THE BREAKTHROUGHAGENDA REPORT

2022

Accelerating Sector Transitions ThroughStronger International Collaboration

UN Climate Change High-Level Champions
in collaboration with:

Marrakech
Partnership

The Breakthrough Agenda Report

INTERNATIONAL ENERGY AGENCY (IEA)
The IEA is at the heart of global dialogue on energy, providing authoritative analysis, data,
policy recommendations, and real-world solutions to help countries provide secure andsustainable energy for all. Taking an all-fuels, all-technology approach, the IEA recommends
policies that enhance the reliability, affordability and sustainability of energy. It examines thefull spectrum issues including renewables, oil, gas and coal supply and demand, energy
efficiency, clean energy technologies, electricity systems and markets, access to energy,
demand-side management, and much more. Since 2015, the IEA has opened its doors tomajor emerging economies to expand its global impact and deepen cooperation.

INTERNATIONAL RENEWABLE ENERGY AGENCY (IRENA)
IRENA is the lead intergovernmental agency for global energy transformation that supports
countries in their transition to a sustainable energy future and serves as the principal platform
for international co-operation, a centre of excellence, and a repository of policy, technology,
resource and financial knowledge on renewables. With 168 Members (167 States and theEuropean Union) and 16 additional countries in the accession process and actively engaged,
IRENA promotes the widespread adoption and sustainable use of all forms of renewables inpursuit of sustainable development, energy access, energy security and low-carbon economic
growth and prosperity.

UN CLIMATE CHANGE HIGH-LEVEL CHAMPIONSThe UN Climate Change High-Level Champions mobilise non-state actors for stronger andmore ambitious climate action. Mandated by Parties of the Paris Agreement, and working with
the Marrakech Partnership, the two serving HLCs Dr. Mahmoud Mohieldin and Mr. Nigel
Topping build on the legacy of their predecessors to engage with non-state actors and activatethe ‘ambition loop’ with national governments, connecting policy with the many voluntary andcollaborative actions taken by cities, regions, businesses and investors, and nations. Theirwork is fundamentally designed to encourage a collaborative shift across all of society towards
a decarbonised economy so that we can all thrive in a healthy, resilient and zero carbon
world. The Climate Champions Team (CCT) is the delivery arm of the UN Climate Change
High-Level Champions.

DISCLAIMER
The development of this report was led by the International Energy Agency (IEA) in
collaboration with the International Renewable Energy Agency (IRENA) and the UN Climate
Change High-Level Champions. The report does not necessarily reflect the views of the IEA
Secretariat, IRENA or individual members of these organisations. Furthermore, the report’s
chapter on agriculture reflects solely the views and findings of the chapter’s authors in theircapacity as UN Climate Change High-Level Champions. The IEA, IRENA, UN Climate
Change High-Level Champions and their officials, agents, and data or other third-party content
providers make no representation or warranty, express or implied, in respect to the report’s
contents (including its completeness or accuracy) and shall not be responsible or liable for any
consequence of use of, or reliance on, the report and its content.

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The Breakthrough Agenda Report

The designations employed and the presentation of material herein do not imply theexpression of any opinion on the part of the IEA Secretariat, IRENA or the UN Climate Change
High-Level Champions concerning, and are without prejudice to, the legal status of any region,
country, territory, city or area or of its authorities, or concerning the delimitation of frontiers orboundaries.
The mention of specific companies or certain projects or products in the report does not imply
that they are endorsed or recommended by the IEA, IRENA or the UN Climate Change HighLevel Champions in preference to others of a similar nature that are not mentioned.

ABOUT THIS REPORTThe Breakthrough Agenda was launched by 45 world leaders at COP26 and is a commitment
to work together this decade to accelerate innovation and deployment of clean technologies,
making them accessible and affordable for all this decade. To kick start this Agenda, countries
endorsed Breakthrough goals to make clean technologies and sustainable practices more
affordable, accessible and attractive than their alternatives by 2030 in the power, roadtransport, steel, hydrogen and agriculture sectors.
The Breakthrough Agenda establishes an annual cycle to track developments towards thesegoals, identify where further coordinated international action is urgently needed to accelerate
progress and then galvanise public and private international action behind these specificpriorities in order to make these transitions quicker, cheaper, and easier for all.

