EBRD and Green Climate Fund’s High-Impact Programme Aims to Transform Hard-to-Abate Sectors for Net-Zero Goals

The net-zero transition is one of the greatest challenges we face. It calls for a complete transformation of how we live, work, produce and consume. Governments and businesses all over the world are pledging to achieve net-zero emissions of greenhouse gases.

However, the path to net zero is less straightforward for some industries than it is for others. Heavy industry, such as cement, steel, chemicals, mining, and heavy-duty transport, such as shipping and aviation, are known as “hard-to-abate” sectors due to the challenges and high costs associated with their transition.

“Hard-to-abate sectors contribute to approximately 30 per cent of global emissions, so their transition is more urgent than ever,” highlights Dimitris Koufos, European Bank for Reconstruction and Development (EBRD) Head of Sustainable Business and Infrastructure, Industry and Agribusiness. “Supporting their transition is one of the most difficult tasks we have undertaken as a Bank, but it is absolutely necessary,” he says.

The EBRD has aligned all its activities with the goals of the Paris Agreement, aiming to accelerate decarbonisation across its regions, supporting them to reach net-zero emissions by mid-century. Supporting the transition of the hard-to-abate sectors is a significant part of this work.

The High-Impact Programme for the Corporate Sector

The EBRD and the Green Climate Fund launched the High-Impact Programme for the Corporate Sector in 2021, providing total financing of US$ 1.01 billion to significantly scale up green financing in the hard-to-abate sectors.

The Programme promotes the uptake of low-carbon technologies in the industrial sector and has been designed to facilitate a transformational shift within the energy-intensive manufacturing, agribusiness and mining sectors of Armenia, Jordan, Kazakhstan, Morocco, Serbia, Tunisia and Uzbekistan.

The Bank provides its clients with grants, advisory services (technical assistance), sustainability-linked loans, and support for governments and industries launching and implementing low-carbon sector roadmaps.

Low-carbon pathways

The EBRD supports the economies where it invests in developing low-carbon sector roadmaps, which outline an industry and its climate performance, the reasons for its current emissions, its potential for reducing those emissions, and key policy actions.

A recent example is the Bank’s work in Türkiye. With funding from the Climate Investment Funds, the EBRD has helped the Turkish government to develop low-carbon pathways for several sectors, such as steel, aluminium, cement and fertilisers. The resulting policy recommendations are mapped into two thematic areas: input and technology, and policy and market. These include topics such as green energy, the circular economy, process improvement, input optimisation, trade models and emission trading systems.

Aluminium (and its alloys) is a key material with uses ranging from heavy manufacturing to everyday, fast-moving consumer goods. Aluminium is also important for emerging technologies, such as electric vehicles. Producing primary aluminium, however, contributes to CO2 emissions; in 2021, it accounted for around 3 per cent of industrial CO2 emissions globally.

The steel sector accounts for nearly 10 per cent of global energy related CO2 emissions and around 30 per cent of industrial carbon emissions, and the cement sector accounts for around 7 per cent of global CO2 emissions.

Findings from our studies suggest that, in order to reach net-zero emissions, Turkish industry needs to develop comprehensive, integrated and consistent policies, and invest in radical technological transformation.

“Our low-carbon pathways aim to lay the groundwork for the core of the Turkish industrial sectors, accomplishing green transformation in a manner that complies with Paris Agreement objectives,” says Dimitris Koufos.

Examples from the EBRD regions

The EBRD supports the green transition of copper producers in many economies, including United Metals Company (UMC) in Egypt, Mega Metal in Türkiye, KGHM Polska Miedź S.A. in Poland and Sofia Med in Bulgaria, as well as steelmakers, such as Metalfer Still Mill (which is also supported by donor funding from the Global Environment Facility and Japan) and SIJ Group, both in Serbia.

The Bank also supports the recycling and production of secondary metals. An example is its financing for Elemental’s new recycling facility in Poland.  The facility will recycle production scrap and end-of-life lithium-ion batteries from electric vehicles and other electronic devices such as smartphones or laptops, as well as platinum group metals from automotive waste.

Rare metals – including lithium, platinum, palladium and nickel – are key to the production of lithium-ion batteries for electric vehicles and automotive waste, and are sourced mainly from mines outside Europe. Extracting and refining these metals often has a high-carbon, social and environmental footprint. The recycling and production of secondary metals, and their re-use as raw materials for new products, can decrease the associated greenhouse gas emissions by up to 98 per cent, compared to primary benchmarks.

The EBRD’s country expertise, private-sector focus and mandate for economic transition plays a critical role in advising countries and clients on how to reduce carbon emissions in hard‐to‐abate sectors, through resource efficiency and the adoption of increasingly circular business models and practices.