Are industry-specific targets the “hidden fix” that policy makers need to raise their ambitions and lay the foundations for green economies?

Emitting around 30 per cent of global greenhouse gasses, industry is already the biggest sector in terms of worldwide emissions. Rather than steadily tracking down, emissions from industry also continue to rise and have doubled since 1990. Yet, most countries do not have industry-specific targets in their climate plans. This means that a lot of opportunities for bringing down emissions are being missed. With countries now revising their climate plans, we spoke to representatives from governments, industry and the finance community about how industry-specific targets can raise ambitions today, while laying the groundwork for tomorrow’s low-carbon economies.

Q: Why is it important to include the industrial sector in the new climate plans?

“The new NDCs are our last chance to be on track with the aims of the Paris agreement,” says Philipp Behrens, the head of the International Climate Initiatives at the German Federal Ministry for Economic Affairs and Climate Action. “Many NDCs don’t set quantifiable targets for the industrial sector. Heavy industries, like steel, cement and chemicals are responsible for 70 per cent of industrial emissions. And, at the same time, the International Energy Agency tells us that we need to reduce the emissions from the heavy industries by 90 per cent by 2050. And we also know that investment decisions [for heavy industries] will need to be taken within the next decade, and that makes it highly relevant and at the same time pressing,” he said.

Q: Why is it important to focus on emerging and developing economies?

“We are currently in a vast building boom, creating cities around the world,” says Sean Kidney the Founder and CEO of the Climate Bonds Initiative. In fact 75 per cent of the infrastructure that will exist in 2050 is yet to be built. And, the majority of this construction will take place in developing and emerging economies. “All emerging markets need access to the heavy industries to be able to build the kit for the future. Those industries have to be low-carbon going forward to meet our climate ambitions.

Q: What are some of the benefits that countries can gain by setting industry-specific targets?

The NDCs can be a valuable “instrument for development, but also for future investment plans,” says Philipp Behrens. Kenya´s Deputy Director of Industries, Purity Kamau, agrees. “Countries will have green products manufactured locally for the construction industry and have competitive or attractive green products for export,” she says.

There are other benefits too, says Mr. Leel Randeni, the Director of the Climate Change Secretariat in Sri Lanka. “The firm itself gets the benefit because the waste of energy can be addressed and businesses can reduce their cost of production. Green employment opportunities will also be generated because industry is switching into more climate friendly production,” he says.

Q: What support is needed, especially in emerging and developing countries, to integrate industries into the next round of NDCs?

“Industry is ready and committed to decarbonize,” says Claude Loréa, the Director of Cement, Innovation and ESG at the Global Cement and Concrete Association. “But, we have a strong call for the enabling policies. We need pull and push instruments. We need carbon pricing to push the decarbonization, but we also need green procurement measures to pull the demand for low carbon products. And finally, we need support for R&D to support the deployment of breakthrough technologies,” she says.

Leel Randeni says that emerging and developing countries urgently need access to technology. “We need technology transfers or technology development opportunities and access to climate finance,” he says. Sean Kidney agrees. “We need cheap capital. That’s where the North can help. It can help with mandating development banks to provide dedicated capital risk support, credit guarantees, and so on,” he says.

Investors also need certainty, says Sean Kidney. “No one has any doubt in global investor land that the world is now going to go green, but it’s very uncertain who is going to be a winner and who is going to be a loser. Can we ride the wave to prosperity or be swamped by it? That’s what investors are thinking. So governments can do something really good here. They can develop pipelines, they can show investors that they have investment propositions, and they can signal that they are surfing. Not being swamped,” he says.