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The Breakthrough Agenda Report

To initiate this cycle, world leaders tasked the IEA, IRENA and the UN Climate Change HighLevel Champions to develop an annual Breakthrough Agenda report to provide an
independent evidence base and expert recommendations for where stronger international
collaboration is needed.
This document, the 2022 Breakthrough Agenda Report, is the first of these annual reports. It
provides an assessment of progress towards each Breakthrough goal and a framework for
tracking progress in the future, a pathway of coordinated international actions through to 2030
and a set of specific recommendations on the most urgent and high impact opportunities tostrengthen international collaboration that can accelerate progress across each Breakthroughsector.
Breakthrough Agenda Signatories:
As of the 1st September 2022 the Breakthrough Agenda signatories are: Australia, Azerbaijan,
Belgium, Cabo Verde, Canada, Chile, China, Denmark, Egypt, European Union, France,
Germany, Guinea Bissau, Holy See, India, Ireland, Israel, Italy, Japan, Kenya, Latvia,
Lithuania, Luxembourg, Malta, Mauritania, Morocco, Namibia, Netherlands, New Zealand,
Nigeria, North Macedonia, Norway, Panama, Poland, Portugal, Senegal, Serbia,
Slovakia, South Korea, Spain, Sweden, Republic of Türkiye, United Arab Emirates, UnitedStates of America and United Kingdom.

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The Breakthrough Agenda Report

FOREWORD

FOREWORD
At the UN Climate Change Conference (COP26) in Glasgow in November 2021, leaders of
45 nations asked our organisations to produce an independent assessment of the status of
the global transitions in five major greenhouse-gas-emitting sectors and makerecommendations for strengthening international collaboration to drive urgent progress.
The ambition those leaders set out was not only to reduce emissions, but to make clean
technologies and sustainable solutions the most affordable, accessible and attractive optionin each major emitting sector of the global economy before the end of this decade.
We commend these leaders for their vision, their recognition that this opportunity can only berealised through greater practical collaboration, and their commitment through the
Breakthrough Agenda to work together to accelerate progress in each sector.
The world is facing multiple and compounding crises. The effects of climate change areintensifying. The availability and affordability of both energy and food are at risk in many
countries, contributing to a broader cost-of-living crisis. The response must not be to slow
down the transition to sustainability but to move even faster. A massive scaling up of clean
energy investment and deployment worldwide is needed to enhance energy security,
affordability and access, and the transition to sustainable land use is essential to protect our
food systems against future shocks.
This report is a joint product of the International Energy Agency (IEA), the International
Renewable Energy Agency (IRENA) and the UN Climate Change High-Level Champions.
Each organisation has brought its own expertise to deliver clear recommendations for theactions that governments and companies need to take. We have also drawn on expertise
generously shared by governments, businesses and civil society organisations active in eachof the sectors we have considered.
In each sector – power, hydrogen, road transport, steel and agriculture – we see rising
investment in clean technologies and sustainable solutions and also growth in the number ofcollaborative international initiatives. But at the same time, global emissions continue to rise,and progress is not yet fast enough to meet the goals that countries have agreed under the
Breakthrough Agenda.
We find that in each of these sectors there is significant scope for stronger international
collaboration – more focused, more sustained, with greater commitment and greater
participation – to accelerate progress.
Many now see the opportunities of the low-carbon transition and are competing to lead thedevelopment of new technologies. This is to be welcomed. The opportunity is for countries,
businesses, communities and citizens to work together to accelerate the growth of global
markets for clean technologies and sustainable solutions while continuing to compete tosupply them.
We look forward to supporting governments, businesses and civil society organisations in theirefforts to implement the recommendations of this report in order to make the transition tosustainability faster, easier and more affordable for all.
Dr Fatih Birol

Francesco La Camera

Nigel Topping

Dr Mahmoud Mohieldin

Executive Director
International Energy
AgencyDirector-General
International Renewable
Energy Agency

UN Climate Change HighLevel Champion for COP26

UN Climate Change HighLevel Champion for COP27

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The Breakthrough Agenda Report

