Search Climate Insights Directory

The report examines the application of transition finance tools—including loans and bonds—to support the decarbonisation of China's steel sector, highlighting the role of regional guidelines in Hebei Province. It identifies a significant funding gap, estimating a need for $18 billion in capital expenditure over the next five years for electric arc furnace (EAF) and hydrogen-based direct reduced iron (H2-DRI) technologies. While large state-owned enterprises are leading the transition, the report notes that high costs of green steel and limited scrap steel supply remain major barriers.

The report examines how transition finance is being leveraged to decarbonise China's steel industry, focusing on the impact of the first subnational regulatory framework introduced in Hebei Province in December 2023. It finds that the market responded quickly to these guidelines, with steel transition loans in Hebei exceeding CNY20bn (USD2.8bn) by the end of 2024. The document estimates that the sector requires at least USD18bn in capex over the next five years to invest in electric arc furnaces (EAF), direct reduced iron (DRI) shaft furnaces, and electrolysers. While large state-owned enterprises lead in transition planning, smaller firms face greater financing gaps. The report recommends that the People's Bank of China introduce further incentives, such as interest subsidies, and that steel companies secure offtake contracts to improve the bankability of green steel projects.

The report finds that the cumulative aligned GSS+ market reached USD 5.7 trillion by the end of 2024. Green bonds remain the dominant theme, while sustainability-linked bonds (SLBs) saw a significant decrease in aligned volume. Europe continues to be the largest source of aligned GSS+ debt, and the report highlights the growth of sovereign issuance and the development of national taxonomies.

Reclaim Finance critiques PCAF's proposed expansion of avoided emissions reporting and the introduction of Expected Emission Reductions (EER), warning that these counterfactual-based metrics are subjective and prone to greenwashing. The briefing also highlights flaws in the 'financed emissions' formula, noting that it often fails to track real-world emissions due to its sensitivity to corporate value fluctuations. Reclaim Finance recommends that PCAF withdraw these proposed methodologies and instead adopt metrics that reflect actual counterparty performance and physical emissions intensities for target setting.

The document proposes a "transition finance nexus" framework to illustrate how transition pathways, planning, assessment, and finance interact in the banking sector. It argues that these elements are interdependent and that improving any single part strengthens the entire system, creating a circular process for scaling transition finance. The framework is based on consultations with 15 organizations, including banks and NGOs.

The document outlines a comprehensive approach to transition finance for Vietnam's high-emission industrial sectors. It introduces a 'Five Hallmarks' framework for creating credible transition plans—covering performance targets, robust planning, implementation, internal monitoring, and external reporting—and provides specific decarbonisation pathways and technical criteria for the steel, cement, and basic chemicals industries. Additionally, it offers a five-tier maturity scale for financial institutions to assess corporate transition credibility and provides best-practice recommendations for issuing sustainability-linked bonds (SLBs) and loans (SLLs) to support the energy transition.

The document outlines a comprehensive methodology for creating and assessing corporate transition plans in Vietnam's high-emission industries. It introduces a 'Five Hallmarks' framework for credible plans, provides sector-specific decarbonization criteria for steel, cement, and basic chemicals, and details the use of sustainability-linked financial instruments. It also presents a five-level classification system for financial institutions to evaluate the maturity and ambition of corporate transitions.

This research paper by the Climate Policy Initiative outlines a framework and recommendations for scaling transition finance to decarbonize India's iron and steel sector, which is the country's largest carbon-emitting industrial sector.

The document identifies a USD 146.4 billion investment gap for Indonesia's 2030 ENDC targets, noting that private financial institutions' climate finance represents only 3% of their total investments. While new regulations like the Indonesia Taxonomy for Sustainable Finance (TKBI) and POJK 18/2023 support decarbonization, significant barriers remain, including contradictory fossil fuel subsidies and a mismatch between the long-term capital needs of climate projects and the short-term nature of commercial bank funding.

The report identifies a substantial investment gap of approximately USD 146.4 billion to meet Indonesia's 2030 Enhanced Nationally Determined Contribution (ENDC) targets. While the government budget provides about one-third of the necessary funding, private financial institutions' contributions remain low, representing only 3% of their total investments. Key barriers include contradictory policies, such as fossil fuel subsidies outweighing climate spending, and a financing mismatch where commercial banks rely on short-term deposits for long-term, capital-intensive climate projects. The report recommends harmonizing sustainable finance policies through the Indonesia Taxonomy for Sustainable Finance (TKBI), enabling alternative instruments like sustainability-linked loans and carbon finance, and enhancing transparency via IFRS S1 and S2 disclosure standards.

The briefing highlights that iron production accounts for over 80% of steel supply chain emissions and argues that a common 'near-zero emissions' iron definition is necessary to guide investment and trade. It proposes a threshold of 350 kgCO2e/t iron to exclude coal-based production and suggests that hydrogen-based direct reduction (DRI) is the primary commercial pathway to achieve this. To overcome supply chain complexities, the document advocates for direct procurement and 'book and claim' systems, announcing that RMI will design and test a climate-credible book and claim system for iron and steel in 2025.

The report identifies three core pillars for scaling transition finance in China's steel sector: robust identification frameworks, financial incentives, and multi-party coordination. It highlights that while pilot regions like Hebei have made progress with specific standards and templates, the broader industry faces high costs, a lack of precise incentives for financial institutions and downstream buyers, and a gap between funding needs and available high-quality transition assets.

In 2024, the Clean Air Task Force (CATF) focused on defending U.S. EPA pollution standards in court, advancing superhot rock geothermal and nuclear energy, and reducing global methane emissions. The organization also worked on simplifying renewable energy siting in the U.S., analyzing the efficiency of hydrogen and carbon capture, and addressing high capital costs for clean energy in Africa. In Europe, CATF influenced the EU's 2040 climate targets and the Net Zero Industry Act, while continuing state-level implementation of federal funding in the U.S.

RMI is implementing diverse decentralized energy solutions in Nigeria to address the fact that over 85 million people lack sustainable electricity. The organization has deployed interconnected minigrids in locations like Zawaciki, Abuja, and Nasarawa, and a community-centric 'Sharing the Power' model in Mokoloki where residents co-own the facility. To ensure economic viability, the Energizing Agriculture Programme (EAP) integrates solar power with agricultural machinery, such as electric mills and cold storage, across 17 communities. RMI also targets industrial emissions through commercial and industrial minigrids, which can reduce carbon pollution by approximately 33 million tons per year. Additionally, the Energy Transition Academy (ETA) provides technical training to utility professionals to scale these initiatives.

The document outlines the methodological frameworks used to quantify climate finance needs for agrifood systems. It establishes a comprehensive taxonomy developed by CPI and FAO covering sectors such as crop and livestock systems, forestry, fisheries, and food diets. The 'top-down' approach aggregates data from 46 publications, using seven key reports to estimate needs for 2024-2030, while the 'bottom-up' approach extrapolates data from 167 Nationally Determined Contributions (NDCs). The analysis highlights significant data gaps for the post-2030 period and notes that agrifood system finance needs in low-income countries represent a larger relative proportion of their economy, averaging 2.7% of GDP.

The document explores transition finance as a tool for emerging and developing economies, particularly in Asia, to decarbonise high-emitting sectors that struggle to meet strict green finance criteria. It analyses the taxonomies of Japan, Singapore, Hong Kong, and ASEAN, while highlighting risks of 'transition-washing' and the need for science-based targets and independent verification to ensure alignment with 1.5°C pathways.

The report argues that China's agri-food system requires significant investment to achieve net-zero emissions and climate resilience, but currently faces a massive funding gap and a mismatch between existing green finance policies and the sector's needs. It advocates for the use of transition finance—including sustainability-linked loans, bonds, and blended finance—to mobilize private capital. The authors emphasize that a 'just transition' is essential to protect vulnerable smallholder farmers. Key barriers identified include poor climate information disclosure by companies and a lack of credible transition plans. The report recommends that regulators standardize GHG accounting for agriculture, mandate climate disclosures for large firms, and align agricultural subsidies with climate goals.

The report identifies a significant funding gap in China's agri-food climate transition, noting that global climate finance for the sector is only one-seventh of what is required. It argues that while public funds currently dominate, mobilising private capital through transition finance—including sustainability-linked loans, bonds, and blended finance—is essential. The document highlights barriers such as inadequate GHG emission disclosure among Chinese agri-food companies and a lack of credible transition plans. It recommends that regulators establish standardised accounting for agri-food emissions, support the development of entity-level transition plans, and align agricultural subsidies with climate goals to ensure a just transition for smallholders and SMEs.

The report highlights that China's steel industry requires at least 1.6 trillion yuan (approximately 220 billion USD) in fixed asset investment to achieve decarbonisation by 2050. While technical feasibility for zero-carbon steel exists, high costs remain a barrier. The document argues that transition finance, carbon pricing mechanisms like the EU's CBAM, and green public procurement are essential to drive investment toward deep decarbonisation technologies, such as low-carbon hydrogen, and to avoid 'carbon lock-in' as 78% of existing coal-based blast furnace capacity requires reinvestment by 2030.

The report highlights that China's steel sector requires at least CNY1.6tn (USD220bn) in fixed-asset investment for decarbonisation by 2050. While the labelled bond and loan markets have the capacity to provide this capital, current issuance from the steel sector is minimal, representing only 0.1% of the Chinese labelled bond market. The document recommends aligning provincial transition finance guidelines with national and international standards, encouraging the use of greenhouse gas (GHG) emission-reduction targets in sustainability-linked bonds (SLBs), and implementing green public procurement to stimulate demand for low-carbon steel.