《奥纬咨询&WEF:2023气候投融资动员政策行动及市场反应白皮书(英文版)(23页).pdf》由会员分享,可在线阅读,更多相关《奥纬咨询&WEF:2023气候投融资动员政策行动及市场反应白皮书(英文版)(23页).pdf(23页珍藏版)》请在三个皮匠报告上搜索。
1、Policy Action to Mobilize Climate Finance,and Market ResponsesW H I T E P A P E RN O V E M B E R 2 0 2 3In collaboration with Oliver WymanContentsImages:Unsplash,Getty Images 2023 World Economic Forum.All rights reserved.No part of this publication may be reproduced or transmitted in any form or by
2、any means,including photocopying and recording,or by any information storage and retrieval system.Disclaimer This document is published by the World Economic Forum as a contribution to a project,insight area or interaction.The findings,interpretations and conclusions expressed herein are a result of
3、 a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum,nor the entirety of its Members,Partners or other stakeholders.ForewordExecutive summary1 Recent public support announcements and accompa
4、nying momentum in private investment2 Sustained support from the public sector is improving commercial viability for investors2.1 Clean hydrogen2.2 Sustainable aviation fuels2.3 Challenges remain3 Driving action,creating certainty,setting standards priority areas for continued public support4 Lookin
5、g aheadContributorsEndnotes34592021Policy Action to Mobilize Climate Finance,and Market Responses2ForewordThree years into the“decisive decade”of the 2020s,1 targets for scale and investment coverage in climate solutions are not being met.While the upwards trajectory in capital flows to c
6、limate-aligned opportunities is encouraging(Bloomberg data estimates more than$2.5 trillion invested in clean energy in 2023),2 investment in breakthrough technologies such as clean hydrogen or sustainable aviation fuels(SAF)is still in the low billions,concentrated in a handful of large deals.Howev
7、er,we have seen encouraging momentum in recent years,driven by a supportive public sector,which has an important role to play in creating the conditions necessary to direct capital towards climate solutions at scale.As argued in the World Economic Forum report Financing the Transition to a Net-Zero
8、Future,3 immediate market-wide stakeholder action is required to facilitate the multifold increase in capital flows needed to deploy,validate and expand critical breakthrough technologies;this relies on co-designed solutions,including innovative financing approaches,new ways of doing business and,im
9、portantly,targeted public intervention.Indeed,while private financing blueprints can act as helpful guidelines for scaling the development of climate solutions,these alone will not drive capital at the speed and scale required to fund the decarbonization technologies necessary to achieve net zero.Br
10、idging the investment gap requires decisive public action that makes use of the lessons learned from the mobilization of capital for renewables over the past decade to increase financier confidence in net-zero transition investments and establish the underlying economic case with more certainty.Targ
11、eted intervention from government actors can help generate sustained demand,establish supply chains and unlock finance for breakthrough technologies.4While recent announcements from governments have signalled a clear intent to encourage the funding of climate solutions,financial institutions(FIs)wil
12、l also have to move from commitment towards action,supported by an enabling policy and regulatory environment.Given the range of climate solutions available and the constraints under which FIs operate,these institutions need breadth and depth of expertise to identify,assess and value investment oppo
13、rtunities in climate solutions,often requiring them to evaluate and manage risks differently.The continued support of the public sector to encourage and enable the transition,and FIs ability to step up to the challenge and harness their commitments,are both necessary to move the needle towards great
14、er action.With public incentives in place and a more favourable environment,private finance is being encouraged to capitalize on the strategic opportunity that climate solutions provide.To further the movement of capital,the public sector should continue to drive action through tax incentives to spu
15、r production or mandates to commit demand,create certainty by pushing for long-term regulatory support and establish better-defined standards for investments in climate solutions.The Financing the Transition to a Net-Zero Future initiative of the World Economic Forum,in collaboration with Oliver Wym
16、an,was launched in 2020 to accelerate the mobilization of capital towards early-stage decarbonization technologies.The initiative has engaged a multistakeholder community of financiers,industry stakeholders,philanthropists and public institutions to analyse specific technologies in the steel,aviatio
17、n and shipping sectors to develop particular mechanisms for the different stakeholders to co-design solutions and identify policy interventions necessary to mobilize private capital.Derek Baraldi Head of Sustainable Finance,World Economic ForumIlya Khaykin Partner,Oliver WymanPolicy Action to Mobili
18、ze Climate Finance,and Market Responses3Executive summaryPublic action is needed to drive investment by private finance in climate solutions and meet net-zero goals on schedule,with recent government announcements showing a clear commitment to facilitate the process.This paper focuses on the United
19、States,Europe and the United Kingdom,given the concentration of the Financing the Transition to a Net-Zero Future(FTT)communitys presence in these regions,as well as noteworthy examples of relevant policy and regulations.These include the Inflation Reduction Act(IRA)in the US,which promises long-ter
20、m tax credits to produce clean energy and technology and increase US production of renewable energy,including the Hydrogen Production Tax Credit,5 and the European“Fit for 55”package,which sets sustainable aviation fuel(SAF)blend mandates6 among other legislation,and the Net-Zero Industry Act,which
21、ensures a more predictable and simplified regulatory environment.7 In parallel,private finance has made significant commitments in recent years,with more than 250 institutions across the spectrum of private capital providers,representing more than$80 trillion in assets under management,committing to