ACKNOWLEDGEMENTS

ACKNOWLEDGEMENTS
The Breakthrough Agenda Report was prepared by the International Energy Agency (IEA),
the International Renewable Energy Agency (IRENA) and the UN Climate Change High-Level
Champions (UNCC HLC).
The principal authors and contributors were (in alphabetical order): Federico Bellone (CCT),
Jose Bermudez Menendez (IEA), Herib Blanco (IRENA), Sophie Boehm (CCT), Emily Cassidy(CCT), Kelly Carlin (CCT), Nicolas Coent (IRENA), Edward Davey (CCT), Gerardo Escamilla(IRENA), Rachel Fakhry (CCT), Angie Farrag-Thibault (CCT), Jinlei Feng (IRENA), Araceli
Fernandez Pales (IEA), Dolf Gielen (IRENA), Timur Gül (IEA), Will Hall (IEA), Albena Ivanova(CCT), Luis Janeiro (IRENA), Claire Kiss (IRENA), Peter Levi (IEA), Kelly Levin (CCT), Martina
Lyons (IRENA), Kieran McNamara (IEA), Stephen Naimoli (CCT), Elizabeth Press (IRENA),
Simon Sharpe (CCT), Jacob Teter (IEA), Tiffany Vass (IEA) and Brent Wanner (IEA).
This would not have been possible without the financial support provided by the Department
for Business, Energy and Industrial Strategy, UK and the Department for Climate Change,
Energy, the Environment and Water, Australia. The High-Level Champions’ contributions were
supported by the World Resources Institute and the Systems Change Lab (a joint initiative
between World Resources Institute, Bezos Earth Fund, UN High-Level Champions, and otherpartners).
The report benefitted from the insights gathered during a series of Breakthrough dialogues,
including initiatives and governments.
Peer reviewers provided essential feedback to improve the quality of the report. They include:
Michael Apicelli, Vanessa Arjona, Russell Conklin, Sandra Dickison, Risa Edelman, Dennis
Mesina and Sunita Satyapal (Department of Energy, United States); Patricia Aruwa (Ministryof Industry, Trade and Enterprise Development, Kenya); Omid Ashrafi, David Caughey, Jess
Dawe, Deborah deGrasse, Colin Dobson, Luckshya Mehta, Dane Synott, Melanie VienWalker, Ka Wing Ng and Fiona Zuzarte (Department of Natural Resources, Canada); Paul
Balserak (American Iron and Steel Institute); Daniel Barlow (British Standards Institute); Chris
Bataille (IDDRI); Claudia Bernarding and Elias Spiekermann (Ministry of Economic Affairs andClimate Action, Germany); Martial Bernoux (United Nations Food and Agriculture
Organization); Jean-Pierre Birat (IF Steelman); James Birch (Gates Foundation); Albert
Cheung (BNEF); Patricia Colaferro (ALACERO); Rebecca Collyer and Chan Yang (European
Climate Foundation); Norela Constantinescu (European Network of Transmission System
Operators for Electricity (ENTSOe)); Max Correa (Ministry of Energy, Chile); Laura Cramer(CGIAR); François Cuenot (UNECE); Tim Dallmann, Dale Hall, Tanzila Khan, Josh Miller andFelipe Rodriguez (ICCT); Anna De Palma and Rachel Lambert (Foreign, Commonwealth andDevelopment Office, United Kingdom); Rob De Jong (UNEP); Julie Deschatelets, Bassam
Javed and Emily Stone (Department of Environment and Climate Change, Canada); Jennie
Dodson (Mission Innovation); Dan Dorner (Clean Energy Ministerial); Karl Downey (CDP);
Jasmine Bascombe, Peter Dale, Stephen Devlin, Paul Durrant, Stephanie Edwards, Bethany

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The Breakthrough Agenda Report

