The manufacturing industry is one of the largest contributors to global carbon dioxide emissions. As industrial production continues to shift towards emerging and developing economies, there is an urgent need to invest in low-carbon technologies to align industry’s growth with countries’ net-zero emission targets. However, the high costs and low maturity of many low-carbon technologies pose significant risks, and scaling up finance from both public and private sources is essential to mitigate these risks.
To address these challenges, the OECD has developed a new “Framework for industry’s net-zero transition”, which provides a step-by-step approach to help emerging and developing economies design financing solutions and improve enabling conditions to accelerate the transition of industry towards net-zero emissions. The framework aims to reduce the barriers to financing for low-carbon technologies, while also facilitating international cooperation for a coordinated and effective transition at scale.
The framework recognizes that there is no one-size-fits-all solution to financing the transition to net-zero emissions in the manufacturing industry, as different countries face different challenges and opportunities. As such, the framework offers a flexible approach that takes into account the specific needs and circumstances of each country.
The framework has four main components:
- Assessing the potential for low-carbon technologies: This involves identifying the most promising low-carbon technologies that are relevant to the manufacturing industry in each country. The assessment will take into account factors such as the availability of natural resources, existing infrastructure, and technological capabilities.
- Identifying financing solutions: Based on the assessment of low-carbon technologies, the framework will help identify potential financing solutions that can support the development and deployment of these technologies. This may involve a combination of public and private financing, as well as innovative financing mechanisms such as green bonds and carbon pricing.
- Improving enabling conditions: In addition to financing solutions, the framework also aims to improve the enabling conditions for low-carbon technologies. This may involve reforms to policies and regulations that support the adoption of low-carbon technologies, as well as the development of new institutions and partnerships to facilitate the transition.
- Monitoring and evaluation: Finally, the framework will establish a system for monitoring and evaluating the progress of the transition towards net-zero emissions in the manufacturing industry. This will involve tracking the adoption of low-carbon technologies, measuring the reduction in greenhouse gas emissions, and assessing the economic and social impacts of the transition.
In conclusion, the OECD’s new “Framework for industry’s net-zero transition” offers a comprehensive approach to support emerging and developing economies in financing the transition of the manufacturing industry towards net-zero emissions. The framework recognizes the complex challenges and opportunities faced by different countries and provides a flexible approach to address them. The implementation of the framework can contribute to broader climate and finance policies and facilitate international cooperation for a coordinated and effective transition at scale.