Breakthrough technologies such as hydrogen-based fuels, bioenergy and carbon-capture storage solutions are needed to hit the global goal of zero emissions by 2050.
To scale these technologies and take them to market, at least a tenfold increase in investment is needed, according to the How to Finance Industry Net-Zero report.
Released by the World Economic Forum and Oliver Wyman, the report outlines how to address the supply-and-demand-side gap and take these technologies to the next level.
Part of the Forum’s Financing the Transition to a Net-Zero Future Initiative, the report brings together input from over 50 financial institutions and the public sector. Their focus is on how to steer capital to breakthrough technologies and drive a more sustainable future.
· The innovative blending of capital supported by an enabling ecosystem is needed, where different sources of public and private capital are brought together in technology-specific financing blueprints. To do this effectively, mechanisms that activate collaboration among multiple stakeholders are necessary.
· Transformative business models are essential, where industry participants and capital providers work together to establish new contracts and ways of doing business to increase the probability of commercial success.
· Targeted public intervention is critical, focused on the design of incentive schemes rewarding early movers adopting innovative technological solutions and de-risking schemes to mitigate investment risks unique to these innovative solutions.
“The challenge ahead is significant, but not insurmountable,” said Derek Baraldi, Head of Sustainable Finance and Investing, at the World Economic Forum. “If executed thoughtfully, the mobilization of finance to breakthrough technologies presents a tremendous investment opportunity. This study found that there is a real appetite from industry for thoughtful partnership and collaboration between private and public capital providers.”
“Organisations have announced ambitious pledges to finance the transition to net-zero but the progress made to date is not enough,” added Ted Moynihan, Managing Partner and Global Head of Industries, Oliver Wyman. “There is a huge gap in financing of early-stage decarbonization technologies, which will be absolutely critical to achieving our targets from 2030 to 2050. With more research breakthroughs coming, we are now in a vital moment to accelerate the mobilization of capital towards decarbonization technologies in hard-to-abate industries.”
By proposing an initial set of financing approaches and de-risking solutions, the report seeks to initiate an important discussion on how to rapidly accelerate the deployment of capital towards breakthrough technologies.
The report launched at the Mission Possible Partnership event Supercharging Industrial Decarbonisation. It brought together public and private sectors from shipping, aviation, and steel. The Mission Possible Partnership will share learnings across these critical industrial sectors and present sector-specific blueprints for industrial decarbonisation.