Report on Sector Decarbonization Roadmaps
Institutional Investors Group on Climate Change (IIGCC) releases a report on sector decarbonization roadmap, aimed at analyzing the current development of the sector decarbonization roadmaps and providing recommendations.
The IIGCC believes that sector decarbonization roadmaps are important strategic plans for achieving decarbonization, and effective sector decarbonization roadmaps can guide investment decisions and attract long-term climate investments. IIGCC also establishes Net Zero Investment Framework for investors to guide investors.
Related Post: Institutional Investors Group on Climate Change Releases Net Zero Investment Framework 2.0
Introduction to Sector Decarbonization Roadmaps
At present, there is no standardized definition of sector decarbonization roadmaps globally, and terms such as roadmap, path, and transition plan are often used interchangeably. The IIGCC believes that sector decarbonization roadmaps refers to a long-term strategic plan developed by policy makers to support decarbonization in important industries. These roadmaps have scientific emission reduction pathways and are based on transition policies and financial services. The role of the sector decarbonization roadmaps includes:
- Clarify the decarbonization path and decarbonization speed, and provide direction for policies, funds, and technologies that support transition.
- Provide decarbonization sequence, correlation, and trade-off information, as well as decarbonization targets for different time horizons.
- Assist enterprises in formulating transition plans and assist financial institutions in providing transition financing for enterprises.
Development of Sector Decarbonization Roadmaps
Currently, multiple jurisdictions worldwide have developed sector decarbonization roadmaps. For example, the EU has developed 17 transition paths covering 14 industrial ecosystems. Australia has developed potential technological transition and emission pathways for six important carbon emission areas. France has developed industry transition plans based on the nine most energy intensive industries. The common features of decarbonization roadmaps include:
- Focus on industries that are most energy intensive or difficult to achieve carbon reduction.
- Incorporate national or regional carbon reduction targets into the roadmap.
- Provide relevant policies and technologies to accelerate decarbonization.
The Institutional Investors Group on Climate Change believes that there are some key information gaps in the decarbonization roadmap for investors, including:
- Lack of consensus on key features and elements in the roadmap.
- Lack of information on how stakeholders can utilize the roadmap.
- Lack of detailed information and feasible measures.
- Lack of connection with extensive decarbonization plans.
Principles of Effective Sector Decarbonization Roadmaps
To enhance the value of sector decarbonization roadmaps to investors, the IIGCC has proposed the following principles to improve the efficiency of using the sector decarbonization roadmaps:
- Principle 1: Trustworthy and helpful for decision-making. The roadmap should provide stakeholders with clear and time limited action plans, clearly referencing and supporting the carbon reduction targets of the jurisdiction, and prioritizing industries that are most important for carbon reduction. The roadmap should also set different emission reduction paths for major greenhouse gases, cover value chain emissions, and set achievable mid-term goals to facilitate the evaluation of progress over a period, and be regularly reviewed and updated.
- Principle 2: Clarify how policies support decarbonization in industries. The roadmap should elaborate on how current and future policy combinations can help decarbonize industries, address regulatory barriers, and provide incentives on both the supply and demand sides. The roadmap should consider the connection between policy combinations and macroeconomic backgrounds, clarify governance and supervision systems, and improve data transparency in policymaking.
- Principle 3: Add the financing mechanism. The roadmap should assess the investment needs for decarbonization in the industry, as well as the quantity of public and private funds, and identify priority plans for industry funding sources. The roadmap needs to establish investment feasibility standards based on factors such as risk return and technological development in different industries and regularly engage in financing communication with the financial industry to attract funds.
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