During the Ministerial Day of the 15th Clean Energy Ministerial (CEM15), the Climate Investment Funds (CIF) unveiled a landmark $1 billion commitment to decarbonize the industrial sector as part of its new Industry Decarbonization investment program. This innovative initiative aims to engage both public and private sectors to drive the reduction of emissions in heavy-polluting industries and support the global transition to a low-carbon economy.
Targeting Heavy-Emitting Industries
The industrial sector is responsible for about 25% of global greenhouse gas emissions, a number that is expected to grow, especially as developing nations continue to rely on industrial output to fuel their economic growth. Key sectors such as aluminum, cement, and steel are poised for increased demand—global aluminum demand alone is projected to rise by 80% by 2050, driven in part by the renewable energy transition. However, these industries are also among the hardest to decarbonize due to their energy-intensive processes.
CIF’s Industry Decarbonization program seeks to change this trajectory by supporting pioneering low-carbon technologies and pathways in these and other sectors. The program is designed to accelerate innovation, provide proof-of-concept funding for emerging technologies, and ensure a just transition for workers in these sectors.
A Unique Model for Public-Private Collaboration
In an unprecedented move, CIF’s program encourages close collaboration between governments, businesses, and multilateral development banks (MDBs). The goal is to create a seamless framework where private sector initiatives are integrated into larger, strategic decarbonization efforts from the start. This includes the opportunity for governments to submit joint expressions of interest alongside private companies, fostering a cooperative approach to large-scale industrial decarbonization.
The program also introduces a dedicated private sector set-aside, allowing up to 100% of funding to be allocated to projects led by private sector entities or those that bring in significant private sector co-investments. A minimum of 50% of total financing will be directed to private sector-led efforts, ensuring that the private sector plays a pivotal role in driving the clean energy transition.
Social Safeguards and a Just Transition
The Industry Decarbonization program places a strong emphasis on social safeguards, ensuring that the decarbonization process is inclusive and that the workforce is actively engaged. A key focus is to ensure that green job opportunities are accessible to all, with plans for worker training, employment promotion, and measures to address potential disruptions. Investment plans will include strategies to promote gender equity, addressing gaps and barriers faced by women and other marginalized groups, with clear indicators to monitor progress.
Aligning with Broader Climate Goals
This new initiative forms part of CIF’s broader $8.6 billion Clean Technology Fund and builds on its long track record of supporting sustainable development through climate finance. As part of this program, countries that submit expressions of interest will undergo a thorough evaluation process led by an independent expert panel, which will make recommendations to the Clean Technology Fund’s Trust Fund Committee. Selected countries will then be invited to develop comprehensive investment plans that outline transformative strategies for decarbonizing their industrial sectors.
Key Deadlines and Next Steps
Eligible countries have until January 17, 2025, to submit expressions of interest on the CIF website. This program offers a unique opportunity for developing countries to access significant funding and expertise to decarbonize heavy-emitting industries, with the potential to accelerate progress towards global climate goals and stimulate sustainable economic growth.
References:
- Climate Investment Funds (CIF) Industry Decarbonization Investment Program
- Clean Technology Fund
