The world will require $13.5-trillion in investments by 2050 to transition to a more sustainable and carbon-neutral future, particularly in the production, energy and transport sectors, the World Economic Forum (WEF) states in its 'Net-Zero Industry Tracker 2023' report, which was published in collaboration with advisory company Accenture.

The report takes stock of progress towards net-zero emissions for eight industries, namely steel, cement, aluminium, ammonia, excluding other chemicals, oil and gas, aviation, shipping and trucking.

These depend on fossil fuels for 90% of their energy demand and pose some of the most technological and capital-intensive decarbonisation challenges.

“Decarbonising these industrial and transport sectors, which emit 40% of global greenhouse gas emissions today, is essential to achieving net zero, especially as demand for industrial products and transport services will continue to be strong,” emphasises WEF Centre for Energy and Materials head Roberto Bocca.

“Significant infrastructure investments are required, complemented by policies and stronger incentives so that industries can switch to low-emission technologies while ensuring access to affordable and reliable resources critical for economic growth,” he says.

The $13.5-trillion in investments is derived from average clean power generation costs of solar, offshore and onshore wind, nuclear and geothermal, electrolyser costs for clean hydrogen and carbon transport, as well as storage costs.

The majority of the technologies needed to deliver net-zero emissions are expected to reach commercial maturity after 2030, highlighting the need for collaborative approaches to research, develop and scale them. This includes substituting legacy technologies with low-emission alternatives, increasing efficiency of processes and machinery, electrification and driving circularity, he said.

“It is imperative that action is taken soon to both decarbonise and improve energy efficiency, otherwise, unabated fossil-fuel demand in the key industry sectors, which has grown 8% on average the past three years, will increase very significantly by 2050,” says Bocca.

“However, industrial leaders can respond through new collaborative ways of working and innovating, for example, within industrial clusters, and by fostering best practices, sharing infrastructure in important areas like clean hydrogen and carbon capture, use and storage (CCUS), and building demand for lower-emissions products.”

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The report calls for industrial sectors to focus on five areas, namely technology, infrastructure, demand, policy and capital.

In terms of technology, industries must prioritise clean power technology across most sectors, commercially scale CCUS in cement, and improve technology to reduce costs for clean hydrogen development.

Further, the report recommends that industries promote shared infrastructure, such as industrial hubs and clusters. Industries should also create a standardized framework for low-emissions products, a simple emissions-intensity calculator, and an auditable carbon-footprint assessment process to improve consumer transparency.

In terms of policy, the report recommends that industries align on emissions reduction requirements globally, with policies customised to suit individual country needs and enhance market transparency to increase emission intensity visibility.

Additionally, in terms of capital, industries must improve transparency for low-emissions and low-carbon alternatives, strengthen demand signals and reduce capital expenditures through shared infrastructure development, the report states.

The report outlines pathways to accelerate the decarbonisation of emission-intensive production, energy and transport industries.

“While the pathway to net-zero in these sectors will differ based on unique sectoral and regional factors, investments in clean power, clean hydrogen and infrastructure for CCUS will be needed to accelerate industrial decarbonisation across most sectors," it emphasises.

Meanwhile, the Net-Zero Industry Tracker proposes a comprehensive framework of emissions drivers and enablers to measure progress and identify gaps, scorecards for each industry, and opportunities for cross-sector collaboration.

The report’s findings underscore the urgency for creating a robust enabling environment, including low-emissions technologies, infrastructure, demand for green products, policies and investments, the WEF said in a statement.

“In addition to increasing capital expenditures to decarbonise existing industrial and transport asset bases, further investment is needed to build a clean-energy infrastructure," the report outlines.

Carbon pricing, tax subsidies, public procurement and development of strong business cases can support in mobilising necessary investments.

However, raising capital for high-risk projects with unproven technologies could be challenging in the current macroeconomic environment. Institutional investors and multilateral banks, therefore, can play an important role by providing access to low-cost capital linked to emissions targets. Equally vital is adapting financial models to the needs of various industries and regions, the WEF notes.

“Collaboration between the public and private sectors is critical to a successful energy transition, and technology can be a key enabler in both managing affordable and reliable access to clean energy and addressing the incremental cost of decarbonization,” says Accenture Strategy CE Muqsit Ashraf.

“Widespread scaling and adoption of clean power, carbon capture and storage, and energy efficiency technologies across sectors are vital for progress. Additionally, business model innovations can also help stimulate demand and accelerate industrial decarbonisation, thereby achieving net-zero objectives and a resilient energy transition.”

The report acknowledges that recent policy developments can push the industrial net-zero transformation in the right direction.

However, while some advanced economies are enacting large-scale policy measures, emerging economies, which will account for a larger share of future demand for industrial products and transport services, will need help accessing low-emission technologies and solutions, it says.