlabelswillencouragecorporatestoproduceSAFandwillreduceregulatoryuncertaintyaroundbiofuels,whichwashistoricallyakeydeterrenttobiofuelproduction(e.g.forcornethanol).De-riskingmeasuresPublic-sector-drivenmeasuresarecriticaltoestablishmarketsandde-riskbusinessmodels.Atamacrolevel,globalincentiveschemescouldspurproduction,ifdesignedwithrenewabledieselincentivesasaprecedent.Forexample,theBlender’sTaxCreditintheUnitedStatesprovidesbiofuelblenderswithanincentiveof$1pergallonofbiodiesel/renewablediesel.Thesemeasuresareespeciallyeffectivewhentheyareoflongertenor,offeringlonger-termrevenuepredictability.Governmentscanalsode-riskdemandthroughfuelblendingmandates,whichcanencourageofftakeagreements.Forexample,arecentlyproposedSAFblendingmandateintheEUwouldrequireairplanesdepartingfromairportswithintheEUtorefuelwithaSAFshare,whichisexpectedtodrivethecreationofaSAFproductionanduptakemarket.Thepublicsectorcanfurthercatalyseflowsbyde-riskingtheinvestmentsoffirstmoverfinanciers.Insurers,too,haveanimportantroletoplayinde-riskinginvestmentsandbusinessmodelsthroughperformanceriskinsuranceintheformofsuretyorcreditinsurance,whichcanhelpreducecapitalcostsandincreaselendingcapacity.Airlines,corporateandindividualcustomerscanallplayimportantrolesinsustainingdemandwithin-builtgreenpremiums.Revenuecertaintywillfundamentallybedrivenbyofftakeagreementswithairlines.FinancingtheTransitiontoaNet-ZeroFuture24ECA-backedloans/loanguaranteesBiofuelcertificationPurchaseofSAFCertificate(SAFc)VoluntarygreenpremiumAffordablesupplyofrenewableenergyLong-termofftakeagreementswithpricesupport,TollingstructuresBlendingmandateLoanguaranteesMunicipalbonds,capitalgrantsTermloan,ProjectfinanceinstrumentsSubpardebtEquityContractwithmunicipalityforfeedstockENABLINGAVIATIONDECARBONIZATIONDealstructuringandfinancingblueprintforSAFproductionanddeploymentConstruction/performanceinsuranceSource:WorldEconomicForumandOliverWyman,basedonindustryinputDe-RiskingMeasuresContractsCapitalCo-productionofotherfuelsSectorandtechnologyoverviewSteelisresponsibleforabout7%ofGHGemissions,27withemissionsestimatedtoincreaseby43%givenlikelyproductiongrowthby2050.Deployingzero-carbonprimaryproductionprocessesatscaleistheonlyviableroutetoachievenetzero.28Theseproductionprocesses,however,requirescalingandarestillintheinitialstagesofcommercialvalidationanddeployment.Inthemeantime,CCScansupportemissionsreduction.Thisbreakthroughtechnologyhasthepotentialtoreduceover80%ofCO2emissionsandcanbeappendedtovariousindustrialprocesses.Itispotentiallyeasiertodeploythanalternativedecarbonizationtechnologies,giventhatitcanberetrofittedonexistingproductionprocesses,requiringminimalchangestoequipmentandassets.CCS’technologyreadinesslevelisapproximately7-8(onascaleof1to9)andisreadyformarket-widedeploymentfromatechnologicalperspective,thoughitrequiresdevelopmentofacarbontransportandstorageinfrastructurenetwork,whichiscurrentlybeingdeveloped.ChallengesandrisksCCSrequiresfinancingacrossitsvaluechain(i.e.capture,transportation,storageinfrastructure),increasingtherisksacrosstheproject,sincethetransportationandstorageinfrastructuresarestillbeingestablished.Fornon-recourseprojects,therisksaresignificant,especiallysincethesupplyofCO2totheCCSmodulesiskeytotheviabilityofbusinessmodelsofring-fencedCCSentities.TheserisksareoutlinedinFigure11.SteelCCSSteelCCS:keyrisksacrossprojectlifecycleFIGURE11PreparationDesignandconstructionEarlyoperationsLateroperationsPolicy/regulatoryrisksLong-termpoliticalriskassociatedwithuseofsubsidiesandtaxincentives;potentialforregimechangeandvolatilityinquantumofemissions-basedincentivesTechnology/completionrisksDesignandexecutionchallengeswithdevelopment&construction;third-partypermitsandapprovals;equipmentimplementationuncertaintyPerformance/businessmodelrisksPricing/marginrisks:CyclicalityofsteelindustryandvolatilesteelpricesOperations:OpexuncertaintyforCCU(e.g.,energy,maintenance,inﬂation,forex)Performance:EquipmentandtechnologyperformanceOtherlong-termrisksShiftinginvestorappetiteforCCSinvestments,environmentalriskSource:WorldEconomicForumandOliverWyman.Market/structuralrisksRiskofstrandedassets,overcapacityofexistingsteelsector;overseascompetitionfromlower-cost,highlycarbonintensiveproducers;uncertainrouteformonetizationofcarbon/emissionsbeneﬁts,bygeography–Debtservicecoverageratio:Minimumof1.0x,ideallyatleast1.15x–Debt-to-equity:Upto60%debtfinancing;30-40%equitynecessarytoabsorbsteelpricerisks–Financinginstruments:Projectfinance,at3-5%rateofreturn–Tenor/amortizationperiod:5-8yearsforcommercialbankdebt–Othercapitalsources:ECA-providedfinancingforeligibleequipment,steelmaker/jointventurepartnersexpectedtoprovide30-40%equitybylendersCapitalCapitalproviders’perspectiveonfinancingillustrativeCCSinvestmentopportunitiesFinancingtheTransitiontoaNet-ZeroFuture26ContractsDemand:Akeyrevenuessourceisexpectedtobeaprivate,voluntary“greenpremium”paidbybuyersofgreensteel(e.g.automakers).Theselong-termofftakeagreementsareafundamentallydifferentmodelofsteelbuyingcomparedtotoday,wheresalesmaybebasedonthespotmarketandindex-basedcontracts.Furthersourcesofsustainedrevenueanddemandtothering-fenced,non-recourse-basedCCSentitycouldbemeasuressuchaspublicprocurementandincentiveschemes,suchasEUETSrebates,CBAM,contractsfordifference,amongothers.ThesaleofCO2by-products(e.g.synthesisgas)tootherdownstreamsectors,suchaschemicals,canfurtherfortifyrevenuesacrossthebusinessmodel.Supply:Criticalinputonthesupply-sideissustainedandconsistentCO2supply,withoutwhichthemodulecannotoperateasintended,withreducedcashflows.CO2offtakeagreementswithsteelmakers(e.g.theprojectdeveloper)aswellasregionalandnationalgovernmentswillallowtheCCSmoduletoprovideuninterruptedservice.De-riskingmeasuresGivensignificantconcernsaboutthecompetitivenessofgreensteel,CCSdeploymentinthissectorwillrequirede-riskingmeasurestounlockprivatecapital.Governmentscande-riskinvestmentsthroughanexistingarsenalofsubsidiesandcreditenhancementmeasures.ThesuccessofthebusinessmodelfortheSPVrestsuponacontinuoussupplyofCO2andamaintenanceofCO2pricing.Governmentsupportinestablishingapricefloorthroughcontractsfordifferenceorfeed-intariffscanmitigatebusinessmodelriskandhedgeagainstcommoditypriceriskandagainstvolatilityinsteelprices.ECAs,too,haveanirreplaceableroletoplay,aslendershavehighlightedthatsignificantamountsareunlikelytobefinancedfornon-recourseprojectsorprojectswithnon-investmentgradecounterpartieswithoutavastmajorityofdebt(i.e.80%andupwards)beingcoveredbyECAguarantees.Additionally,equipmentguaranteesforeligibleequipmentcanfurtherunlockprivatecapital.Similarly,lendersarelookingtoMDBstoprovideequity-likeproducts,likesubordinateddebt,withoutwhichsmallerdebt-to-equityratioswillbeobserved.Finally,subjecttoinsurersreceivingthesameassurancesabouteconomicviabilityandoperationalriskasotherfinanciers,thefollowingde-riskingmeasuresmaybecomeavailable:investmentriskinsurance(forpoliticalandsomeelementsofregulatoryrisk),engineeringandconstructionriskinsurance,andcreditenhancementsprovidedbyinsurers,whichwouldalsobeadditiveinmitigatingtherisksoutlinedabove,particularlyforlenders(whocanrealizeregulatorycapitalandcounterpartylendinglimitbenefits).Toreducepotentialfinancingcostsandmitigateconstructionanddevelopment-relatedrisks,technicalfirmscanprovideindependentverificationoftheCCStechnologyandconstruction/equipmentguaranteestofurthermitigatetechnologyandperformancerisks.Long-termofftakeagreementsareafundamentallydifferentmodelofsteelbuyingcomparedtotoday.FinancingtheTransitiontoaNet-ZeroFuture27ProjectfinanceinstrumentsSaleofCO2by-products(e.g.Syngas)Long-termofftakeagreementswithpricesupportSubordinateddebt/patientcapitalConstruction,transportationandstorageriskinsuranceIndependenttechnologyverification,Construction&equipmentguaranteesEU/ETScostsavingsGuaranteedCO2supplyENABLINGSTEELDECARBONIZATIONDealstructuringandfinancingblueprintforblastfurnaceretrofitwithcarboncaptureandstorage(CCS)Source:WorldEconomicForumandOliverWyman,basedonindustryinputDe-RiskingMeasuresContractsCapitalPublicprocurement,Contractfordifference,CarbonpricingmeasuresEquipmentguaranteeforCCSmoduleTechnologyoverviewH2-DRIisaprocessthatexclusivelyuseshydrogenasthereductionagentintheore-basedsteelproductionprocess,ascomparedtoconventionalprocessesthatuseacombinationofhydrogenandmethane/syngas.Typically,thedeploymentofthistechnologyrequiresfinancingfortwoseparatefacilities:ahydrogen(H2)plantaswellasanelectricarcfurnace(EAF)steelplant.GivenalimitedprecedentfordecentlysizedplantsusingH2-DRI,financiershaveidentifiedconsiderablescale-uprisk,whichislikelytolimittheprovisionofdebtwithconventionalcovenants.ChallengesandrisksInviewofthesignificantrisksassociatedwiththenewtechnology,somelendershavehighlightedtheattractivenessofadeconsolidatedprojectstructure,wherethehydrogenplantset-upandEAFretrofittingarefinancedseparately.Suchastructureissaidtofacilitateamorestrategicallocationofprojectrisks(Figure12).However,thereisnowidespreadconvergenceamonglendersonthisdeconsolidationofhydrogenproductionfromthesteelplant.SteelH2-DRISteelH2-DRI:keyrisksacrossprojectlifecycleFIGURE12PreparationDesignandconstructionEarlyoperationsLateroperationsMarket/structuralrisksOvercapacityofexistingsteelsector;overseascompetitionfromlower-cost,highlycarbonintensiveproducers;uncertainrouteformonetizationofcarbon/emissionsbeneﬁts,bygeographyPolicy/regulatoryrisksLong-termpoliticalriskassociatedwithuseofsubsidiesandtaxincentives;indirectimpactofrenewableenergypolicyonviabilityofhydrogenproductionandusageTechnology/completionrisksDeployingagreenﬁeldtechnologyatcommercialscale;littletonotechnologyriskinsuranceavailablePerformance/businessmodelrisksDemand:ImpactofsalespriceandsupplyondemandRevenuerisks:Greensteelpriceexpectedtobevolatileandreduceovertime,revenueuncertaintywillpersistBusinessmodelrisks:SeveralO&Mrisks,giventheintegratednatureoftheprojectOtherlong-termrisksHydrogenfuel-basedconcerns;interimuseof‘bluehydrogen’mayhaveassociatedreputationalrisksSource:WorldEconomicForumandOliverWyman.CapitalSomefinanciershaveindicatedthatthedecouplingoffacilitieswouldallowforthedeconstructionofrisksbyde-linkingthehydrogenproduction,transportandstorageinfrastructurefromtheEAFinfrastructure.Deconsolidatingtheprojectstructureallowsfortechnologicalandbusinessmodelriskstobemanagedindependentlyandareductionincomplexity,anddistributesrisksacrossstakeholders,allofwhichcanenhancebusinessmodelviability.Aprecedentforthistypeofde-linkedfinancingstructurecanbefoundinpetrochemicalsandLNGprojects.FinancingtheTransitiontoaNet-ZeroFuture29–Debtservicecoverageratio:1.75x-2.25xforsteelplant;1.20x-1.35xforH2plant–Debt-to-equity:Upto60%commercialdebtforsteelplant;lowerforH2plantgivenhigherriskandlimitedprecedentsforlarge-scaleplants.Equitycouldbefromdiverseplayers,suchasspecializedinvestors,traditionalassetmanagers/owners,industrialcounterpartiesandsteelpurchasers–Financinginstruments:Projectfinancefornon-recourse,ring-fencedprojects–Tenor/amortizationperiod:7-10yearsforcommercialbankdebt,lessthan14yearsforECAdebtforsteelplant;15-20yearsforcommercialbankdebtforH2plant–Othercapitalsources:ECA-providedfinancing,juniordebtfromMDB/statefinancier;upto60%withtenorofover14years.PotentialforgovernmentgrantifH2plantisfinancedseparatelyCapitalproviders’perspectiveonfinancingillustrativeH2-DRIinvestmentopportunitiesContractsDemand:ThesuccessoftheH2-DRIprojectrestsonlong-termofftakeagreementswithpricesupportbetweenthegreensteelproducerandbuyers.Ifthehydrogenproductionisdeconsolidated,steelmakerscouldestablishacontractwiththehydrogenplant(i.e.SPV),basedonavailability-basedpayments.Ifthecapacityofthehydrogenplantweretobeexpandedinthefuture,therewouldbeanopportunityforothercompaniestoestablishtollingstructures,allowingforthediversificationofrevenuesfortheSPV.AswithCCS,publicprocurementforgreensteelisanadditionalenablerthatcanenhancebankabilityanddrivedecarbonizationgiventhevariousdownstreamapplicationsofsteel.Supply:Forahydrogenplanttobecommerciallyviable,renewableenergymustbeaccessibleandrelativelyinexpensive.Theprojectdevelopercouldsecurealong-termcontractforenergytoensurethatoperatingcostsremainstableand/orpredictablethroughouttheprojectlifecycle.OtherarrangementsthatwouldsupporttheviabilityoftheH2-DRIprojectwouldbeindependenttechnologyverificationbytechnicalfirmstodecreasetechnology/performancerisks.EPCfirmscouldalsoofferconstructionorequipmentguarantees,furtherincreasinginvestorconfidence.De-riskingmeasuresGiventheoperatingstructureoftheH2-DRIproject,thehydrogenplantandEAFsteelplantwillrequiredistinctde-riskingmechanisms.Hydrogenproducerswillrequirede-riskingmeasurestomitigateinnovationandperformancerisks.TheEAFsteelplant,awell-establishedtechnologyandcommerciallyscaledproductionprocess,willinsteadrequirede-riskingmeasurestoensurethatgreensteeliscompetitivewithexistingalternatives,andthatthereissufficientlong-termdemand.SimilartoCCS,theinvolvementofECAsiskey,aslendershavehighlightedthatsignificantamountsareunlikelytobefinancedfornon-recourseprojectsorprojectswithnon-investmentgradecounterpartieswithoutavastmajorityofdebt(i.e.90%andupwards)beingcoveredbyECAguarantees.Similarly,lendersarelookingtoMDBstoprovideequity-likeproducts,likesubordinateddebt,withoutwhichsmallerdebt-to-equityratioswillbeobserved.Withregardtoprivate-sectormeasures,insurershaveindicatedtheycouldbemorewillingtoprovideinsurancewhenworkingundertheumbrellaofthepreferredcreditorstatusofMDBsandECAs.FortheEAFsteelplant,centralgovernmentscouldprovidepricesupporttoenhancethecompetitivenessofgreensteelthroughtargetedincentiveschemesforearlymovers.Finally,giventheneedtodevelopnewassetsandinfrastructure,theriskofstrandedassetsissignificantinthecontextofthesteelindustry’stransitiontonetzero.Itiscriticalthatgovernmentsestablishclearpolicysignalstomitigatetheriskofassetsandinfrastructurefallingintodisuseduetoregimechange.Deconsolidatingtheprojectstructureallowstechnologicalandbusinessmodelriskstobemanagedindependentlyandareductionincomplexity,anddistributesrisksacrossstakeholders,allofwhichcanenhancebusinessmodelviability.FinancingtheTransitiontoaNet-ZeroFuture30EquityTechnology/constructioninsuranceLong-termofftakeagreementswithpricesupportProjectfinanceInstrumentsTypicalfinancinginstrumentsENABLINGSTEELDECARBONIZATIONDealstructuringandfinancingblueprintforH2-DRIsteelproduction(greensteel)Independenttechnologyverification,Construction&equipmentguaranteesAvailabilitybasedpayments,Pass-throughO&McostsSubordinateddebt/patientcapitalSource:WorldEconomicForumandOliverWyman,basedonindustryinputDe-RiskingMeasuresContractsCapitalCapital/constructiongrantsPublicprocurement,Contractfordifference,CarbonpricingmeasuresECA-backedloans/loanguaranteesAffordablesupplyofrenewableenergySectorandtechnologyoverviewShippingaccountsforapproximately3%ofannualCO2emissionsglobally,29withemissionsexpectedtonearlydoubleby2050.Thesectorpresentsanopportunityof$300billionto$500billionannually,withinvestmentsmainlyrequiredtobuildland-basedinfrastructureandsustainablefuelcompatibleshipengines.30Whileenergyefficiencyimprovementscandecreaseshippingemissions,thedeploymentofalternativefuelsiskeytodecarbonization.Greenammoniaisconsideredapromisingfuel,givenhigherenergydensityversushydrogen,acompleteabsenceofcarbonatoms,andscalability/usabilityonlong-distanceroutes.Apipelineofammonia-basedfeasibilitystudiesandsmall-scalepilotprojectsarebeingdesignedtofurthertestthetechnology’spotential.Positively,stakeholdersarecommittedtoacceleratingthesector’stransitiontonetzero.In2018,theInternationalMaritimeOrganization(IMO)setanambitiontoreducesectoralCO2emissionsby50%by2050.TheIMOhasadoptedbindingmeasuresataglobalscale,includingtheInternationalConventionforthePreventionofPollutionfromShips(MARPOL),theEnergyEfficiencyDesignIndex(EEDI)andtheShipEnergyEfficiencyManagementPlan(SEEMP).AdditionaltechnicalandoperationalrequirementswereadoptedinJune2021toacceleratereductionsincarbonintensity,byrequiringshipstomeetaspecifiedEnergyEfficiencyExistingShipIndex(EEXI)andacarbonintensityindicator(CII)rating.FinancialinstitutionshaveindicatedtheircommitmenttomobilizingthecapitalrequiredtomeettheIMO’semissionsreductionambitionthroughthePoseidonPrinciples.Launchedin2019,thePrinciplesprovideaframeworkforfinancialinstitutionstoassessanddisclosetheiralignmentwiththeIMO’sclimategoals.ThePrincipleshave27signatories,comprisingtheequivalentof$185billionor50%ofshippinglending.Inasimilarvein,theSeaCargoCharterwaslaunchedinOctoberof2020todevelopacomparableframeworkthatwouldapplytocharterers;theCharterhas21signatories.Theseeffortsbytheshippingindustryandthefinancialsectorsignifythegrowingmomentumtoprogresstowardsnet-zerotargets.ChallengesandrisksHowever,shipping’stransitiontonetzerofacesseveralchallenges.Withrespecttofinancing,currentvessels–withalifespanof25to35years–operatingonhigh-emissionfuelsmustbewrittenoffassunkcostsforownersandinvestors.ShippingFinancingtheTransitiontoaNet-ZeroFuture32Furthermore,privatelendingtothesectorhasdeclinedsteadilysincethe2008financialcrisis,creatingagrowinginvestmentgap.Atasolutionlevel,ahighcostdifferentialexistsbetweencarbon-basedfuelsandpotentialgreenalternatives.Whilecargolinershaveapredeterminedroute,othervessels,suchastrampers,donotoperateonafixedscheduleorregularroute,raisingtheriskofincompatibilitybetweenthevesselandthebunkeringinfrastructureatthenextportofcall.Thehighlyfragmented,internationalnatureoftheshippingindustryexacerbateschallenges.Piecemealpolicyinterventionwillbeineffective.WhiletheEU’srecentproposaltoaddshippingtotheEUETSisastepintherightdirection,requirementsandincentivesmustbeimplementedataglobalscaletobeeffective.Further,carbontradingschemesareassociatedwithpricevolatility,generatinguncertaintyforinvestors.Thesechallenges,amongotherrisks(Figure13),haveresultedinaninvestmentgapthatwillneedtobelargelypluggedbypubliccapital.Keyrisks–Greenammonia-poweredcarrierFIGURE13PreparationDesignandconstructionEarlyoperationsLateroperationsMarket/structuralrisksOfftakeriskacrosstheindustryvaluechain;fragmentedandinternationalnatureoftheshippingindustryandresulting‘ﬁrst-moverdisadvantage’withinglobalmarketPolicy/regulatoryrisksAbsenceofinternationalregulation;variationinregulatoryapprovalsandcomplianceoffuelwithstandardsacrossoperatinggeographies;riskofstrandedassetsifmarketforgreenammoniadoesnotmaterializeTechnology/completionrisksConstructionanddevelopment-relatedrisksPerformance/businessmodelrisksPricing/marginrisks:Unclearwillingnessofmarkettoplaceapremiumforammonia-poweredcarrier(upto2.5xhighercost)Businessmodelrisks:Greenammoniaavailability,dependencyonrenewableelectricitygenerationOtherlong-termrisksSafetyrisksassociatedwithuseofammonia;toxicitytohumansandenvironmentrequiresspecialhandlingonboardSource:WorldEconomicForumandOliverWyman.CapitalAmajorityofthefinancingrequiredforgreenammonia-poweredcarriersstemsfromfuelproductioncosts.Co-investmentacrosstheshippingvaluechainisthereforeapromisingapproachtoproducecostefficienciesandimprovebusinessmodeleconomics.Potentialco-investmentstructurescouldinvolveequipmentproviders,vesselmanufacturers,cargoownersandfueldevelopers.Thisapproachwouldallocateriskandcostsacrossmultiplestakeholders.Forexample,inthecaseoftheNordicGreenAmmonia-PoweredShip(NoGAPS)project,thevesselisbothpoweredbyandtransportingammonia.Thecargoownerisalsothefuelsupplier.Byestablishingwhatamountstoanofftakeagreementforboththefuelandthevessel’sservices,thisarrangementreducestheriskincurredbythevesselownerandtheshipfinanciersignificantly.Public-privateinvestmentframeworksareespeciallyimportantforshipping’stransition.ECAshavebecomeanincreasinglysignificantsourceoffinancingfortheshippingsectorsincethe2008crisisandwillplayacriticalroleinfundingthenextgenerationofships.ApplyingaprecedentfromtheFinancingtheTransitiontoaNet-ZeroFuture33ECAsarerequiredtoplayacrucialroleinclosingtheinvestmentgapandprovidingcreditenhancementstounlockprivatedebtfinancing.renewablesspace,MDBscouldprovideprojectfinancingthroughanECA.Inthisstructure,ECAscantakeonrisk,resultingincheaperfinancingforthevesselowner.Incomparisontopreviouslydiscussedtechnologies,challengesassociatedwithfinancingdonotstemfromthefinancingneedsofthevesselitself.Giventhatagreenammonia-poweredcarrierisnotexpectedtobesignificantlymorecapitalintensivethanexistingships,thesolutiondoesnotlieindealstructuring.Rather,thekeybarrierstoexpandingthetechnologyarefuelavailabilityandprice.Toaddressthesechallengesandimprovebusinessmodeleconomics,de-riskingmeasuresanddemand-sidesupport(e.g.fuelmandates)arecrucial.ContractsDemand:Uncertaintyovergreenfuelofftakeneedstobeaddressedthroughthestimulationofdemand.31Long-termofftakeagreementsneedtobeestablishedacrossthevaluechain,beginningwithcargoownersacceptinggreenpremiumswithpotentialpass-throughstoendcustomers.Similarly,vesselownerscouldenterintolong-termcharteringagreements(e.g.15+years)withcargoowners,withabuilt-ingreenpremium.Supply:Criticaltothebusinessmodelisasteadysupplyofgreenammoniaatasteadyprice.Sincerenewableelectricityisasignificantdependencyforfuelproduction,driving70%ofproductioncosts,securinganuninterruptedandaffordablesupplywillenablesolutionstobereliablyadopted.Additionally,EPCfirmscanbebroughtintooverseetheenginedevelopmentprocess,ensuringthatvesselperformancewillbeuptostandards.De-riskingmeasuresECAsarerequiredtoplayacrucialroleinclosingtheinvestmentgapandprovidingcreditenhancementstounlockprivatedebtfinancing.Theyhavebecomeanincreasinglysignificantsourceoffinancingfortheshippingsectorsincethe2008crisisandwillplayacriticalroleinfundingthenextgenerationofships.Applyingaprecedentfromtherenewablesspace,MDBscouldprovideprojectfinancingthroughanECA.Inthisstructure,ECAsareabletotakeontherisk,resultingincheaperfinancingforthevesselowner.Giventhehighlyfragmented,internationalnatureoftheshippingindustry,policyinterventioncannottakeapiecemealapproach.WhiletheEU’srecentproposaltoaddshippingtotheEUETSisastepintherightdirection,requirementsandincentivesmustbeimplementedataglobalscaletobeeffective.Further,carbontradingschemesareassociatedwithpricevolatility,generatinguncertaintyforinvestors.TheIMOhasasignificantroletoplayinsettingalevelplayingfieldfortheglobalshippingindustrybyestablishingconsistentguidelinesandstandardsthatapplytoallvessels,regardlessofgeographicorigin.Establishingsafetyandfuelhandlingregulationscouldsignaltoinvestorsammonia’sviabilityasasolution.Creatingaglobalregulatoryframeworkcanalsohelpmitigateconcernsregardingcompetitiveness.Withintheprivatesector,insurerscansupportriskmitigationthroughadedicatedproductoffering.Thevesselowner/operator,too,canmitigateperformancerisksbyutilizingadual-fuelenginetodecreasethepotentialexposuretorisksassociatedwiththesupplyofammonia.FinancingtheTransitiontoaNet-ZeroFuture34GlobalregulatoryframeworkStorageandprovisionofgreenammoniaEPCoversightofenginedevelopmentECA-backedloans/loanguaranteesSpeciccreditenhancementmeasuresSubordinateddebt/patientcapitalTypicalinstrumentsusedforshipnancingSource:WorldEconomicForumandOliverWyman,basedonindustryinputDe-RiskingMeasuresContractsCapitalENABLINGSHIPPINGDECARBONIZATIONDealstructuringandﬁnancingblueprintforgreenammonia-poweredshipTechnology/performanceriskinsuranceEquityLong-termcharteringagreementswithpricesupportAordablesupplyofgreenammoniaPublicinterventiontoaccelerateprogress3Thefinancialsector’sabilitytoscaleinvestmentmultifoldunderexistingcovenant,environmentalandriskconstraintshasveryreallimits.Theproblemrequirespolicy-makerstocorrectforthemarketfailure.Interventionisnecessarytoestablishde-riskingmeasures,incentivizeearlymoversandencourageMDBstoprovideclearstewardshipasanchorinvestors.FinancingtheTransitiontoaNet-ZeroFuture36Theprivatesectorcanmakeprogressonthefinancingofearly-stagebreakthroughtechnologies,butthisprogressmustbeaccelerated.Thissectionoutlinesfourthematicrecommendations(Figure14)andasetofunderlyingactionsthatpolicy-makersshouldconsidertocreateanenablingenvironmentandenergizeprivatecapitalflows.Source:WorldEconomicForumandOliverWyman,basedonFinancingtheTransitiontoaNet-ZeroFutureinitiativeinsightsA.Improvetherisk-returnproﬁleofbreakthroughdecarbonizationprojectsB.CoalesceamultistakeholderecosystemforcollectiveactionC.Establishclearpathways,standardsandmandatesgloballyD.DesignawayperverseincentivesandoutcomesRecommendedpolicyenablerstocatalyseprivatefinanceFIGURE14GreeninvestmentsenvironmentframeworkIn2012,theWorldBankdevelopedaframeworkfora“greeninvestmentclimate”,whichitdefinesasan“investmentclimateforenvironmentallyfriendlyactivitiesbasedonpolicies,programs,legislation,institutions,fiscalandfinancialinterventions,andothermeasuresdesignedtopromotegreengrowthofeconomies”.32Itisbasedontheargumentthatenablinginvestmentclimatesaretypicallyshapedbyadiverserangeoftoolsthatgovernmentsuseaspartoftheirinterventionstrategies.Thisarsenaloftoolsisimportant,butitisalsoessentialthattheinterventionsarenotimplementedinapiecemealfashionandinsteadareguidedbyanoverarchingframework.Figure15mapsthefourkeyenablersagainstthisframeworkandidentifiesspecifictoolsandpoliciesneededtoaccelerateprogress.FinancingtheTransitiontoaNet-ZeroFuture37MappingofpolicyenablerstothegreeninvestmentclimateframeworkFIGURE15FrameworkI.FinancialandeconomicinstrumentsII.PoliciesIII.RegulatoryenvironmentIV.ProgrammesandinstitutionsDescriptionofcomponentRecommendedpolicyMappingSource:WorldEconomicForumandOliverWyman,adaptedfromWorldBank,GreenInfrastructureFinance:FrameworkReport,2012.Fiscalincentives:Incentivestoreducetaxliabilities–Earlymoverincentives(e.g.tax-equityswaps)–Contractsfordifference/feed-intariffs–Guarantees/subpardebtinstruments–Capexgrants–Creditinsurance/enhancements–Tradablecertificateschemes(e.g.SAFc)–Carbonpricing/rebates–Publicprocurementagreements–Green/blendingmandates–Informationavailability-relatedinitiatives(e.g.,mandatingtransitionplans)–Greenstandards,certifications,labels–Correctiveactiontoensureregulatorycompliance–Emissionmonitoringandverification–Inclusionofclimaterelatedactivitiesinmandates–R&Dfunding,technicalassistance–Catalyticcapitalthroughpooledinvestmentvehicles–Investablepipelinedevelopment–Structuredengagementtoco-designsolutionsandcapitalsteeringmechanismsFinancialmeasures:Financialinstruments,schemes,subsidyarrangementsMarket-basedmechanisms:MarketsforcarbontradingandvaluationPolicies,targets,andlegislation:Policies,speciﬁclegislation,andinformationavailability-relatedinitiativestoimplementobjectivesProceduresandmechanisms:Speciﬁcations,standards,veriﬁableindicatorstoregulategreeninvestmentsRegulatoryagencies:InstitutionsthatcreateandmaintaintheregulatoryenvironmentProgrammes:InitiativesimplementedtopromotegreeninvestingInstitutions:Institutionsinvolvedinthecountry/regionsprogrammesABCDABCDThespecificrecommendations,whilebasedoninputreceivedinthecontextofspecifictechnologydiscussions,aimtoholisticallyidentifyallenablingareasofpublicintervention.TheeightrecommendedactionsareoutlinedinFigure16.FinancingtheTransitiontoaNet-ZeroFuture38Organizingframeworkforrecommendedpublic-sectorinterventionsFIGURE16i.ImprovefinancialviabilityofbreakthroughsolutionsbystimulatingdemandandmitigatinginnovationrisksTheearlymoverfinancingandadoptionofsolutionscanbeenabledbyimprovingrisk-rewardtrade-offs.Therearetwokeyleversforthepublicsectortoconsider:1)throughdemandenhancingmeasuressuchasgreenmandates(e.g.SAFblending),procurementrequirements(e.g.powerpurchaseagreements)andpricesupportmeasures(e.g.carbonprices);thiswillstimulatedemandforgreenproducts,ensuringasteadystreamofrevenuewithadequaterevenuemargins;2)throughpolicy-makersde-riskinginnovationrisks,therebyunlockingfinancing;specificmeasuresincludecreatingmarketsolutionstoreducetechnologyperformancerisks(e.g.equipmentguarantees),establishingreliablesupplychainsofproductioninputs(e.g.municipalfeedstock),andtargetedgrants/investmentstospurboldinnovation.ii.Designincentivepolicieswhichenhancethelong-termpredictabilityofreturnsPolicy-makersshoulddesignincentiveschemesthatallowlong-termpredictabilityoffinancialreturns.Short-datedincentiveschemeswillhavelimitedimpact,particularlyinattractingpatientcapital,asfinancierspursuesteadyreturnsoveralongertenor.Specifically,forbreakthroughtechnologies,non-recourseprojecteconomicscanbeheavilyreliantoncommodityprices.Whileincentiveschemescanencouragethebuildoutofproductionfacilities,short-datedincentiveslimitthecertaintyofrevenues.Extendingthetenorofincentiveschemes(e.g.theLowCarbonFuelStandardforaviationfuel)and,wherenecessary,underwritingitinformalagreements(e.g.contractsfordifference)canmitigateuncertainty,decreasethecostofcapital,improveinsurerwillingnesstounderwriteinvestmentriskandincreaseinvestorappetite.A.Improvetherisk-returnproﬁleofbreakthroughdecarbonizationprojectsI.FinancialandeconomicinstrumentsII.PoliciesIII.RegulatoryenvironmentIV.ProgrammesandinstitutionsB.CoalesceamultistakeholderecosystemforcollectiveactionC.Establishclearpathways,standardsandmandatesgloballyD.DesignawayperverseincentivesandoutcomesSource:WorldEconomicForumandOliverWyman,basedonFinancingtheTransitiontoaNet-ZeroFutureinitiativeinsights.i.Improveﬁnancialviabilityofbreakthroughsolutionsbystimulatingdemandandmitigatinginnovationrisksii.Designincentivepolicieswhichenhancethelong-termpredictabilityofreturnsiii.Catalyseinvolvementfromthebroaderﬁnancialsectorusingtargetedincentivesiv.EncourageMDBsandECAstoplayastewardshiprole,whileactivelytakingstepstopreventcrowdingoutofprivatecapitalv.Coordinateglobalschemesandmandatestoavoidarbitragevi.Establishconsistenttechnicalstandardsandcertiﬁcationsandfacilitategreaterdataﬂowsvii.Steerstakeholderstowardssustainablegoalsthroughclearguidanceonnationalambitionsandpathwaysviii.Encouragebothgreenandtransitionlendingwhileavoidingunintendedconsequencesofimmediatedivestmentfromallhard-to-abatesectorsandEMDCsFinancingtheTransitiontoaNet-ZeroFuture39iii.CatalyseinvolvementfromthebroaderfinancialsectorusingtargetedincentivesToolsandpoliciesshouldbedesignedtofacilitategreaterparticipationsfromvariedsourcesofcapital.Insurers,assetowners,assetmanagers,patientcapitalandothersourcesofprivatecapitalarerequiredtobridgetheinvestmentgap.Targetedmeasuresareneededtoelicittheinvolvementofthesestakeholders.Forexample,suchfinancialtoolsastaxequityincentives,taxexemptionsandgovernmentcapitalgrantstowardsprojectscanincreaseflowsfrominstitutionalinvestors.Loanguaranteesandconcessionarycapitalareconsideredtobesomeofthemosteffectivemechanismsforde-riskingearly-stageclimate-orientedinvestments.33iv.EncourageMDBsandECAstoplayastewardshiprole,whileactivelytakingstepstopreventthecrowdingoutofprivatecapitalPubliccapitalproviders,suchasMDBsandECAs,shouldlooktousetheirfinancingabilitiestoserveasanchorinvestors.MDBsshouldcreatecapacityinthesystem,leadonoriginationbreakthroughtechnology-basedprojectsandprovidetechnicalassistanceonexpandinginnovativeopportunitiestocorporatesandpartnerfinancialinstitutions.Theycanbetterleveragepubliccapitalthroughblendedfinanceandinsuranceinstruments.34BothMDBsandECAshaveacriticalroletoplayinprovidingthefinancialsectorwithaclearlineofsightonnationalambition,forthcominginitiativesandavailableprogrammes.ECAs,whichtodatehaveplayedalimitedroleinfinancingtransitionefforts,canfinanceSMEsandcorporatesontheirtransitionjourneysthroughtheprovisionofclimatefocusedloans,guaranteesandinsuranceproducts.Exportfinancingstrategieswillbeneeded,especiallyforhard-to-abatesectors,wherethefinancialsectormayhavelimitedappetitetoincreasethescaleoffinancingforhistoricalreasons(e.g.capitalconstraintsforlendingintheshippingsector).v.CoordinateglobalschemesandmandatestoavoidarbitrageLocalized,fragmentedregulatoryactivitiesandpublic-sectorschemeswilllikelyresultinlimitedeffectiveness.Acoordinatedglobalresponseacrosssectorsandtechnologiesisrequiredtocreatealevelplayingfieldandensurethatgreensolutionsareabletocompeteinthemarketplace.Forexample,thedecarbonizationoftheaviationsectorismostlikelytobesuccessfulthroughconsistentglobalblendingmandatesforSAF(e.g.10%blending)ratherthanlocalized/country-specificblendingmandates.ThelatterwillputtheimpactedairlinesatacompetitivedisadvantageandslowdowntheexpansionofglobalproductionandthedistributionnetworksforSAF.vi.EstablishconsistenttechnicalstandardsandcertificationsandfacilitategreaterdataflowsPolicy-makersshouldaidthedevelopmentofgreenstandards,measurements,certificationandverificationframeworkstoreducetheriskofgreenwashing.Thisincludestheuseofgreenprinciplestopromoteconsistencyandtransparencyacrossinternationalfinancialmarkets.Whereprogressisalreadybeingmadebymultilateralinstitutionsandprivate-sectorandmission-basedorganizations,policysignalscanhelpprovidecredibilitytoappropriateefforts.ExampleswherethishasbeendoneeffectivelyincludetheInternationalCapitalMarketAssociationGreenBondPrinciples35andtheLoanMarketAssociationGreenLoanPrinciples.36Additionally,policy-makerscanaddressmarketinefficienciescausedbylimiteddatabycoordinatingnationalreferencedatacollectionandsharing.Forexample,publicinstitutionscansharedetaileddataonowninvestments(e.g.loanguaranteesbyuseofproceeds,insurancecoverage)inadditiontofacilitatingthecreationofnationaldatahubsforclimatedata.vii.SteerstakeholderstowardssustainablegoalsthroughclearguidanceonnationalambitionsandpathwaysEngagingindialoguewithfinancierstosetexpectations,communicatenationalprioritiesandgivecredibilitytolow-carbonpathwaysreflectingcountry/regionalspecificitiesiskey.Thiswouldhelpdrive“conviction”and“convergence”onpathwaysmostlikelytosupportthecountry’stransitiontonetzerowhilepreventingtheproliferationofmisalignedefforts.Itwouldalsosteerandfocuscapitalinareaswiththegreatestneedandimpact.Thecommunicationofprioritysectorssupportedbydetailedroadmaps,forexample,willensurealignmentandcertaintyonthewayforward.Italsoallowstheprioritizationoflimitedproductioninputs(e.g.municipalwaste)andthescalingupofcommoninputs(e.g.hydrogen).viii.Encouragebothgreenandtransitionlendingwhileavoidingunintendedconsequencesofimmediatedivestmentfromallhard-to-abatesectorsandEMDCsStrongandclearsignalsmustbesentencouraginginvestmentinthe“greening”ofbrown,hard-to-abatesectors.Ifclimatepoliciesarenotcarefullyconsideredanddesigned,financiersmayinadvertentlybeincentivizedtodivestfromimportantactivitiesoftheeconomyratherthantohelpthemtransition.Forexample,thenarrowdesignofkeyperformanceindicatorsandincentivesfor“greenassets”ratherthanforthe“greeningofassetsandactivities”cancutofffinancingtoessentialactivities.Similarly,regulatoryactionsanddevelopedcountrypoliciesmayinadvertentlyhinderclimatefinanceflowstoEMDCsifnotcarefullyconsidered,whichwouldnotbeconsistentwiththegoalsofa“justtransition”.37FinancingtheTransitiontoaNet-ZeroFuture40ConclusionThechallengeaheadissignificant,butnotinsurmountable.Ifexecutedthoughtfully,themobilizationoffinancetobreakthroughtechnologiespresentsatremendousinvestmentopportunity.Moreimportantly,solvingtheclimatecrisisasaglobalcommunityistheonlyviablepathforwardtoavoidirreversibledamagetotheplanet.Itisimperativetocapitalizeonthisgrowingopportunityandworktogethertoachievenet-zeroambitionsandavoidaclimatecatastrophe.Itisimperativethatinnovationacrosstechnologiesandfinancingstructures,andpolicyandcooperationacrossthestakeholderecosystem,beenabledandencouragedtosuccessfullycatalysesystem-levelchange.Tosupportthiseffort,theFinancingtheTransitiontoaNet-ZeroFutureinitiativewillworktowardselevatingpolicyandMDBdialogue,furtherdevelopingframeworksforfinancingandde-riskingsolutionstailoredtoemergingmarkets,identifyspecificlighthouseprojectstobepilotedand,morebroadly,continuetoidentifyareasforcollaborationtomobilizefinancetowardsfightingclimatechange.FinancingtheTransitiontoaNet-ZeroFuture41ContributorsWorldEconomicForumDerekBaraldiHeadofSustainableFinanceandInvestingandHeadofBankingandCapitalMarkets,WorldEconomicForumLLCManuelaFulgaPlatformCurator,BankingandCapitalMarkets,WorldEconomicForumOliverWymanSayliChitrePrincipal,FinancialServices,OliverWyman,UnitedKingdomJohnColasPartner,FinancialServices,OliverWyman,USAIlyaKhaykinPartner,FinancialServices,OliverWyman,USASimranSinghSeniorConsultant,FinancialServices,OliverWyman,USATheWorldEconomicForumacknowledgesthecontributionsofthefollowingindividuals,amongothers,totheeffortsoftheFinancingtheTransitiontoaNet-ZeroFutureinitiativeoverthepast15months.LucaValerioCamerano,ManagingDirector,AlgebrisInvestments,UnitedKingdomFaustineDelasalle,Co-ExecutiveDirector,MissionPossiblePartnership;Director,EnergyTransitionsCommission,UnitedKingdomErikvanDoezum,Director,Metals,MiningandFertilizers,EMEA,INGGroup,NetherlandsJesseFahnestock,ProjectDirector,FirstMoversInitiatives,GlobalMaritimeForum,DenmarkBridgetFawcett,GlobalHead,Strategy;Co-Head,SustainabilityandCorporateTransitions,Banking,CapitalMarketsandAdvisory,Citi,USAMagaliGable,Vice-President,SustainableFinance,BMOFinancialGroup,CanadaFrancoisGaudet,Head,ThematicImpactFinanceOperations,EuropeanInvestmentBank,LuxembourgAlasdairGraham,Head,IndustryDecarbonization,EnergyTransitionsCommission,UnitedKingdomElinaKamenitzer,Head,ClimateActionandEnvironmentCoordination(Lending),EuropeanInvestmentBank,LuxembourgPeterKanning,GlobalHead,BusinessDevelopment,SustainableFinance,HSBCHoldings,UnitedKingdomKatharinaKort,ManagingDirector,GlobalSustainableFinanceGroup,BankofAmerica,USAEilaKreivi,Head,CapitalMarkets,EuropeanInvestmentBank,LuxembourgElizabethKurtz,Associate,SustainableFinance,BBVA,SpainFredericLucenet,GlobalHead,ManufacturingandServices,EuropeanBankforReconstructionandDevelopment(EBRD),UnitedKingdomAparajitPandey,Consultant,ShippingandTransitionFinanceLead,EnergyTransitionsCommission,UnitedKingdomMichaelParker,Chairman,GlobalShipping,LogisticsandOffshore,Citi,UnitedKingdomOlivierPineau,ManagingDirector,Coverage,BBVA,SpainAmitPuri,ManagingDirectorandGlobalHead,EnvironmentalandSocialRiskManagement,StandardCharteredBank,UnitedKingdomNicholasRobson,ManagingDirectorandGlobalPracticeLeader,CreditSpecialties,MarshMcLennan,USAJaredWestheim,Vice-President,SustainableFinanceGroup,ExecutiveOffice,GoldmanSachs,USATysonWhite,Director,ProjectFinance,BreakthroughEnergyFoundation,USAAaronWolf,ManagingDirector,OilandGas,CreditSuisse,SwitzerlandAcknowledgementsFinancingtheTransitiontoaNet-ZeroFuture42WorldEconomicForumMatthewAks,ProjectFellow,FinancialandMonetarySystems,WorldEconomicForumLLCAndreBelelieu,HeadofInsuranceandAssetManagement,WorldEconomicForumLLCEmmaSkovChristiansen,Lead,ShippingEmissionsandOceanAgenda,FriendsofOceanAction,WorldEconomicForumRenéevanHeusden,ProjectLead,DecarbonizingSteelandAluminium,WorldEconomicForumAnthonyHobley,Co-ExecutiveDirector,MissionPossiblePartnership,WorldEconomicForumKevinSoubly,ProjectLead,CleanSkiesforTomorrow,WorldEconomicForumLLCLaurenUppink,HeadofAviation,TravelandTourism,WorldEconomicForumLLCFinancingtheTransitiontoaNet-ZeroFuture431.EnergyTransitionsCommission,MakingMissionPossible:DeliveringaNet-ZeroEconomy,2020.2.Khaykin,Ilya,JohnT.ColasandMatthewAks,“Howtofinanceindustry’snet-zerotransition”,MarshMcLennan,22January2021,https://www.marshmclennan.com/insights/publications/2021/february/how-to-finance-industrys-net-zero-transition.html(accessed15September2021).3.UnitedNations,“HistoricNewSustainableDevelopmentAgendaUnanimouslyAdoptedby193UNMembers”,25September2015,https://www.un.org/sustainabledevelopment/blog/2015/09/historic-new-sustainable-development-agenda-unanimously-adopted-by-193-un-members(accessed20September2021).4.UnitedNationsFrameworkConventiononClimateChange(UNFCCC),“TheParisAgreementandNDCs”,2021,https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs/nationally-determined-contributions-ndcs(accessed20September2021).5.EuropeanCommission,“DeliveringtheEuropeanGreenDeal”,14July2021,https://ec.europa.eu/clima/policies/eu-climate-action/delivering_en(accessed20September2021).6.InternationalEnergyAgency(IEA),NetZeroby2050:ARoadmapfortheGlobalEnergySector,2021,https://www.iea.org/reports/net-zero-by-2050(accessed20September2021).7.Gates,Bill,“Cleanjetfuelneedstobemorelikeamicrowaveoven”,GatesNotes,13July2021,https://www.gatesnotes.com/Energy/introducing-a-new-way-to-invest-in-clean-energy-innovation(accessed20September2021).8.Channell,Jason,etal.,Hard-to-AbateSectorsandEmissions,Citi,GlobalPerspectivesandSolutions,May2021,https://www.citivelocity.com/citigps/hard-to-abate-sectors-and-emissions(accessed22September2021).9.EuropeanCommission,“ProposalforaRegulationoftheEuropeanParliamentandoftheCouncil:Establishingacarbonborderadjustmentmechanism”,14July2021,https://ec.europa.eu/info/sites/default/files/carbon_border_adjustment_mechanism_0.pdf(accessed22September2021).10.WorldSteelAssociation,“Climatechangeandtheproductionofironandsteel”,17May2021,https://www.worldsteel.org/media-centre/press-releases/2021/climate-change-and-the-production-of-iron-and-steel.html;InternationalMaritimeOrganization,“FourthGreenhouseGasStudy,2020”,https://www.imo.org/en/OurWork/Environment/Pages/Fourth-IMO-Greenhouse-Gas-Study-2020.aspx;InternationalAirTransportAssociation(IATA),“WorkingTowardsAmbitiousTargets”,IATA,2020,https://www.iata.org/en/programs/environment/climate-change(allaccessed22September2021).11.Channell,etal.,Hard-to-AbateSectorsandEmissions,op.cit.12.Alemany,Jacqueline,“Bidentospeakon‘economicopportunities’presentedbyaddressingclimatechange”,MSN,23April2021,https://www.msn.com/en-us/news/politics/live-updates-biden-to-focus-on-job-creation-as-he-virtually-hosts-second-day-of-global-climate-summit/ar-BB1fYc35(accessed15September2021).13.UnitedNations,“Warning‘MotherNatureIsNotWaiting’,Secretary-GeneralUrgesLeaders’ClimateSummittoFormCoalitionforNet-ZeroEmissionsby2050,BoostInvestmentinCleanEnergy”,Pressrelease,22April2021.14.Toole,Matthew,“SustainablefinancesurgesinpopularityduringH12021”,Refinitiv,27July2021,https://www.refinitiv.com/perspectives/market-insights/sustainable-finance-surges-in-popularity-during-h1-2021(accessed22September2021).15.EuropeanBankforReconstructionandDevelopment,2020JointReportonMultilateralDevelopmentBanks’ClimateFinance,2021.16.BloombergNEF,EnergyTransitionInvestmentTrends,January2021.17.Ibid.18.Giorgi,Amanda,andCarlottaMichetti,ClimateInvestmentOpportunities:Climate-AlignedBonds&Issuers2020,ClimateBondsInitiative,July2021,https://www.climatebonds.net/files/reports/cbi_climate-aligned_bonds_issuers_2020.pdf(accessed22September2021).19.Amacker,Jonathan,andCharlesDonovan,MarathonorSprint?TheRaceforGreenCapitalinEmergingMarkets,ImperialCollegeBusinessSchool,CentreforClimateFinance&Investment,March2021.20.InternationalEnergyAgency(IEA),GlobalEnergyReview2021,2021.21.Barnes,Amy,AnthonyBiceandAlexWittenberg,“GoingBeyondInvestments–TheRoleofCommercialUnderwritingintheClimateTransition”,MarshMcLennanBrinkNews,24June2021,https://www.brinknews.com/going-beyond-investments-the-role-of-commercial-underwriting-in-the-climate-transition(accessed23September2021).22.USDepartmentofTransportation,FederalHighwayAdministration,“PaymentMechanismsinPublic-PrivatePartnerships”,2017,https://www.fhwa.dot.gov/ipd/fact_sheets/p3_paymentmechanisms.aspx(accessed23September2021).23.Hale,Thomas,etal.,“TowardsNetZeroexportcredit:Currentapproachesandnextsteps”,BlavatnikSchoolofGovernment,BSGWorkingPaperSeries,July2021,https://www.bsg.ox.ac.uk/sites/default/files/2021-07/BSG-WP-2021-042_0.pdf(accessed23September2021).EndnotesFinancingtheTransitiontoaNet-ZeroFuture4424.WorldEconomicForumandMcKinsey&Company,CleanSkiesforTomorrow:SustainableAviationFuelsasaPathwaytoNet-ZeroAviation,InsightReport,November2020.25.Ibid.26.WorldEconomicForum,RMIandPwCNetherlands,PoweringSustainableAviationThroughConsumerDemand:TheCleanSkiesforTomorrowSustainableAviationFuelCertificate(SAFc)Framework,CleanSkiesforTomorrow,InsightReport,June2021.27.InternationalEnergyAgency(IEA),IronandSteelTechnologyRoadmap,October2020,https://www.iea.org/reports/iron-and-steel-technology-roadmap(accessed24September2021).28.EnergyTransitionsCommissionandMaterialEconomics,SteelingDemand:Mobilisingbuyerstobringnet-zerosteeltomarketbefore2030,MissionPossiblePartnershipNet-ZeroSteelInitiative,July2021,https://materialeconomics.com/material-economics-steeling-demand.pdf?cms_fileid=b5f87ce120230f7f8d2b3c413a6c28c9(accessed24September2021).29.Ibid.30.Krantz,Randall,KasperSogaardandTristanSmith,“Thescaleofinvestmentneededtodecarbonizeinternationalshipping”,GettingtoZeroCoalition,January2020.31.EnergyTransitionsCommission,TheFirstWave:Ablueprintforcommercial-scalezero-emissionshippingpilots,GettingtoZeroCoalition,November2020,https://www.energy-transitions.org/wp-content/uploads/2020/11/The-first-wave.pdf(accessed24September2021).32.TheWorldBank,GreenInfrastructureFinance:FrameworkReport,2012.33.UN-convenedNet-ZeroAssetOwnerAlliance,“CalltoAction–ClimateBlendedFinanceVehicles”,February2021,https://www.unepfi.org/wordpress/wp-content/uploads/2021/02/Blended-Finance-Call-to-Action.pdf(accessed27September2021).34.BlendedFinanceTaskforce,BetterFinance,BetterWorld:ConsultationPaperoftheBlendedFinanceTaskforce,Business&SustainableDevelopmentCommission,2018.35.InternationalCapitalMarketAssociation(ICMA),“GreenBondPrinciples:VoluntaryProcessGuidelinesforIssuingGreenBonds”,June2021,https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Green-Bond-Principles-June-2021-100621.pdf(accessed27September2021).36.LoanMarketAssociation,“GreenLoanPrinciples:Supportingenvironmentallysustainableeconomicactivity”,December2018,https://www.lma.eu.com/application/files/9115/4452/5458/741_LM_Green_Loan_Principles_Booklet_V8.pdf(accessed27September2021).37.EuropeanInvestmentBankGroup,ClimateBankRoadmap:2021-2025,November2020,https://www.eib.org/attachments/thematic/eib_group_climate_bank_roadmap_en.pdf(accessed27September2021).FinancingtheTransitiontoaNet-ZeroFuture45WorldEconomicForum91–93routedelaCapiteCH-1223Cologny/GenevaSwitzerlandTel.:+41(0)228691212Fax:+41(0)227862744contact@weforum.orgwww.weforum.orgTheWorldEconomicForum,committedtoimprovingthestateoftheworld,istheInternationalOrganizationforPublic-PrivateCooperation.TheForumengagestheforemostpolitical,businessandotherleadersofsocietytoshapeglobal,regionalandindustryagendas.

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