WHAT IT AIMS TO ACHIEVE
The Climate Investment Funds’ (CIF) Industry Decarbonization Program has the potential to transform the carbon-emissions pathway of high-emitting industry sectors in developing and emerging countries, and to demonstrate the kind of change that can be replicated in similar sectors elsewhere. It could facilitate the shift of the industrial sector to sustainable practices and unlock investments needed to move it onto a low-carbon, climate-resilient investment pathway.
Why it’s needed
Industry — one of the leading sources of increases in greenhouse gas (GHG) emissions today — may become the single biggest source of GHG emissions in the next decade. The relative contribution of developing countries to industrial emissions has been increasing rapidly, with the highest growth rate of industrial energy use occurring outside the Organisation for Economic Co-operation and Development (OECD) countries.
At the same time, there is major potential for industrial energy efficiency in developing countries. While the investments needed to accelerate low-carbon and climate-resilient transition would be significant, early and accelerated action could prevent the locking-in of inefficient technologies and prevent the need for additional investments in low-carbon technologies in the long term.
HOW IT WORKS
The program works across multiple levels — industrial facility, technology, corporate, sectoral, and national. Through the targeted use of concessional finance to address the barriers to investment, via the provision of a combination of technical assistance and investment support, this program seeks to reduce system-wide barriers to investment in low-carbon, climate-resilient business models and technologies.
Program activities will be implemented under three components:
- At the corporate and sector levels, program activities will support climate governance and strategies through policy dialogues, capacity building, and technical assistance; the integration of climate considerations into decision-making; and the deployment of climate technologies across supply chains.
- At the national or regional levels, they will facilitate dialogues on climate-resilient pathways and the implementation of policy considerations, such as energy-efficient regulation and climate-governance standards for financing.
- In the areas of monitoring, reporting, and verification, they will focus on improving current practices and organizing sector participation in national and internal policies, including through accessing green financial markets, as well as internal domestic and international climate markets.
The Main Challenges
The issue of industry being one of the leading and growing sources of increases in (GHG) emissions has proven to be difficult to abate. Tackling this issue brings with it a range of challenges from policy, institutional, and market failures to technical and financial needs.
CIF is well-positioned to drive a transformation change in decarbonizing the industry sector, with a tested business model that is focused on a country-led, programmatic, and participatory approach involving multiple multilateral development banks (MDB).