22、 align their portfolios with net-zero pathways by 2050 through the Glasgow Financial Alliance for Net Zero.8This paper refers to recent public-sector announcements,highlighting the role that the public sector has played in mobilizing investments in sustainable aviation fuel(SAF)and clean hydrogen in
23、 the US,Europe and the UK.These solutions will constitute the technology focus of this paper,building on the Financing the Transition to a Net-Zero Future initiatives work to date and reflecting the communitys interest in these technologies.In this renewed context of government support,the paper wil
24、l consider the market response,and how sustained support from the public sector has been improving commercial viability for investors,all the while outlining the challenges that the financing community continues to face.Finally,the paper will summarize priority actions guiding the public sectors eff
25、orts to mobilize private-sector funding,with reference to ongoing sector-specific work at the Forum.The public sector can take on three roles as it directs investments,as referenced in this paper:1.Driving action:for example,through tax incentives to spur production or mandates to commit demand 2.Cr
26、eating certainty:by pushing for long-term regulatory support 3.Setting standards:by establishing better-defined standards for investments in climate solutions(e.g.definitions of what constitutes a clean hydrogen project)Importantly,the successful deployment of funds for breakthrough technologies res
27、ts on close collaboration between all stakeholders involved.Immediate market-wide stakeholder action backed by enabling public policies is required to address the highly likely investment gap towards net zero.Recent announcements from governments have signalled a clear intent to encourage the fundin
28、g of climate solutions.Policy Action to Mobilize Climate Finance,and Market Responses4Recent public support announcements and accompanying momentum in private investment1The public sector has an important role to play in stimulating private-sector funding for breakthrough technologies.Policy Action
29、to Mobilize Climate Finance,and Market Responses5Recent announcements indicate a clear intent from the public sector to stimulate private-sector funding for breakthrough technologies.Still,the myriad of public or industry mechanisms available can feel confusing and inaccessible.Figure 1 attempts to
30、map the many regulated sustainability-related initiatives in the EU,US and UK.This includes:financial mechanisms related to carbon prices(market,tax or credit);mandates,regulations and enabling policies that affect both clean technologies such as clean hydrogen and SAF and renewable energies;and tra
31、nsition guidance and standards.Binding sustainability-related initiatives across focus geographies(non-exhaustive)FIGURE 1Focus initiatives for clean technologies and renewable energiesCarbon price mechanisms(market,tax,credit)Financial incentivesand enabling policyUK carbon price supportMandates an
32、d regulationEmission-tradingsystemCBAMBorder carbon taxUS RGGI(regional initiative)emission-trading systemUK ETS emission-trading systemEuropeUSUKTransition guidance Standards and reportingEU taxonomyeconomic activities classificationCSRDreportingrequirementReporting requirementDecarbonizationSEC+US
33、 IRANet-Zero Industry ActRePowerEU and European Green DealDraft under discussion not votedStatus of regulationEU-levelfunding/support1National mandates for low-carbon fuels,e.g.SAFUK green taxonomyUK green taxonomyNational fundingvia UK GreenFinance StrategyPowering Up BritainUS Build BackBetter Act
34、Note:Some countries are in the process of adopting TCFD guidance as a regulation;1.Funding/support through IPCEIs,EU Innovation Fund(under ETS),the European Hydrogen Bank,European Innovation Council,EIB loans,EU guarantees under InvestEU programme.Source:Oliver Wyman analysis,in collaboration with t
35、he World Economic ForumAs it relates to SAF and clean hydrogen specifically,the US IRA commits specific investments(grants,funding)and tax credits to hydrogen and carbon capture,utilization and storage(CCUS),and low-emission fuels(LEF),including SAF.As detailed in Table 1,$16.4 billion in tax credit
36、s has been allocated to hydrogen and CCUS,and$8.6 billion to LEF,which include SAF,representing respectively 4%and 2%of the total IRA investment in clean and energy funding of$381 billion,with most of the incentives going to zero-emission power generation.9 The IRA is expected to spur significant in
37、vestment in the US economy,with more than$1 trillion expected to be invested in power generation,hydrogen and CCUS over the next eight years.10Policy Action to Mobilize Climate Finance,and Market Responses6IRA investments and tax credits by sector(hydrogen and CCUS,and low-emission fuels)TABLE 1Hydr
38、ogen andCCUSLow-emissionfuels,including SAFTotal1Investments$billions-111.3Grants-53.6Funding-57.7Tax credits$billions16.48.6280.8Grants-45.9Funding16.48.6234.9Key incentives Clean hydrogen production orinvestment credits Carbon capture and storage production or investment credits Production of low-
39、carbon fuels(including SAF,biofuel,biodiesel,renewable diesel)$1020 billion$20100 billionNote:1.Total includes zero-emission power generation(the largest investment area),manufacturing,conservation and resilience,agriculture,hydrogen and CCUS,infrastructure,low-emission fuels including SAF,electric
40、vehicles and consumer sectors.Sources:The Bipartisan Policy Center,“Inflation Reduction Act(IRA)Summary:Energy and Climate Provisions”,4 August 2022;Francesca Paris,Alicia Parlapiano,Margot Sanger-Katz and Eve Washington,“A Detailed Picture of Whats in the Democrats Climate and Health Bill”,The New
41、York Times,16 August 2022;Committee for a Responsible Federal Budget,“Whats in the Inflation Reduction Act?”,28 July 2022;Senate.Gov,“Bipartisan Infrastructure Investment and Jobs Act Summary:A Road to Stronger Economic Growth”;CBO cost estimate;Oliver Wyman analysisPolicy Action to Mobilize Climate
42、 Finance,and Market Responses7While it is difficult to parcel out the specific amount of European investment committed to clean hydrogen or LEF,the following sections will highlight recent incentives and mechanisms,including other regulatory measures such as SAF mandates that have proved to be an ef
43、fective tool in committing demand for and thereby spurring the production of and investment in SAF.It should be noted that various regulatory levers have been applied to SAF and clean hydrogen to drive both demand and supply.Figure 2 provides an overview of regulatory levers to support SAF and clean
