NDCs 3.0: How integrating industries can raise ambitions today and create strong foundations for tomorrow’s thriving low-carbon economies

With global industrial emissions continuing to grow, the next round of climate plans represent a critical chance to build the foundations for thriving low-carbon manufacturing and a safe climate for all.

Since 2000, industrial greenhouse gas emissions have grown faster than in any other sector and continue to rise every year. New climate plans will need a sharper focus on industries if we are to keep global temperatures under 1.5 degrees of change. Heavy industries, like steel, cement and chemicals, are key. They account for 70 per cent of all industrial emissions and, for this group of high-emitters, 2050 is only one investment cycle away.

Integrating industries is especially urgent for emerging and developing economies (EMDEs), as this is where the biggest growth in industrial activities will happen over the coming decades. For example, three quarters of the global urban infrastructure that will exist in 2050 is yet to be built, and most of this construction will take place in EMDEs.

In 2025, countries will submit the third iteration of their nationally determined contributions (NDCs 3.0). Arguably the most important policy documents of this century, the new NDCs will outline the measures that countries will take over the next decade to ensure a safe climate. Countries are again compelled to raise the ambition of their plans. Integrating industries offers some quick-wins. At the same time, this next round of plans can be powerful blueprints to build a thriving low-carbon manufacturing sector, reaping long-term national benefits.

Raising the ambition: Countries can make quick-wins by integrating industries

When it comes to national climate plans, most countries have tackled industry emissions as part of their energy sector commitments. This makes sense for those industries whose emissions are mainly energy-related. But, many industries, including heavy emitters, have more complex, process-related emissions. This means they need more detailed, industry-specific measures to bend the emissions curve.

To date, only a fraction of NDCs define industries as a standalone area, with their own specific targets and measures to drive down emissions. This is where countries can make quick gains on the ambition front, says Tomasz Pawelec, Industrial Development Policy Expert at UNIDO. “Including industry is a chance for countries to really enhance the ambition of their NDCs by pursuing mitigation measures that were previously not considered,” he said.

Sometimes these measures can be as simple as changing regulations. For example, in the high-emitting cement sector many countries could review regulations to allow the use of some waste products as an additional low-emissions fuel source. Concentrating measures like this on contained industrial sectors, can result in significant and cost-effective ways for countries to tackle emission, he said.

Today’s NDCs can build the foundation for tomorrow’s low-carbon economies

Integrating industries into NDCs today can also bring major benefits in the long-run. It will provide policymakers with the impetus to adopt measures, such as tax breaks and incentives, which will create the conditions that industries need to decarbonize.

As more and more markets like the EU and others stipulate the need for low-carbon products, this will help national industries to compete globally, skipping transition measures and investing directly in low solutions. This, and the expansions of green jobs and sectors, can create a thriving future economy.

This is especially true when it comes to heavy industry. From her work with industries worldwide, Rana Ghoneim, Chief of the Division for Energy and Climate Action, is clear – the solutions EMDEs need to decarbonize heavy emitting industries exist, but a lack of supportive policies and finance is stalling action.

“If governments provide that enabling framework, industry is ready and willing to create the innovations and step on board,” she says. “There is a strong need from governments to shape the market to create demand for low-carbon products, like requiring specific amounts or a specific share of low-carbon products in construction, for example, or using green public procurement to create demand,” she said.

“The companies already know what they can do, they just need some support – an enabling environment from the government, some regulations – which will allow them to actually implement those measures,” Ms. Ghoneim said. “The missing piece of the puzzle is then finance.” This is where a clear national plan for the decarbonization of industry is also critical for attracting investors.

Charting the course

As countries embark on updating their climate plans, the UNIDO-led Net Zero Partnership for Industrial Decarbonization has developed an NDC 3.0 Support Package to guide EMDEs through the process of including realistic, industry-specific targets and plans.

Central to this support is the NDC Industry Decarbonization Support toolkit. This can be adapted to each country’s context – whether it already has industry-specific decarbonization policies in place or wants to develop them. The toolkit focuses on three main areas: NDC design and implementation for industrial decarbonization, the relevant policies and measures to include, and supporting access to finance so that industry-specific NDC commitments can be implemented.

“UNIDO’s responsibility lies in getting an understanding from countries on what ‘good’ looks like in an industry-related action, and setting a benchmark to aspire to. For me, ‘good’ looks like an ambitious target: the right actions to actually support getting towards that target and utilizing the technologies that could get you there fastest and most cost effectively… and an estimation of the investments that will be needed,” Ms. Ghoneim said.

Alongside the toolkit, UNIDO’s Industrial Decarbonization training programme will enhance policymakers’ understanding of how to undertake industrial decarbonization and the available policy, technology and finance options. The type of capacity building will depend on need, but it can include detailed technical support on new technologies and new solutions, the sharing of case studies and best practice from other countries, and study tours.

These efforts will be supported by the Climate Club’s Global Matchmaking Platform, which will work with EMDEs to match suitable technologies, technical knowledge, funds and financing instruments to support a country’s ambitions and goals.