How to finance industrial decarbonization
Paris Agreement recognizes that keeping temperature below 2°C from pre-industrial levels would significantly reduce impact of climate change. It will be essential to decarbonize industry to achieve this.
Direct industrial processes contribute 5.2% of global greenhouse gas emissions, while energy use in industries contributes 24%. There are currently few market-tested mechanisms to price industrial carbon emissions.
Debt financers, particularly banks, do not consider energy-efficient industrial equipment as an attractive lending proposition. Public-funded unsecured subordinated debt financing could be used to help.
The initial identification of standardized plants, equipment, and processes that reduce carbon emissions substantially and offer financial benefits, rather than backing a variety of technologies across industrial sectors, would help to reduce costs of researching and assessing the environmental and financial benefits of new technologies.
Read original article WEF