44、 hydrogen production,and examples for each where applicable,namely:Carbon pricing and carbon credit markets,which apply broadly across all climate solutions,and have been shown to be a significant lever in encouraging the production of less carbon-intensive technology Research and development(R&D)gr
45、ants,earmarked to be allocated to R&D projects for the development of climate solutions More specifically for the focus technologies,blend requirements and tax incentives that have been highly effective in spurring investments in SAF and clean hydrogen productionRegulatory levers to support SAF and
46、clean hydrogen production(non-exhaustive)FIGURE 2R&D grants:Earmarked funds,which can be allocated to R&D projects in climate solutionsEU Innovation Fund will invest 3bn to help build market for hydrogen through the European Hydrogen Bank and 1.8 billion into“clean tech”projects,including SAF projec
47、tsUS Build Back Better Act(BBBA)allocating$9.5 billion for clean hydrogen initiatives,including the development of regional clean hydrogen hubs and$275 million for grants in SAF productionCarbon pricing:Carbon tax system that imposes additional cost for producing climate solutionsBritish Columbia ta
48、xes diesel 40 CPG for carbon emissionsGermany carbon pricing system as part of Fuel Emissions Trade Law(BEHG)Tax incentives:Specific tax incentives for blending or producing climate solutionsHydrogen Production Tax Credit,awards up to$3 per kg of hydrogen produced to projects with a life-cycle GHG e
49、missions intensity of 0.45 kg CO2e/kg H2through to 2027US blenders tax credit and SAF blenders tax credit,which extends up to$1.75 per gallon for SAF through to 2027Blend requirements:Minimum requirements of renewable content in fuelEU“Fit for 55”regulation demanding 2%SAF blend by 2025,and 6%SAF bl
50、end by 2030No direct blend requirement for clean hydrogen1Carbon credit markets:Carbon cap and trade system that allows companies to benefit from operating below the GHG capCalifornias Low Carbon Fuel Standard and Canadas Clean Fuel StandardEU Emissions Trading System(EU ETS)Note:1.The EU“Fit for 55
51、”regulation demands an e-fuel blend mandate(1.2%by 2030),which is indirectly a clean hydrogen mandate.Source:Oliver Wyman analysis,in collaboration with the World Economic ForumPolicy Action to Mobilize Climate Finance,and Market Responses8Recent support for clean hydrogen development Public support
52、 for clean hydrogen production11 and offtake in recent years has been significant,as illustrated in Figure 3 showing current and announced grant programmes available for hydrogen projects capital expenditure(CapEx).Recent examples of noteworthy announcements extending beyond grant support and suppor
53、ting the development of clean hydrogen production include:The Netherlands Stimulation of Sustainable Energy Production and Climate Transition(SDE+)programme,offering long-term contracts for difference(CfD)auctioned annually,up to 13 billion in 2022s annual auction The H2Global Foundation,set up by t
54、he German government as a“two-sided”auction for long-term offtake and short-term supply,with the price difference between the two sides subsidized,similar to a CfD,promising 900 million for the first funding window,and with further funding already earmarked for future years The UKs Electrolytic Allo
55、cation Round,offering 100 million in the first round in revenue support for projects in operation before 2026 In the US,the IRA announced the 45V Hydrogen Production Tax Credit,which awards up to$3 per kg of hydrogen produced to projects with a life-cycle greenhouse gas emissions intensity of less t
56、han 0.45 kg per kg of hydrogen(kg CO2e/kg H2)12 Most recently,the European Commission established the European Hydrogen Bank,an auction system to support producers through a fixed-price payment for a maximum of 10 years of operation,committing an initial 3 billionCurrent and announced grant programm
57、es available for hydrogen projects CapEx across part of value change eligible($millions)1,2FIGURE 3893297Clean hydrogen grants1,6531,7361385,8406,985Grey hydrogen grants1,19116,503End-useInfrastructureProduction and end-useProduction and infrastructureProductionWhole value chainKey151Notes:1.Does no
58、t include EU Innovation Fund;2.Based on$1=1.56 AUD=1.36 CAD=1=0.87.Sources:International Energy Agency,Global Hydrogen Review 2022:Executive Summary;Oliver Wyman analysisPolicy Action to Mobilize Climate Finance,and Market Responses9In July 2022,the European Commission approved“Hy2Tech”,the first of
59、 many projected Important Projects of Common European Interest(IPCEI)on hydrogen,through which 15 member states will provide up to 5.4 billion in public funding to 41 projects,and expected to unlock an additional 8.8 billion in private investments.In September 2022,“Hy2Use”was also approved,the seco
60、nd IPCEI on hydrogen,through which 13 member states will provide up to 5.2 billion in public funding to 35 projects,which is expected to unlock an additional 7 billion in private investments.13 Moreover,the US Department of Energy(DOE)made$8 billion available to fund regional clean-hydrogen hubs acr
61、oss the United States under the Infrastructure Investment and Jobs Act.This clear signal of the public sectors willingness to provide incentives for clean hydrogen production and directly support projects in this space was accompanied by a significant increase in private investment.In March 2022,Mae
62、rsk entered partnerships with six leading companies to source 730,000 tonnes of green methanol a year by the end of 2025 to run 12 methanol-fuelled vessels it had ordered in 2021.14 In October 2022,Cepsa signed a memorandum of understanding(MoU)with the Port of Rotterdam to ship green hydrogen from
63、southern Spain to northern Europe,starting in 2027.15Recent support for sustainable aviation fuels developmentGovernment incentives and regulations to support SAF are changing the assessment of business model risk,supporting both demand and supply.Until recently,R&D grants have been the most popular
64、 lever for government support of SAF.These are earmarked funds that can be allocated to R&D in SAF.Examples include the US Build Back Better Act(BBBA),which allocated$275 million for grants in SAF production,and the EU Innovation Fund,allocating 1.8 billlion to clean technology projects including SA
65、F.Since 2020 there have been government announcements of additional support in the form of tax incentives and blend requirements,stimulating further funding.In the US,the IRA extends up to$1.75 per gallon for SAF through to 2027 for blending or producing SAF.S&P Global Commodity Insights viewed the
