Executives from ‘hard-to-abate’ industries have called for increased financing to support decarbonization efforts, following the release of a landmark report that outlines less than a third believe they have adequate budgets to do so, and over half have not yet set net-zero targets.
Reducing emissions in the hard-to-abate industries – cement, steel, aluminum, petrochemicals, shipping, aviation, heavy industry, and manufacturing – is vital in the effort to combat climate change, with industry and transport accounting for almost half of the global emissions.
The findings from ‘Hard to Abate, Ready to Start’, published by Masdar, the host of Abu Dhabi Sustainability Week (ADSW), in partnership with FT Longitude, further the discussion on decarbonization by identifying the biggest hurdles, and what is needed to drive greater action in the lead up to the 2023 United Nations Climate Change Conference (COP28) in the UAE.
Although challenging, the report finds that half of the senior industry leaders are more confident that net zero in their business is more achievable today compared to a few years ago.
HE Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, COP28 President-Designate, and Chairman of Masdar said “COP28 will see the conclusion of the Global Stocktake, offering a review of progress against the Paris Agreement. We know that the results will show a significant gap in where we are and where we need to be. The UAE is committed to addressing this, to reigniting momentum, and to bringing the goal of 1.5 within reach. Addressing carbon emissions in hard-to-abate sectors is a priority in that regard. There is simply no path to net zero that does not include decarbonizing these essential industries.”
Despite the optimism that exists across the industry, and the emergence of innovative new technologies to capture and store carbon, reliable finance remains a major barrier for accelerating progress for many senior executives. Despite strong progress across the sector over the past decade, 60 percent of organizations surveyed across Europe, Asia-Pacific, the Middle East, and North America have still not set decarbonization targets, and leaders from those organizations cite a lack of reliable finance as the main barrier for committing to targets. 83 percent and 62 percent of senior executives from the Middle East and Asia-Pacific respectively highlighted that they are taking steps to reduce emissions but have not set a target date for completion. Further, only 30 percent of senior executives overall, indicated their budgets will be able to meet decarbonization needs, and more than 50 percent are concerned about the impact of global economic headwinds on decarbonization investment.
Ahead of COP28, the UAE Presidency has made clear that access to finance and capital will be a priority, noting that both governments and private sector partners require the resources needed to commit to transformative action. This includes investing in the breakthrough technologies and innovations needed to drive ambition, such as carbon capture and storage, and other forms of decarbonization.
In addition to financing hurdles, the report also highlights the disparity in available technologies to accelerate decarbonization. Despite the progress made in recent years, the research outlines the gap in “frontier” technologies available at a commercial scale, delaying energy-intensive industries in ramping up decarbonization efforts.
Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, said “Building on important momentum gained during ADSW 2023, this report is a vital tool to drive forward decarbonization in hard-to-abate industries. Masdar, a global clean energy powerhouse, will continue to play a leading role by fostering global collaboration amongst governments and private sector partners. We intend to seize the opportunity of utility-scale renewable energy and focus our investments in frontier technologies like sustainable aviation fuel and green hydrogen to help accelerate global progress ahead of COP28 and beyond.”
As well as calling for greater industry collaboration, the report highlights the importance of increased public sector support and calls upon global governments to deliver innovative incentives across funding, legislation, and taxation to support national net-zero targets. As highlighted in the report, only 24 percent of senior executives expect to receive funding from government funds or incentives and 41 percent believe that without greater incentives and funding, they will be unable to meet their domestic market’s net-zero targets.
Publication of today’s report comes ahead of the UAE’s preparations to host COP28 later this year. This global event will act as a major milestone in progressing conversations and inclusive solutions across all sectors, including those hard-to-abate industries. In convening key players from this sector, COP28 will aim to accelerate climate action and deliver concrete outcomes and solutions for climate change.
In his role as COP President-Designate, Dr. Al Jaber has emphasized the need to address gaps by bringing public and private partners together in a “COP of Action, and a COP for All”. The UAE is firmly committed to an inclusive approach to climate action that includes industry leaders, civil society, academics, women, youth, and indigenous peoples.
In addition to COP28, ‘Hard to Abate, Ready to Start’ will help frame discussions at the upcoming International Energy Week in London and S&P CERA Week in Houston, Texas.
Abu Dhabi Sustainability Week (ADSW) is a global initiative championed by the UAE and its clean energy powerhouse Masdar, to accelerate sustainable development and advance economic, social, and environmental progress. Established in 2008, ADSW provides a global platform for all who have a stake in the future of our planet. ADSW brings together leaders from across governments, the private sector, and civil society, to discuss and engage on bold climate action and innovations that will ensure a sustainable world for future generations.