ACKNOWLEDGEMENTS

Fisher, Nicholas Jeffrey, Joe Morrisroe, Rachel Noronha, Edward Webber and Olivia
Wessendorff (Department for Business, Energy and Industrial Strategy, United Kingdom);
Louisa Esdaile, Chase Fiori, Duncan Fitzpatrick, Ash Kerrison, Peta Olesen, Renee Robinson,
Thea Shelley, Michael Smith, Matthew Stocks and Amanda Wormald (Department of Climate
Change, Energy, the Environment and Water, Australia); Lisa Fischer, Michele Rimini, Domien
Vangenechten and Katinka Waagsaether (E3G); Laura Fisher (the Mulloon Institute); Warren
Flentje and Jenny Hayward (Commonwealth Scientific and Industrial Research Organisation,
Australia); Mattias Frumerie (Ministry of Environment, Sweden); Rana Ghoneim (UNIDO);
Alasdair Graham, Mike Hemsley, Hugo Liabeuf and Andreas Wagner (Energy Transitions
Commission); Thomas Hale (Oxford University); Dan Hamza-Goodacre (Climate Emergency
Collaboration Group); Lukas Hermwille (Wuppertal Institute); Tim Karlsson (IPHE); Jian Liu(Energy Research Institute); James Mitchell (RMI Centre for Climate Aligned Finance); Jonas
Moberg (Green Hydrogen Organisation); Simon Müller, Jesse Scott and Wido Witecka (Agora
Energiewende); Daria Nochevnik (Hydrogen Council); Tomoki Ooka and Saki Oura (Ministryof Economy, Trade and Industry, Japan); Daniele Poponi (European Commission); Andrew
Purvis (World Steel Association); Stephan Raes and Deger Saygin (OECD); Julia Reinaud(Breakthrough Energy); Costa Samaras (White House Office of Science and Technology
Policy, United States); Daniel Schroth (AfDB); Roland Schulze (EIB); Shashi Shekhar(Government of India); Wilson Sierra (Ministry of Industry, Energy and Mining, Uruguay);
Neelam Singh (WRI); Urska Skrt (WBCSD); Amanda Starbuck (The Sunrise Project); Hiroyuki
Tezuka (Japan Iron and Steel Foundation); Veaceslav Ursachi (National Agency for Researchand Development, Moldova); Noé van Hulst (Gasunie and IPHE); Jonathan Wadsworth (World
Bank); Richard Waite (WRI); Kirsten Westphal (H2 Global); Lini Wollenberg (CGIAR andUniversity of Vermont); Helena Wright (FAIRR Initiative); Max Åhman (University of Lund).

The individuals and organisations mentioned above that contributed to this study throughconsultations and the peer review process are not responsible for any opinions or judgements
it contains. The views expressed in the study are not necessarily views of the IEA’s or IRENA’s
members. All errors and omissions are solely the responsibility of the IEA, IRENA and the UN
Climate Change High-Level Champions.

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The Breakthrough Agenda Report

TABLE OF CONTENTSTABLE OF CONTENTS
Executive Summary ................................................................................................................. 9
Chapter 1. Context: Closing the collaboration gap ............................................................... 21
Chapter 2. Power ................................................................................................................... 29
Significance of the sector ..........................................................................................................31
Sector goals ..............................................................................................................................32
How do we get there? ...............................................................................................................35
Current state of international collaboration ...............................................................................38
Priority areas for international collaboration .............................................................................41

Chapter 3. Hydrogen ............................................................................................................. 54
Significance of the sector ..........................................................................................................55
Sector goals ..............................................................................................................................56
How do we get there? ...............................................................................................................59
Current state of international collaboration ...............................................................................61
Priority areas for international collaboration .............................................................................64

Chapter 4. Road Transport .................................................................................................... 82
Significance of the sector ..........................................................................................................84
Sector goals ..............................................................................................................................85
How do we get there? ...............................................................................................................86
Current state of international collaboration ...............................................................................90
Priority areas for international collaboration .............................................................................93

Chapter 5. Steel ................................................................................................................... 112
Significance of the sector ........................................................................................................114
Sector goals ............................................................................................................................114
How do we get there? .............................................................................................................117
Current state of international collaboration .............................................................................120
Priority areas for international collaboration ...........................................................................123

Chapter 6. Agriculture.......................................................................................................... 138
Significance of the sector ........................................................................................................140
Sector goals ............................................................................................................................140
How do we get there? .............................................................................................................146
Current state of international collaboration .............................................................................149
Priority areas for international collaboration ...........................................................................152

Chapter 7. Putting the world on track to meet the Paris goals............................................ 172

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The Breakthrough Agenda Report

EXECUTIVE SUMMARYEXECUTIVE SUMMARY
STRENGTHENING INTERNATIONAL COLLABORATION TO

ACCELERATE TRANSITIONS

The world remains far off track to meet internationally-agreed climate change goals, despite
action being taken in many areas. The Nationally Determined Contributions that countries have
put forward in the UN climate change negotiations imply a lower emissions trajectory now thanthey did before, and most countries have committed to achieving net zero emissions by aroundthe middle century, as have many businesses. Yet, global emissions, which must be halved thisdecade to limit temperature rise to 1.5°C, are still increasing. The energy crisis and threat of a
global food crisis that the world now faces underline the equal urgency of increasing theaffordability, accessibility, resilience, and security of supply of humanity’s most essential
commodities and services. Transitions to sustainability can reduce the likelihood of such crises
occurring in future.
International collaboration will be critical to success, given the global scale and fast paceof change required. Action by governments and businesses individually is necessary, but not
sufficient. Well-targeted international collaboration can make low carbon transitions faster, lessdifficult, and lower cost. By aligning and coordinating actions internationally, countries andbusinesses can accelerate innovation, create stronger signals for investment and larger
economies of scale, and establish level playing fields where needed to ensure that competition
is a driver of the transition, and not a brake. International assistance, finance, and the sharingof best practice can support widespread adoption of effective policies and available
technologies. International infrastructure can enable cross-border flows of clean energy. Without
international collaboration, the transition to net zero global emissions could be delayed bydecades.
International cooperation and technology cost reduction
Cost difference between a slow and fast transition in
2030 for key clean energy technologies
Batteries

40
Difference between notransition and slow transition

20

0
2010

Electrolysers

Solar

Wind
-3%

2020

2030
NZE

2040

2050

2060

2070

2080

2090

Impact of afaster transition

GtCO2

Net Zero by 2050 scenario (NZE) versus a Low
International Co-operation Case

Low International Co-operation Case

0%

-17%
-20%

-18%

Cost reduction

Figure 1

-40%

-11%
-60%

Sources: IEA, 2021, Way et al., 2022.

Without international collaboration, the transition to net zero global emissions could bedelayed by decades. The costs of critical low carbon technologies could be significantly lower
in a fast global transition, which can only be achieved by the collective action of many
countries.

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The Breakthrough Agenda Report

EXECUTIVE SUMMARY

There is a huge opportunity, and need, to strengthen international collaboration in each of the
major greenhouse gas emitting sectors of the global economy. Many valuable international
initiatives exist, led by governments, businesses and civil society, and their number anddiversity has increased notably over recent years. However, current efforts are far from
exploiting the full potential of collaboration to accelerate progress. In each sector, collaborationmust go beyond sharing of best practice, and include deliberate alignment of action in areas
such as technology development, standards and trade, complemented by strong support todeveloping countries. Participation must expand to include more countries in each sector, tomake this a truly effective global effort. Collaboration must be sustained over years to have its
full impact, not sporadically started and stopped. Serious, sustained and focused international
collaboration of this kind could greatly increase the chances of limiting the rise in global
temperatures to 1.5°C, as well as positively contributing to economic development. This will
help generate an additional 14 million jobs and prevent 2 million premature deaths globallyfrom air pollution by 2030 (IEA, 2021).
Figure 2

How international collaboration can accelerate progress at each stage of thetransition

Source: Adapted from Victor, Geels & Sharpe, 2019.

International collaboration can accelerate progress at each stage of the transition

The Breakthrough Agenda is designed to strengthen international collaboration where it ismost needed. Leaders of 45 signatories (44 countries plus the European Union), which
represent over 70% of global GDP, committed at COP26 to work together to make clean
technologies and sustainable solutions the most affordable, accessible and attractive optionin each of the emitting sectors before the end of this decade. They agreed on collective goals
with the intention of focusing attention on critical problems to solve in each emitting sector.
The annual process to identify priorities for stronger collective action to accelerate transitions
and then tracking progress on delivery, of which this report is a major part, can help to increase
the impact of international action over time.

