46 SEPTEMBER 2024 | THE FOREIGN SERVICE JOURNAL technologies. The Mission Possible Partnership’s Global Project Tracker reveals, however, that the heavy industry transition needs to accelerate sevenfold to meet 2030 climate targets. To reach FMC’s goals by 2030, the initiatives that FMC members have taken need to be replicated at scale and supported by adequate infrastructure, financing, and an enabling policy environment. The Way Forward FMC’s work has brought to light the challenges of scaling up near-zero emissions products and services, especially at the pace required to get on track for net zero, and the risk that as demandside signals increase, potential supply shortages might emerge. Some of these challenges are: • Insufficient renewable energy capacity and grid infrastructure to provide the zero-carbon electricity needed to decarbonize (e.g., to produce green hydrogen). • Lack of technology at commercial scale, despite significant progress in developing pathways and pilots that could lead to decarbonization. Will a particular technology prove to be the final pathway, or will it just be transitional, leading to a different path altogether? • Unwillingness to pay for green premiums. Demand remains insufficient, especially at the green premium, to justify the investment required to produce near-zero emissions solutions. For example, zero-emission fuels for shipping currently cost three to four times the price of bunker fuel, while sustainable aviation fuel can cost five times more than traditional jet fuels. • Insufficient collaboration between suppliers, innovators, financiers, demand-side buyers, policymakers, and others in the value chain. To spearhead the shift to near-zero emissions products and services and accelerate the demand for net-zero technologies, additional measures could help us move faster and at scale. First, governments need to enact more supportive policies and regulations that help industry decarbonize, through carbon taxation, tax credits, low-interest loans, subsidies, grants, and other incentives. Policy incentives worth mentioning include the production and investment tax credits envisaged under the U.S. Inflation Reduction Act (2022), or the subventions provided under the European Union’s Green Deal Industrial Plan, and the Emissions Trading Scheme. FMC currently has 13 government partners, in addition to the United States, to support efforts on policy and regulations, with more countries interested in partnering, as well. Since public procurement represents a significant share of GDP, the adoption of low-carbon procurement practices could also send a strong market signal to suppliers, incentivize investment and supply chains development, facilitate uptake, and reduce the green premium. In the cement and concrete sector, public procurement is responsible for 40 to 60 percent of global concrete sales, highlighting the impact that public procurement could have. Policy can be leveraged to ensure a broad application of decarbonization targets that can further spur the market by setting mandates for the private sector, for instance. Countries like the United States have signed the Industrial Deep Decarbonisation Initiative (IDDI), co-launched in 2021 by the United Nations Industrial Development Organization and the Clean Energy Ministerial, to tackle carbon-intensive construction materials such as steel, cement, and concrete. But the number of countries signatory to IDDI remains low. Because the breakthrough technologies needed to decarbonize the hard-to-abate industrial sectors require enormous up-front capital investment and ongoing production premiums but are also exposed to operational risks, international financial institutions, domestic development banks, and commercial banks need to cooperate and accelerate efforts to offer financial products that unlock funding and de-risk investments. These may include blended finance, concessionary loans, sustainability bonds, and first-loss insurance. Realizing the Paris Agreement means the so-called hard-toabate sectors have to abate. Addressing the many challenges to the development, financing, and adoption of these technologies is crucial to gain traction and continue making progress. FMC will continue to serve as a platform for companies around the world to leverage their collective purchasing power to accelerate the deployment of near-zero emission solutions. It will continue to drive collaboration efforts across value chains, including through aggregated demand, finance, and infrastructure, as well as sharing lessons in global forums aimed at strengthening the demand signal for low-carbon technology. n Carbon dioxide removal (CDR) is increasingly seen as a critical decarbonization tool if we are to hit the Paris climate goals.
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