66、SAF tax credit as significant in closing SAFs price gap relative to renewable diesel(RD).16In July 2021 the European Commission published a package of legislative proposals branded“Fit for 55”.One component is the ReFuelEU Aviation proposal to increase the production and uptake of SAF.This includes
67、a blending mandate under which aviation fuel suppliers must ensure that all fuel supplied to aircraft operators at EU airports contains a minimum proportion of SAF,including a minimum share of synthetic fuel.17 The European blending mandate is expected to have a strong impact on SAF demand.18 Still,
68、EU SAF mandates have relatively conservative targets,which lag behind most airlines ambitions many have set themselves the target of using 10%SAF by 2030.Without strong mandates,FIs will find it difficult to invest to a level that would support higher blends.Figure 4 gives a picture of global SAF ta
69、rgets and mandates,describing three levels of SAF blending initiatives.Three types of SAF blending initiativesFIGURE 43 billion gallons available per year by 2030 and 35 billion gallons(100%SAF)by 205030%by 203014%by 2030,100%by 2050Target10%by 2030,75%by 20500.5%by 2026,1%by 2028,2%by 203022%by 202
70、53Proposed mandate2%by 2025,6%by 2030,70%by 20501%by 2022,2%by 2050,5%by 20300.5%by 2020,30%by 2030(target)0.8%by 2021,4.5%by 2025,27%by 2030Mandate:European countries will eventually have to at least align with the EU mandate1Notes:1.In the UK,the second round of consultations is under way,with the
71、 final version of the mandate expected to be introduced to Parliament by the end of 2023;2.In May 2021,Germany adopted a power-to-liquid(PtL)roadmap that established the suggested target for electricity-based kerosene.No visibility on timeline of adopting this target into law;3.In Spain,the“Balanced
72、 Compromise”initiative is currently in consultations with internal stakeholders.No visibility on timeline of adoption of the 2%mandate.Sources:Oliver Wyman analysis,in collaboration with the World Economic ForumPolicy Action to Mobilize Climate Finance,and Market Responses10The European Commission r
73、eached political agreement on the ReFuelEU Aviation proposal in April 2023,requiring fuel suppliers to ensure a minimum share of SAF at EU airports,starting at 2%of overall fuel supplied by 2025 and reaching 70%by 2050.Front-runner countries such as Norway in 2020,followed by France and Sweden,set m
74、andates before the EU had done so,albeit with more conservative targets.On the way to an enforceable mandate,the UK,Spain and Germany currently have proposed legislation in place.Notably,the UK has an ambitious mandate of 10%by 2030,and 75%by 2050.A final version of the mandate is expected to be int
75、roduced to Parliament by the end of 2023.It should be noted that Spain and Germany will have to comply eventually with the more ambitious EU mandate.The US,Finland and the Netherlands19 have opted for soft targets,meaning that clear enforcement mechanisms are not defined,which renders the targets as
76、pirational.20 Without clear mandates and with short-term incentives(e.g.the SAF blenders tax credit is set to expire in five years in the US),it is difficult for producers to build new capacity,given project timelines.While the industry perception is that the tax credit will be extended,there is no
77、guarantee.The lack of regulatory certainty and mandates places strain on FIs investment decisions and the ability of producers to seek funding.Figure 5 depicts a good example of how state and regulatory incentives can interact to create an inducement to concentrate both the production and purchasing
78、 of SAF in the state of California.Multiple SAF incentives overlap in the US,creating the motivation to consolidate production and purchasing in high-incentive regions.It is worth noting that the public sector is also funding the development of SAF through direct investment.Recent examples include N
79、este receiving funding from the EU Innovation Fund to develop its Porvoo refinery for green hydrogen production and carbon capture and storage.The upward trajectory in capital flows to opportunities is a positive response to the continued public support for the production of and investment in climat
80、e solutions.At the same time,in response to government regulations and incentives around climate solutions,FIs must develop new capabilities crucial to financing and supporting the transition.State and regulatory incentives for SAF production in CaliforniaFIGURE 5SAF value2022 average price$per gall
81、on$3.45$1.50$2.57$0.82BTCRINLCFSTotal value$1.56$9.08Over$4/gallon of regulatory incentive available for SAF in CaliforniaAdditional valueavailable in form ofcorporate premiumsfor SAFRanges from$1.25 to$1.75,based on carbon intensityAlso ranges based on carbon intensityCalifornia jet fuel A PriceReg
82、ulatory valueNotes:BTC=blenders tax credit;RIN=renewable identification number,LCFS=Low Carbon Fuel Standard.Source:Oliver Wyman analysisPolicy Action to Mobilize Climate Finance,and Market Responses11Sustained support from the public sector is improving commercial viability for investors2Financiers
83、 are increasingly encouraged to invest,incentivized by sustained support from the public sector.Policy Action to Mobilize Climate Finance,and Market Responses12For both clean hydrogen and SAF the investment case relies on supportive public action.Financial incentives and mechanisms,targets and regul
84、atory mandates encourage action from private finance and industry on the supply side and commit demand.Notwithstanding,FIs can also use flexible investment structures and partnerships with knowledgeable developers,airlines or original equipment manufacturers(OEMs)to facilitate their investments.For
85、clean hydrogen,public support in the form of CfD and blended finance mechanisms is effective in driving funding,as described below,and the opportunity for financiers to invest in parent companies and partner with developers is further facilitating investments in the space.For SAF,while targets and r
86、egulatory mandates help set the standard and commit demand,investment at the SAF plant level and partnerships with airlines help ensure demand and mitigate risk.Most of the projects at final investment decision stage today are financed on balance sheets by large incumbent gas or energy producers,and
