Full Title: Financing the Low-Carbon Transition in Heavy Industry
Author(s): Shuyi Li, Wei Li, Shutong (Lucy) Lu, Peishan Wang, Yujun Xue, Rong Yan, and Boya Zhang
Publisher(s): Rocky Mountain Institute
Publication Date: March 19, 2024
Full Text: Download Resource
Description (excerpt):
China’s heavy industry sectors are large in scale, carbon-intensive in both feedstock and fuel use, asset-heavy, and have a long life cycle in nature. Ensuring a successful low-carbon transition is challenging and requires large amounts of capital investment. The rapidly evolving green financing mechanisms have successfully channeled capital to support a wide range of decarbonization activities. However, due to the misalignment between the high emitting nature of heavy industry and the original definitions of green finance, existing financial support is still insufficient to meet the heavy industry’s decarbonization needs. Therefore, there is an urgent need for innovative financing mechanisms.
This report focuses on financing the transition of three heavy industry sectors — steel, cement, petrochemicals and chemicals — to low carbon. By analyzing sector-level transition pathways and scale of investment, the report presents guidance on matching transition capital needed with available financial instruments. The report also offers a forward-looking perspective on market development, suggesting ways to further refine the financing mechanisms to better facilitate the transition of the heavy industry sectors.