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EXECUTIVE SUMMARY

Action in the five sectors for which the signatories have so far agreed on goals under the
Breakthrough Agenda – power, hydrogen, road transport, steel, and agriculture – is essential
to achieving international climate goals. Global greenhouse gas emissions have now reachedalmost 60 GtCO2e and these sectors today account for over 50% of that total (IPCC, 2022).
Clean technologies and sustainable solutions are not yet the most affordable or accessible
options in these sectors except in the power sector; and even in the power sector, this is not
yet the case in all countries. Meeting the Breakthrough Agenda goals in these sectors will
require concerted action from governments, businesses and civil society. And doing so could
enable all countries to make faster progress, greatly increasing the chances of avoiding moredangerous levels of climate change and meeting the Sustainable Development Goals.
Figure 3

Greenhouse gas emissions by sector, 2019

Other energy
Forest andother land use

Power
10%
23%

5%

Other
industry

19%
10%
5%

5%

Other transport

Road transport

6%

17%

Steel

Buildings
Agriculture andrelated land use

Source: IPCC, 2022.

The five sectors for which countries have agreed goals under the Breakthrough Agenda
account for over 50% of current global emissions.

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The Breakthrough Agenda Report

EXECUTIVE SUMMARYPRIORITIES FOR STRENGTHENEDINTERNATIONAL COLLABORATION IN THE
FIVE FOCUS SECTORSThe power sector accounts foraround 13 GtCO2e, or 23% of
total emissions. This has risen
by around 10% since 2010.
These need to fall by over 50%
by 2030.
Emissions from the power
sector should fall by around 8%
each year to 2030.
Electricity access should reach
100% by 2030, if not before.
Investment will need to grow
25% each year, reaching
USD 2 trillion per annum
required by 2030.
_________________________
Hydrogen production and use
accounts for around 0.9 GtCO2
of emissions, or 1.5% of total
emissions.
Renewable and low carbonhydrogen production currently
accounts for less than 1% of
total.
Targets and commitments to
use low carbon and renewablehydrogen are equivalent to 3%
of current total hydrogen
demand.
15% of ammonia and 28% of
methanol is internationallytraded.
_________________________The road transport sector
accounts for around 6 GtCO2e,or 10% of total emissions.
That’s risen by 13% since2010. These need to fall bynearly a 1/3 by 2030.

In the power sector, the immediate focus for international action must
be growing, coordinating and improving the accessibility of support todeveloping countries. This will be vital to mobilise investment in the
additional 7.4 – 8 TW of renewable power capacity that is needed
globally by 2030, as well as in other clean power options. At the sametime, there must be more dedicated international support for developing
countries, and exchange of best practice among all countries, on thesocioeconomic challenges of the transition. Countries should reassess
the opportunities for interconnectors to support the integration of larger
shares of low-cost clean power, while reinforced international action isneeded now to coordinate the demonstration and testing of powersystem flexibility solutions, including long-term storage, that will beneeded to enable fully net zero power in future years. A concerted
international effort to agree on strong minimum energy performancestandards for high energy consuming appliances will be essential to help
cut costs as well as emissions, reducing the necessary increase inpower generation capacity.
To increase the availability and affordability of renewable and low
carbon hydrogen, the immediate priority is for countries and companies
to work together to create larger markets for its deployment and trade,including through purchase commitments. This will also incentivise
investment in production, which must scale up from less than 1 Mt in2020 to around 140-155 Mt per year by 2030. Stronger international
action on two fronts is essential: countries and companies should
coordinate measures to move away from production based on unabatedfossil fuels in sectors where hydrogen is already used, and share bestpractice in deployment in new applications for hydrogen such as steel,shipping, and energy storage. The number and geographical distributionof demonstration projects should be increased, along with deeper
sharing of learning, and should be backed by targeted technical andfinancial assistance. This will be important to make hydrogen solutions
available and affordable for more countries at an earlier date.
International efforts to agree safety, operational and emissions
standards should be accelerated, since these will be critical to enablingwidespread deployment and trade.
In road transport, countries and manufacturers should align target
dates for all new vehicles to be zero emission, to shift investment more
quickly towards the new technologies and accelerate their cost
reduction. Zero emission vehicles accounted for around 9% of global car
sales in 2021; this should reach about 60% by 2030. An even greater

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Public charging infrastructureneeds to increase 10-fold by2030.
If major markets align theirpolicies with 100% ZEV sales
by 2035, cost parity between
ZEVs and ICE vehicles could
be reached several years
earlier.
Over 60% of the vehicles
added to the roads in Africa
each year are imported used
vehicles.
_________________________The steel sector accounts foraround 3 GtCO2e of emissions,or 5% of total emissions. That’s
risen by around 15% since2010. These need to fall byaround ¼ by 2030.
Global average directemissions intensity of steel
production needs to fall byaround 30% by 2030.
114 Mt of conventional, highemission plants are currently
underway or in the planningstage.
_________________________
Agriculture and related land
use accounts for around
10GtCO2e, or 17% of total
emissions. Of those about 7
GtCO2e come from direct,
farm-gate emissions.
Farm-gate emissions haveincreased by 0.6% per year
since 2000. These need to fallby around 20% by 2030 and
agricultural expansion needs tohalt.
Smallholder farmers produce
about 30% of global foodproduction.
27% of all agriculture and land
use emissions can be attributed
to agricultural products that areinternationally traded.

