Shearman & Sterling LLP A Deeper Look at the Global Framework Principles for Decarbonizing Heavy Industry | 44
GLOBAL FRAMEWORK PRINCIPLES FOR HEAVY INDUSTRY
DECARBONIZATION
The Global Framework Principles for Heavy Industry
Decarbonization, originally published by the Climate Group
and Mighty Earth in February of 2021, is centered on six
principles that seek to guide the industry through a "just,
accessible, regenerative and inclusive recovery" from the
COVID-19 pandemic.
6
Within this context, each principle
embodies a particular theory that policymakers can use,
and industry insiders can advocate for, to ensure the
greatest odds for decarbonizing heavy industry within the
time goals set out by various international climate accords.
Additionally, the International Energy Agency (IEA) released
their report last month that provides 10 recommendations
to decarbonize heavy industry.
7
Common themes between these two frameworks are
as follows:
• Secure a truly green recovery by tying public financing
for heavy industry to key measures aligned with corporate
greenhouse gas emission reduction commitments and
plans calibrated to a 1.5°C trajectory. The IEA's report
suggests these could include direct public funding, public
financing mechanisms to mobilize private investments,
and sustainable investment schemes and taxonomies,
including transition finance.
• Establish and strengthen plans, policies, and investments
to ensure that industrial transformation results in long
term GHG emissions reduction, protects biodiversity
and human health, and leads to a just transition.
• Institute policies to create demand for low-carbon,
circular and resource efficient basic material products
by formulating roadmaps, plans and targets addressing
multiple levels (e.g., industry, sub-sectors, companies,
national and regional).
• Develop and deploy at scale, financing policies and tools
to incentivize and reward heavy industry companies that
set science-based, time-bound, public climate targets
calibrated to 1.5°C.
• Prioritize creating a market for near zero emission
materials production and investment in R&D for enhanced
development and deployment of low, zero carbon
technologies.
• Ensure effective international coordination, cooperation
and accounting, including international technology
co-development, capacity building, sunsets of the high-
emitting technologies and implementation of responsive
trade policies and carbon border adjustments to reduce
emissions leakage between economies.
RE-VISITING THE FRAMEWORK PRINCIPLES
While eighteen months is not a very long period of time,
in the world of climate technological innovation and
global warming, 18 months is enough such that scientific
understanding has evolved, and the global community
has updated its climate change expectations. The United
Nations Climate Change Conference (COP26) in November
of 2021 was the first real admission by the international
community that the goals set out in the 2015 Paris
Agreement were not being met due to insufficient policy
progress. Most notably, policymakers acknowledged that
the international community is likely to soon exceed the
possibility of achieving the 1.5°C maximum warming target.
International policymakers have also since acknowledged
that absent unprecedented rapid and massive changes to
the world's economy and infrastructure, as well as stringent
reductions in emissions of not just carbon dioxide, but also
of methane and nitrous oxide, a 2°C warming target is likely,
a more realistic one.
The development of financial frameworks to drive
investments in heavy industry has made significant gains,
with the broader deployment of public-private financial
partnerships, as well as significant government pledges to
finance energy transition and decarbonization technologies
that heavily impact the industrial sector. Drawing upon past
experience of successful deployment of renewable energy
projects, there are many additional policy measures that
can be implemented to support demand for low-carbon
and resource efficient materials. These include programs
akin to the offering of tax credits for wind, solar and carbon
removal projects in the U.S., the offering of feed-in tariffs
to promote the production of renewable energy in Germany,
and the offering of low-cost, hundred million dollar-plus
loans like those recently issued by the U.S. Department of
Energy to finance Advanced Clean Energy Storage, a clean
hydrogen and energy storage facility capable of providing
long-term, seasonal energy storage.
6
See Climate Group, "Global Framework Principles for Decarbonising
Heavy Industry," https://www.theclimategroup.org/framework-principles
(March 2022).
7
See IEA, "Achieving Net Zero Heavy Industry Sectors in G7 Members,"
https://www.iea.org/reports/achieving-net-zero-heavy-industry-sectors-in-
g7-members (May 2022).
