Revolutionary technologies such as hydrogen-based fuels, bioenergy and carbon capture storage solutions are needed to reach the global goal of zero emissions by 2050.
To develop these technologies and commercialize them, investments must at least be increased tenfold, according to the How to Fund the Industry Net-Zero Report.
Published by the World Economic Forum and Oliver Wyman, the report explains how to close the gap between supply and demand and take these technologies to the next level.
As part of the Forum’s Funding the Transition to a Net Zero Future initiative, the report brings together contributions from more than 50 financial institutions and the public sector. They focus on how to direct capital towards advanced technologies and drive a more sustainable future.
· The innovative mix of capital supported by a favorable ecosystem is needed, where different sources of public and private capital are brought together in technology-specific financing schemes. To achieve this effectively, mechanisms that activate collaboration between multiple stakeholders are needed.
· Transformative business models are essential, where industry participants and capital providers work together to establish new contracts and ways of doing business in order to increase the likelihood of business success.
· Targeted public intervention is essential, focused on designing incentive programs that reward early adopters to adopt innovative technology solutions and risk reduction programs to mitigate the investment risks inherent in these innovative solutions.
“The challenge ahead is important, but not insurmountable ”, declared Derek baraldi, responsible for sustainable finance and investment, at the World Economic Forum. “If executed in a thoughtful manner, mobilizing finance for cutting-edge technologies presents a tremendous investment opportunity. This study found that there is a real industry appetite for thoughtful partnership and collaboration between private and public capital providers.
“The organizations have announced ambitious commitments to fund 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 funding for early-stage decarbonization technologies, which will be absolutely critical to achieving our goals from 2030 to 2050. With more research breakthroughs to come, we are now at a critical time for accelerate the mobilization of capital towards decarbonising technologies in industries that are difficult to reduce.
By proposing a first set of financing approaches and risk reduction solutions, the report seeks to initiate an important discussion on how to rapidly accelerate the deployment of capital towards disruptive technologies.
The report launched at the Mission Possible Partnership event Supercharging industrial decarbonization. It brought together the public and private sectors of maritime transport, aviation and steel industry. The Mission Possible partnership will share lessons learned from these critical industrial sectors and present specific sector plans for industrial decarbonization.