87、 banks have little appetite for senior debt.For most banks today,while risk appetite varies between institutions,bankability still relies on having offtake agreements in place,securing a renewable energy supply via power purchase agreements(PPA)and certifications by independent technical firms to ce
88、rtify and verify the underlying technologies for example,through engineering,procurement and construction(EPC)wraps or performance guarantees.21 As a result of such challenges,only a small percentage of clean hydrogen projects have secured investment to date.The International Energy Agency(IEA)estim
89、ates that only 4%of proposed clean hydrogen projects reach a final investment decision;the Hydrogen Councils estimate is slightly higher at about 10%of proposed large-scale projects.22 Notwithstanding this,there has been promising interest from different parts of the finance value chain,including pr
90、ivate equity and venture capital,where players are increasingly looking for opportunities to put smaller stakes to work in early-stage funding and capital markets,encouraged by guidance and principles from the Climate Bonds Initiative on the eligibility of clean hydrogen projects for the use of proc
91、eeds under green bonds.23 Moreover,investments by incumbent oil and gas and energy companies are picking up,as actors think strategically about pivoting towards the energy transition.Private-sector investment is being encouraged by three main drivers:24 Sustained support from the public sector is en
92、couraging private-sector investment in clean hydrogen,building on the significant private investments in projects along the hydrogen value chain in recent years.As discussed earlier in the paper,the public sector has demonstrated a clear signal to create incentives for clean hydrogen.Notably,long-te
93、nor contracts for difference(CfDs)are proving to be an effective tool in helping bridge the green premium that exists between low-or no-emission products and their grey or brown alternatives.For example,the European Commission recently announced a rollout of carbon CfDs,enabling a full switch of exi
94、sting hydrogen production from natural gas to renewables,and a transition to hydrogen-based production processes in important industrial sectors.Additionally,financing instruments to blend public and private capital can help boost investor confidence and spur project financing.The Connecting Europe
95、Facility is a significant example of this,disbursing grants for the construction of hydrogen refuelling infrastructure that is conditional on additional financing from a financial intermediary.25 The possibility of investment in industrial incumbents at the parent-company level substantially decreas
96、es the risk profile of investment in clean hydrogen projects.Such investments are typically structured as preferred equity or convertible bonds and come with pre-agreed optionality for project-or asset-level co-investment,simultaneously or at a later point.An example of this is found in the strategi
97、c partnership between Fortescue Future Industries(FFI)and Tree Energy Solutions(TES).The 130 million investment by FFI comprised an equity stake in TES and direct investment in the construction of the TES Green Energy Hub.26 Partners will jointly identify,develop and invest in further assets to give
98、 FFI a pathway for access to critical clean hydrogen infrastructure.Building in the ability to co-invest at the asset level as the portfolio of projects develops gives investors further flexibility while also securing access to a pipeline of high-quality projects.The“developer model”is becoming a fr
99、ont-running approach to hydrogen financing,relying on the selection of a credible industrial sponsor or developer for investment,as opposed to betting on a winning technology.To ensure investor confidence,many questions not limited to technology need to be answered,and the capabilities required to a
100、nswer them are not yet broadly available to FIs.These include Clean hydrogen2.1Policy Action to Mobilize Climate Finance,and Market Responses13defining what a clean hydrogen project is and how it operates,assessing what technology to choose from and the reliability of the manufacturers and suppliers
101、 of the technology,and questions about whether companies that are more vertically integrated(e.g.those that own or manufacture their own electrolysers)are more or less attractive.While there is a need to develop in-house capabilities to understand and manage the risks associated with investments in
102、clean hydrogen,investors and FIs can respond to some aspects of the capability gap by relying on a sponsors knowledge of the industry,technology risks and ability to identify offtakers or ship the end-product.This is the model adopted by H2 Energy,a developer based in Switzerland that has been worki
103、ng on renewable hydrogen projects since 2014.It should be noted that strategies to address recurring challenges need to be flexible and regionally adaptable.Notwithstanding this,scaling up hydrogen production will require FIs to adapt their capabilities to understand and manage new risks.The uptake
104、in recent SAF projects and partnerships investing in SAF highlights the strong interest in SAF investments.As is the case with clean hydrogen production,private-sector investment in SAF is driven by three main catalysts,reliant first and foremost on a supportive public sector:Incentives and regulati
105、ons drive high potential margins in SAF,due to the large gap between expected demand(driven by incentives and mandates)and even the most ambitious supply forecasts.Insofar as it accelerates demand,supportive legislation is strengthening the investment case,as previously described.The“Fit for 55”mand
106、ate of SAF use for access to EU airports,and the Better Business Bureau,which acts to provide tax incentives in the US,are positive contributors.These returns are enjoyed within short payback periods.Indeed,biofuel projects have been shown to break even within the first few years of production.It sh
107、ould be noted that earlier movers are likely to capture outsized margins.The flexibility of SAF production plants substantially decreases the risk profile of investments in SAF projects.Investors in SAF plants can benefit from options for SAF plants to produce RD,SAF and other products,allowing for
108、flexibility to adapt to market conditions and the potential to prioritize RD as needed,which has clearer and more ambitious mandates in most regions.Collaboration with knowledgeable partners in industry,as is the case for clean hydrogen,is encouraging investments in SAF.By partnering with industry e
