As Group Chief Sustainability Officer for India’s JSW Steel, one of the top steelworkers in the world, Prabodha Acharya, sees multiple challenges to decarbonization.
The company needs a large, round-the-clock supply of clean electricity. Switching from carbon-intensive virgin steel to recycling is difficult given how much India’s economy is still growing; there’s not enough scrap metal. Hydrogen technologies are not yet mature enough to be commercially viable in India. And entirely new competencies may need to be developed.
But don’t tell Acharya that steel is a “hard-to-abate” sector.
“I have an objection to that,” he said at a strategic knowledge exchange event co-hosted by CIF with LeadIT and the Industrial Deep Decarbonization Initiative (IDDI) at the 14th Clean Industry Ministerial and the 8th Mission Innovation (CEM/MI-8), in Goa, India on July 22. “Psychologically, if we think something is difficult, we leave that to address at the end. I would urge everybody to stop calling our sector ‘hard to abate’ … call it a priority to abate – that will give it urgency, that these are the sectors we need to address at the beginning.”
Acharya was part of a panel of industrial leaders at the event, which focused on how to unlock large-scale financing to enable a shift to net-zero, climate-resilient industry in developing countries. The panelists, all supportive of decarbonization, provided their perspectives on where investment is most needed to enable a just transition.
CIF launched the Industry Decarbonization Program last year to mobilize investment in middle-income countries in particular, where heavy industry is still growing rapidly to meet demand for steel, cement, and other materials. The UK and Sweden pledged a combined $100 million to launch the program, and CIF is aiming to raise another $400 million by the end of this year.
Along with industry leaders, the event in Goa included voices from international organizations and partnerships, multilateral development banks (MDBs), and governments. Together, they discussed where finance is needed, how the public and private sectors can best work together, and how to catalyze investment to achieve just transitions in industry in developing countries.
Increasing the scale and pace of investment
“There remains a vast gap in the amount of industry financing that is needed and what is currently on offer, so today I strongly invite all partners to scale up and channel up investment to targeted programs like CIF,” said the Rt. Hon. Grant Shapps, UK Secretary of State for Energy Security and Net Zero. “This is a truly historic opportunity to harness the power of public and private finance to deliver targeted support at the pace required to meet the climate goals.”
Ciyong Zou, Deputy to the Director General and Managing Director of the Directorate of Technical Cooperation and Sustainable Industrial Development at the UN Industrial Development Organization (UNIDO), echoed the call for massively scaling up finance.
“Decarbonization requires significant investment in new technologies and training of workers,” he noted. Yet current financial flows are nowhere near large enough to influence companies’ own investment decisions, “and avoid locking in emissions for several decades to come.”
Moreover, Zou said, the cost of private capital for low-carbon technologies is two or three times higher in developing countries, so finance is particularly crucial there. At the same time, countries need to create an enabling environment for decarbonization and adopt long-term goals and roadmaps, to send clear signals to the market and help mobilize investment.
Isabel Chatterton, Director and Asia Pacific Regional Head of Industry, Infrastructure, and Natural Resources at the International Finance Corporation, explained how IFC works with governments and with the private sector to line up bankable climate projects and facilitate investment. Tackling the “priority to abate sectors,” she said, is “a huge opportunity – $11–21 trillion of investment from now to 2050.”
The global South as a hub of innovation
Along with mobilizing finance and ensuring a just transition, Chatterton said it’s important to ensure that knowledge flows from the global North to the global South and vice-versa.
Dr. Somya Joshi, Head of Global Agendas, Climate and Systems at the Stockholm Environment Institute and Roadmaps Lead at LeadIT, built on those themes. “When we talk about breakthrough technologies, how can we co-develop them, instead of just having them come from the global North?” she said, adding that there is growing demand for pilot projects in developing countries.
The closing speaker was Mariana Especie, Director of Energy at Brazil’s Ministry of Mines and Energy. Brazil announced at CEM/MI-8 that it was joining the Industrial Deep Decarbonization Initiative, a broad coalition of governments and the private sector, in line with the government’s goal to decarbonize industry and transportation.
“We believe there are many opportunities that can be achieved through concessional financing,” Especie said. Brazil wants to develop some hydrogen technology hubs, for instance, and finance recently approved by CIF will make it possible to create the first one.
“We expect with our $70 million from the fund to be able to leverage investments up to $8 billion. That’s huge,” she said. Brazil is also keen to serve as an example for other countries in the global South. “We’re excited to share our experience with the world,” she added, “so we can help other countries to follow the same pathway.”