Kick-off meeting on the Framework for Industry's net-zero Transition, 13 April 2022, OECD, Paris

1. FRAMEWORK FOR INDUSTRY’S
NET-ZERO TRANSITION
1
13 April 2022
Deger Saygin
Industry Programme
Lead CEFIM
A framework for developing financing solutions to accelerate
industry’s netzero transition in emerging and developing economies

2. • The array of measures for low-carbon transition
aligned with a net-zero path are known
Manufacturing industry is the largest source
of global carbon dioxide emissions
Sources: IEA (2021a;b)
• Low-carbon measures will require scaling
investments and financing by 5 times

3. • Low-carbon measures will need to be deployed in emerging and developing economies
• Solutions for creating the market conditions and for financing will be needed
Industrial output will grow in
emerging and developing economies
Source: IEA (2020)
Global steel production by region, 2019-2070 Global Cement production by region, 2019-2070

4. Solutions for a net-zero transition requires
understanding of industry / country considerations
Technology
transfer & R&D
Carbon
Markets
Asset
stranding
High costs of
transition &
competitiveness
A flexible approach is
needed to develop
solutions that encompass
many considerations for
emerging and developing
economies
• Improving enabling market
conditions
• Financing

5. …
Motors
Cement
…
MSMEs
Clusters
Iron / steel
…
Heavy
industry
Supply
chains
R&D
Tech.
transfer
Assets
Key stakeholders and Framework’s 3 Pillars
Develop financing
solutions for a
pipeline of bankable
projects
Solutions to improve
the enabling market
conditions
Support international
dialogue by sharing of
best practices
Understanding benefits &
risks of industry’s low-
carbon transition
2. Implementation Outcomes 3. Framework benefits
1. Focus Area
Finance
institutions
Policy
makers
Energy system
and
infrastructures
Regulation, target setting
Implementation, reporting
Industry

6. Framework is a step-by-step guide
on how to approach industry transition
Deliverables
Activities
Step 1
Stakeholder Engagement
and Focus Area
Step 2
Background Research
Step 3
Business Cases and
Pipeline of Projects
Step 4
Market and Financing
Solutions
Step 5
Disseminate Framework
outcomes
Pillar 1
Focus Area
Pillar 2
Implementation Outcomes
Pillar 3
Framework Benefits
Report:
Country status
and Focus Area
Slide deck:
pathways,
projects,
business cases
Market &
Financing
solutions
Policy
brief(s)
Use cases
Bilateral meetings
Workshops
Desktop Research
Workshops
In-house
analysis
Plenary
session
Workshops
Consultations
Plenary
session
Meetings and
conferences
Website
communication

7. Rationale
• Transition policies require consensus of actors based on
up to date data and fact-based analyses
• Solutions should be aligned with national priorities
• Multiple actors play a role across a diverse value chain
and policy making process in industry
• Market interventions and financing solutions differ
Outcomes
• Identification, mapping and engagement of stakeholders
• Stakeholder priorities and their current activities related to industry transition
• Governance of implementation of the Framework
• Work and time plan for implementation with an agreement on the Focus Area (e.g. sub-sector, low-carbon technology,
product supply chain)
Step 1: Engage stakeholders and agree on the
Focus Area
Engage with the CEFIM programme counterpart
Identify and understand the stakeholder groups’
priorities
Agree on the Focus Area
1.1
1.2
1.3
Set up a Steering Committee and prepare Terms of
Reference and work plan
1.4

8. 2.3
2.2
2.1
Desktop research on current status of technology, policy
and financing
Regulatory, policy, financial and business status
Inform Step 1 to confirm the Focus Area
Rationale
• Progress made in low-carbon technology uptake,
available policies and financing instruments and their
implementation differs
• Growing sustainable finance efforts by countries but
emissions intensive sectors are overlooked
• Current state / as-is analysis needed
Outcomes
• Short slide deck that shows and discusses
• Energy use, CO2 emissions, value added of industry sub-sectors
• Available industry energy and emission scenarios
• Available regulations, policies, financing instruments and business models for industry transition
• Latest investment trends in low-carbon technologies in industry and how they have been financed
• Priorities, critical issues, barriers and investment decision factors in industry’s net-zero transition
• Formation of a comprehensive dataset to inform further Steps
Step 2: Undertake research on the current technology
policy and financing situation