109、xperts for SAF investments,including airlines or OEMs,FIs can de-risk investments by helping to ensure the demand for SAF,creating a more advantageous investment/risk/return profile.In this vein,purchase agreements or offtake commitments also help to mitigate exposure to high SAF prices and shift th
110、e pricing power away from the few energy players currently driving the SAF market.Notwithstanding the above,SAF is at earlier stages of maturity when compared with RD,which is slowly beginning to be commoditized.This may decrease interest in a side-by-side evaluation.Sustainable aviation fuels2.2Pol
111、icy Action to Mobilize Climate Finance,and Market Responses14While the public sector has shown clear intent to support the funding and development of climate solutions,there are still several barriers that impede the mobilization of capital towards breakthrough technologies,including industry and ma
112、rket challenges.Given the international and integrated nature of sectors,systemic issues require global coordination.27 On the industry front,supply challenges are broadly driven by a high cost of ownership for new production facilities or critical supporting infrastructure and a shortage of feedsto
113、ck.On the demand side,a lack of technological readiness of several transition solutions associated with a higher risk profile,and a lack of standardized definitions of“green”production processes and outputs,lead to underinvestment in promising technologies.Whats more,the cost differential between ex
114、isting and green products threatens the soundness of business models.More broadly,there are systemic issues constraining industrial decarbonization that effective policies can help eliminate.For example,enabling sustainable aviation requires sufficient feedstocks and infrastructure.As described in t
115、he 2021 Financing the Transition to a Net-Zero Future report,28 for financial institutions this translates to:A mismatch in the profile of opportunities,driven by:(1)the impression that returns are not commensurate with the levels of risk posed;(2)a difference between offered debt financing tenor an
116、d financing needs(given capital treatment pressures and broader risk appetite);(3)limited liquidity when financing sustainable decarbonization infrastructure,meaning that project financing needs and the average appetite of infrastructure investors do not match;and(4)the fiduciary duty of longer-term
117、 institutional investors unwilling to take on significant levels of risk without de-risking measures A limited pipeline of“bankable projects”,due to capacity and resource constraints within Fis,leading to a preference for investments in“portfolio-ready projects”and“counterparty-level financing”as op
118、posed to project-specific financing,which tends to require significant time,effort and upskilling of front-office teams Limited data and clarity on pathways that would otherwise inform their financing strategies,including limited data on the emissions reduction potential of new opportunities,a lack
119、of granular sector transition plans,inconsistent or incomplete climate-related disclosures and limited data on the past performance of comparable investmentsWithin these constraints,FIs have many challenges to overcome if they are to support and benefit from the transition by funding climate solutio
120、ns.While the public sector can act to mitigate some of these challenges,only the most ambitious FIs will benefit from the opportunities that climate solutions provide,by successfully adapting their climate strategies to meet the challenge head-on.With recent announcements reflecting a clear signal f
121、rom the public sector to support the transition and create the enabling environment for investment,private finance must act alongside it.While incentives are important enablers,FIs must also evolve to adapt to the restraints posed by the climate investment universe.Challenges remain2.3Policy Action
122、to Mobilize Climate Finance,and Market Responses15Driving action,creating certainty,setting standards priority areas for continued public support3Three focus areas have proven to be particularly effective in driving funding towards climate solutions.Policy Action to Mobilize Climate Finance,and Mark
123、et Responses16To maximize its effectiveness in driving funding of climate solutions,the public sector should work in three main areas:Effective government action focuses on both creating incentives to drive funding for climate solutions(e.g.through tax incentives)and committing demand at the speed r
124、equired by encouraging action through mandates As far as possible,public actors can provide certainty on the long-term backing for current policies to ensure a predictable and simple regulatory environment and drive funding towards climate solutions Global standard-setters can look to better define
125、standards relating to climate solutions to help clarify what does and does not support the transition to net zero for investors(e.g.what counts as“clean hydrogen”),ensuring coherence across stakeholders and speed in decisionsThree key roles the for the public sector to support funding for climate so
126、lutionsFIGURE 6CreatingcertaintySetting standardsDrivingactionGuidance and support Agreed definitions and standards helping to credentialize green products and services(e.g.what is“clean hydrogen”,and how does a project work?)Capability development guidance for FIs(e.g.around identification,assessme
127、nt management of new climate risks)Regulatory certaintyCreating a stable environment through long-term commitments and tenorsSimplifying the regulatory environment to ensure predictability and avoid red tape(e.g.through the Net-Zero Industry Act)Incentives and mandatesFinancial incentives,including
128、financial support(e.g.CapEx support on the supply side,or subsidies on the demand side)or innovative mechanisms(e.g.a government-supported auction)Mandates(e.g.SAF blending mandate)or penalties(e.g.carbon tax)that help commit demand towards climate solutionsRolesLeversSource:Oliver Wyman analysis,in
129、 collaboration with the World Economic ForumPolicy Action to Mobilize Climate Finance,and Market Responses17As referred to elsewhere in this paper,the public sector has an important role to play in driving action from other actors,namely producers of the technologies,offtakers of the solutions and f
130、inancial investors.Driving action may take the form of financial incentives on the demand and supply side,or other mechanisms such as mandates or penalties,to help commit demand towards climate solutions and ensure a steady revenue stream for producers.Incentives are most effective when they are acc
131、ompanied by mandates that effectively commit demand.The role of the public sector in creating certainty for climate investment has also been alluded to;the public sector does this by guiding actors through regulatory certainty,ensuring a predictable and simplified environment.Regulatory certainty is
132、 required to encourage funding from FIs and can act as a powerful de-risking mechanism.To the extent possible,public actors should provide certainty on the long-term commitment of current policies;for example,through longer-term tax credits.The EU has responded to frustrations and criticism accompan
133、ying the IRA with a focus on simplifying red tape(e.g.through the legislative proposal of the Net-Zero Industry Act initiative of the Green Deal Industrial Plan)and more subsidies and innovative financial mechanisms;for instance,through the European Hydrogen Bank.Public support also has an important
134、 role to play in setting standards;for example,via taxonomies to help credentialize green products and services that ensure actors are aligning with net zero and avoid greenwashing concerns.Indeed,an increasing amount of regulatory activity surrounding sustainable financing has involved setting defi
135、nitions and standards for the underlying economic activity being financed.First published in draft format in March 2020,the EU taxonomy defines performance thresholds,or“technical screening criteria”,for economic activities,by sector and subsector.The focus on economic activity supports the goal of
136、driving funding towards climate solutions,irrespective of the financial instrument or means of funding.Any investment or lending for a recognized activity counts as sustainable,whether through a loan,project financing or a green bond.There is also a clear push towards harmonizing definitions on sust
137、ainable economic activities globally,given the magnitude of global cross-border investment flows.In April 2021,the EU and China announced plans to harmonize taxonomies,with the aim of developing a jointly recognized classification system.Globally harmonious definitions and standards will encourage f
138、unding for climate solutions,especially in technologies where significant definitional opacity remains,such as regarding what constitutes clean hydrogen.In September 2023,the US Department of the Treasury released nine principles for net-zero financing and investment by FIs,including guidance on how
139、 FIs should support clients to adopt their own transition plans.29Policy Action to Mobilize Climate Finance,and Market Responses18Looking ahead4Close collaboration between financiers,project developers and policy-makers holds the key to mobilizing climate finance.While recent announcements by variou
140、s governments clearly signal that the public sector is committed to creating incentives to fund climate solutions,collaboration with private financiers and industrial stakeholders is needed to reach the speed and scale required.There is a strong case for continued public support and prioritization o
141、f breakthrough technologies to enable the mobilization of funds towards breakthrough climate solutions at the necessary speed and scale.Private actors are encouraged by this renewed government support and are upgrading their capabilities to meet the funding challenge.Importantly,the successful deplo
142、yment of funds for breakthrough technologies rests on close collaboration between all stakeholders involved.Immediate market-wide stakeholder action backed by enabling public policies is required to address the highly likely investment gap towards net zero.Policy Action to Mobilize Climate Finance,a
143、nd Market Responses19ContributorsAcknowledgementsLead Authors Derek BaraldiHead of Sustainable Finance,World Economic Forum Sayli ChitrePartner,Oliver WymanFaye HatoumEngagement Manager,Oliver WymanIlya KhaykinPartner,Oliver WymanAdditional contributorsJohn ColasPartner,Oliver WymanManuela FulgaLead
144、,Sustainable Finance,World Economic ForumThe World Economic Forum also acknowledges the following individuals,among others,who have contributed to the efforts of the Financing the Transition to a Net-Zero Future initiative over the past year:Laia BarbarLead,Industry Decarbonization,Aviation,and part
145、 of the Airports for Tomorrow community,World Economic ForumNoam BoussidanManager,Policy Engagement and Regional Action,and part of the Accelerating Clean Hydrogen community,World Economic ForumDavid KaplanPrincipal,Oliver WymanIn addition,our thanks go to the engagement and support of the Financing
146、 the Transition to a Net Zero Future community,including financial institutions,suppliers and developers of climate solutions,and public entities.ProductionBianca Gay-FulconisDesigner,1-Pact EditionAlison MooreEditor,Astra ContentPolicy Action to Mobilize Climate Finance,and Market Responses20Endnot
147、es1.While much of the emissions abatement pre-2030 will be driven by existing technologies(e.g.solar),post-2030 abatement relies on breakthrough technologies such as energy efficiency solutions,hydrogen-based fuels,bioenergy and carbon capture,utilization and storage(CCUS)solutions,among others.A pr
148、erequisite to the successful expansion and deployment of these breakthrough technologies in the 2030s is their validation at commercial scale in the 2020s.Significant capital needs to be made available this decade for the timely industrial decarbonization of hard-to-abate sectors and a global energy
149、 transition,rendering the 2020s a“decisive decade”.2.Based on BloombergNEF analysis of more than 8,000 public companies with explicit revenue exposure to clean energy:Nathaniel Bullard,“The Trillions of Dollars Forgotten When Tracking the Energy Transition”,Bloomberg,17 August 2023:https:/ report pu
150、blished in collaboration with Oliver Wyman,under the initiative of the same name:World Economic Forum,Financing the Transition to a Net-Zero Future,October 2021:https:/www3.weforum.org/docs/WEF_Financing_the_Transition_to_a_Net_Zero_Future_2021.pdf.4.As argued in a World Economic Forum briefing pape