9. Rationale
• Policy design requires an understanding of the gap
between the current policy and transition path
• Transition paths need to consider availability of resources,
access to finance, human-resource needs and supply,
manufacturing capacity, costs development and the age
of the capital stock
Outcomes
• Short slidedeck that shows and discusses
• Current policies and net-zero paths that characterise the Focus Area energy/emissions growth and investment needs to 2030/2050
(based on country and/or region level data supported by global level assessments)
• Investment needs of the low-carbon technologies to close the transition gap from the current policies to the net-zero path
• Business case assessment of the low-carbon technologies (based on production costs, marginal cost of CO2 abatement etc) and
their societal and economy wide impacts
• Pipeline of low-carbon projects that can close the transformation gap (technology type, capacity, location, year of deployment etc)
Step 3: Assess the business cases of a net-zero pathway for
the Focus Area and identify a pipeline of projects
Evaluate business cases and identify a pipeline of
projects and financing needs
Assess investment needs
Choose a net zero pathway for the Focus Area
Choose a Current Policies scenario as a reference
3.1
3.2
3.3
3.4

10. Outcomes
• Strategy for stakeholder consultations to identify the critical issues and barriers and developing solutions
• Short slidedeck that shows and discusses
• List of specific critical issues and barriers to financing and investments to low-carbon technologies relevant to the Focus Area
• Financing origins and sources to close the financing gap of the net-zero path
• Market and financing solutions to close the transformation gap, matched with the specific barriers they can overcome
• Guidance to stakeholders for how solutions can be implemented
• Description of a country-specific monitoring and evaluation mechanism and how it can be implemented
4.1
4.3
4.4
4.5 Agree on a monitoring and evaluation mechanism
Identify financing gaps in the available financing
instruments
Match low-carbon projects and financing solutions
Establish the financing and market barriers
Rationale
• Improving enabling market conditions can overcome a
large share of the effort
• Breakthrough technologies will require new forms of
financing instruments and new sources of supply
• Innovative financing will be critical
• Financing for infrastructure
Step 4: Develop market and financing solutions to close the
transformation gap
Develop market enabling
solutions
4.2
Develop financing solutions

11. 5.1 Develop a communication and outreach strategy
Disseminate Framework outcomes in the country and
beyond
5.3
Identify follow-up actions and further collaboration
between OECD and emerging economies
Outcomes
• Communication and outreach strategy
• Dissemination activities in the country and beyond
• Engagement activities with the stakeholders to identify follow-up activities for expanding collaboration between the
OECD and the governments on industry’s low-carbon transition
Rationale
• Policy makers will gain insight into the potential, cost and
benefits of industry transition and solutions.
• Industry will benefit from solutions that can help to
improve their competitiveness.
• Finance institutions will have better insight into the
needed financing instruments for industry transition,
which will help them to prioritise and develop in
expanding their markets.
Step 5: Disseminate Framework outcomes
5.2

12. Contributing to broader energy, climate and financing
policy dialogue and international cooperation
3. Framework
benefits
Framework
for
Industry’s
net-zero
Transition
Country
priorities
Market &
Financing
solutions
Trade
Industry
Value
Chain
Net-Zero
Pathway
Just
Transition
Carbon
markets
Technology &
Digitalisation
Transition
finance
Blended
finance
Emissions
tracking &
ESG
Projects
develop
ment
Standards &
certification

13. Timeline and next steps
Industry
Value Chain
Net-Zero
Pathways
Just
Transition
Carbon
Pricing
Climate
Finance
Blended
Finance
Emissions
tracking and
ESG reporting
Projects
development
Standards
and
certifications
22 April
Collection of any
written feedback to
the Framework
Early May May Summer September H2 2022 2024
Finalisation of the
Framework and
input to the OECD
review process
Bilateral discussions
with “Framework
implementers”
Framework
finalisation
Launch
webinar
Implementation
starts in Indonesia
Experiences from
implementation
will be gathered in a
Guidance Document
Implementation
starts in Thailand
2023

14. Framework for Industry’s net-zero Transition: Q&A
Step 1
Engage Stakeholders and agree on the Focus Area
Step 2
Undertake research on the current technology, policy and
financing situation
Step 3
Assess the business cases of a net-zero pathway for the
low-carbon transition of the Focus Area and identify a
pipeline of projects
Step 4
Develop market and financing solutions to close the
transformation gap
Step 5
Disseminate Framework outcomes
3. Framework
benefits
Framework
for
Industry’s
net-zero
Transition
Country
priorities
Market &
Financing
solutions
Trade
Industry
Value
Chain
Net-Zero
Pathway
Just
Transition
Carbon
markets
Technology &
Digitalisation
Transition
finance
Blended
finance
Emissions
tracking &
ESG
Projects
develop
ment
Standards &
certification

15. 15
Please visit our webpage:
www.oecd.org/cefim/
For more information, please contact:
Deger Saygin
Deger.SAYGIN@oecd.org
Joseph Cordonnier
Joseph.CORDONNIER@oecd.org