151、r,published in collaboration with Oliver Wyman,under the Financing the Transition to a Net-Zero Future initiative:World Economic Forum,Closing the Investment Gap:Policies to Accelerate Transition Finance,May 2022:https:/www3.weforum.org/docs/WEF_Closing_the_Investment_Gap_Policies_to_Accelerate_Tran
152、sition_Finance_2022.pdf.5.The Hydrogen Production Tax Credit awards up to$3 per kg of hydrogen produced to projects with a life-cycle GHG emissions intensity of 0.45 kg CO2e/kg H2 through to 2027.6.The EU“Fit for 55”regulation demands 2%SAF blend by 2025,and 6%SAF blend by 2030.7.An important pillar
153、 of the Net-Zero Industry Act is“setting enabling conditions”,which aims to improve conditions for investment in net-zero technologies by enhancing information availability,reducing the administrative burden of setting up projects and simplifying permit-granting processes.8.During this time,the Fina
154、ncing the Transition to a Net-Zero Future(FTT)initiative has worked to convene 50+stakeholders across the financial community committed to financing breakthrough technologies in hard-to-abate sectors,and engaging industrial corporates,technology experts and public-sector actors to ensure a forum for
155、 dialogue across geographies and sectors,to share lessons learned and act to increase financier confidence in funding breakthrough technologies.9.The Bipartisan Policy Center,“Inflation Reduction Act(IRA)Summary:Energy and Climate Provisions”,4 August 2022:https:/bipartisanpolicy.org/blog/inflation-
156、reduction-act-summary-energy-climate-provisions/;Francesca Paris,Alicia Parlapiano,Margot Sanger-Katz and Eve Washington,“A Detailed Picture of Whats in the Democrats Climate and Health Bill”,The New York Times,16 August 2022:https:/ for a Responsible Federal Budget,“Whats in the Inflation Reduction
157、 Act?”,28 July 2022:https:/www.crfb.org/blogs/whats-inflation-reduction-act;Senate.Gov,Bipartisan Infrastructure Investment and Jobs Act Summary:A Road to Stronger Economic Growth:https:/www.cardin.senate.gov/wp-content/uploads/2022/09/Infrastructure-Investment-and-Jobs-Act-Section-by-Section-Summar
158、y.pdf;figures based on CBO cost estimate;Oliver Wyman analysis.10.Oliver Wyman analysis,as further described in Christine Oumamsour,Todd Bowie,Jake Purvis and Tushar Narsana,“How the Inflation Act Is Reshaping US Energy”,OliverWyman:https:/ defined by the International Energy Agency,clean hydrogen r
159、efers to both hydrogen produced through electrolysis powered from renewable sources(green hydrogen)and hydrogen produced from natural gas in conjunction with carbon capture and storage(CCS)by steam methane reforming(blue hydrogen).12.The sum of$270 billion for clean energy tax credits has been made
160、available under the IRA,allowing green hydrogen to have a$3/kg subsidy advantage over grey.13.European Commission,“State Aid:Commission Approves Up to 5.4 Billion of Public Support by Fifteen Member States for an Important Project of Common European Interest in the Hydrogen Technology Value Chain”,1
161、5 July 2022:https:/ec.europa.eu/commission/presscorner/detail/en/IP_22_4544.14.Maersk,“A.P.Moller-Maersk Engages in Strategic Partnerships across the Globe to Scale Green Methanol Production by 2025”,10 March 2022:https:/ and the Port of Rotterdam Join Up to Create the First Green Hydrogen Corridor
162、between the North and South of Europe”,11 October 2022:https:/ Global,“Biofuels Get Boost from Tax Credits,Infrastructure Funding in Surprise US Senate Budget Proposal”,29 July 2022:https:/ Action to Mobilize Climate Finance,and Market Responses2117.IATA,“Fact Sheet:EU and US Policy Approaches to Ad
163、vance SAF Production”:https:/www.iata.org/contentassets/d13875e9ed784f75bac90f000760e998/fact-sheet-us-and-eu-saf-policies.pdf.18.European Commission,“State Aid:Commission Approves Up to 5.4 Billion of Public Support by Fifteen Member States for an Important Project of Common European Interest in th
164、e Hydrogen Technology Value Chain”,15 July 2022:https:/ec.europa.eu/commission/presscorner/detail/en/IP_22_4544.19.It should be noted that European countries will eventually have to align with the EU mandate.20.It should be noted that California established the Low Carbon Fuel Standard(LCFS)in Septe
165、mber 2022,designed to encourage the use of cleaner low-carbon transportation fuels in California and encourage the production of those fuels,by allowing regulators to guide the industry through differentiated incentives within a single regulatory framework.21.As further described in a Financing the
166、Transition to a Net-Zero Future insight report published in collaboration with Oliver Wyman:World Economic Forum,Financing the Transition to a Net-Zero Future,October 2021:https:/www3.weforum.org/docs/WEF_Financing_the_Transition_to_a_Net_Zero_Future_2021.pdf.22.International Energy Agency,Global Hy
167、drogen Review 2022:Executive Summary:https:/www.iea.org/reports/global-hydrogen-review-2022/executive-summary;Hydrogen Council,“Hydrogen Insights 2023”,11 May 2023:https:/ Bonds Initiative,“Climate Bonds Standard”:https:/ described in the World Economic Forum blog,“3 Ways to Accelerate Financing for
168、 Clean Hydrogen Projects”,12 January 2023:https:/www.weforum.org/agenda/2023/01/davos23-accelerate-financing-clean-hydrogen-projects/.25.European Commission,Innovation and Networks Executive Agency,“Connecting Europe Facility”:https:/wayback.archive-it.org/12090/20221222151902/https:/ec.europa.eu/in
169、ea/en/connecting-europe-facility.26.Reuters,“Fortescue,Tree Energy to Develop Green Energy Hydrogen Import Facility in Germany”,5 October 2022:https:/ further described in a Financing the Transition to a Net-Zero Future insight report published in collaboration with Oliver Wyman:World Economic Forum
170、,Financing the Transition to a Net-Zero Future,October 2021:https:/www3.weforum.org/docs/WEF_Financing_the_Transition_to_a_Net_Zero_Future_2021.pdf.28.Ibid.29.US Department of the Treasury,“Treasury Releases Principles for Net-Zero Financing&Investment,Applauds$340 Million Philanthropic Commitment a
171、nd Other Pledges”,19 September 2023:https:/home.treasury.gov/news/press-releases/jy1744.Policy Action to Mobilize Climate Finance,and Market Responses22World Economic Forum9193 route de la CapiteCH-1223 Cologny/GenevaSwitzerland Tel.:+41(0)22 869 1212Fax:+41(0)22 786 2744contactweforum.orgwww.weforum.orgThe World Economic Forum,committed to improving the state of the world,is the International Organization for Public-Private Cooperation.The Forum engages the foremost political,business and other leaders of society to shape global,regional and industry agendas.