EXECUTIVE SUMMARY

acceleration of deployment is needed for zero emission heavy goods
vehicles, given the earlier state of current deployment, and in many
countries the transition to zero emission two- and three-wheeledvehicles will also be important. More systematic exchange of bestpractice is needed to promote effective policies to mobilise investment
in charging infrastructure, narrowing the wide gap between the countries
furthest ahead in this regard, and the rest. Technical and financial
assistance to developing countries should be greatly increased, toenable wider sharing of the benefits of the transition. Harmonised
standards will be essential to ensure sustainability in battery supply
chains. Regulatory coordination between used vehicle importing andexporting countries is needed to take the most inefficient vehicles out ofinternational trade, saving costs as well as cutting emissions.
In the steel sector, the immediate opportunity is for aggregation ofdemand to mobilise investment in the production of near-zero emission
steel. Less than 1 Mt of primary near-zero emission steel per year iscurrently produced, whereas over 100 Mt per year will be needed by
2030. Joint procurement commitments by groups of countries andcompanies should be greatly increased, and be supported by measures
such as advance purchase commitments, to mobilise the needed
investment. Collaboration on commercial-scale pilot projects is neededin all major steel producing regions, to accelerate learning. A strategic
dialogue on trade should be launched at the earliest opportunity,
including the leading producer and consumer countries, to agree ways
to ensure near-zero emission steel can compete in international markets– removing what could otherwise be a significant obstacle to thetransition. Common definitions and standards for low emission andnear-zero emission steel must be agreed, as important enablers ofcollaboration on procurement and trade.
In agriculture, an immediate priority for international collaboration must
be to improve access to finance for smallholder farmers in developing
countries – by increasing the flow of public finance, and its leverage ofprivate finance. This is needed both to reduce emissions and to increase
productivity and resilience. Current agricultural practices are depleting
natural resources as well as contributing over a fifth of global emissions,and this must be reversed. Global investment in research, development
and demonstration of technologies and practices for resilient andsustainable agriculture needs to be increased, reversing the declining
trend of recent years that threatens to undermine positive international
efforts. A long-term process should be established to share learning on
reorienting agriculture policies towards sustainability, to accelerate
progress away from harmful practices. Countries should also begin
focused discussions on how to ensure international trade facilitates, anddoes not obstruct, the transition to sustainable agriculture.

_________________________
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EXECUTIVE SUMMARYPUTTING THE WORLD ON TRACK TO MEET THE PARISGOALSCountries and businesses should work together in each emitting sector to increase
the chances of meeting the Paris Agreement goals, in line with the BreakthroughAgenda commitment. There are likely to be significant opportunities for well-targetedinternational collaboration to accelerate low carbon transitions in sectors beyond the five
discussed in detail in this report, such as in buildings, cement, shipping and aviation. Actionin each sector can support progress in others, for example by scaling up the deployment ofclean technologies and reducing their costs. International collaboration is of course anaddition to, not a replacement for, the necessary action by individual countries andbusinesses.
In each emitting sector, there needs to be at least one international forum in which
actors with strong influence and interests in the sector collaborate to accelerate theglobal transition. Governments and companies should work to agree the international fora
through which to take forward the recommendations of this report for each Breakthroughsector, within existing frameworks wherever possible. This will help provide greater clarity for
new and existing participants, reducing barriers to collaboration, and enabling international
efforts to develop greater strength and depth over time.
Technical and financial assistance must be made more available in all sectors. In many
sectors there is a need to agree priorities, massively scale up climate finance and coordinate
international efforts to provide more timely and accessible support, responding to the needsof developing countries. This needs to include a range of instruments, including innovative
approaches to finance that take into consideration and overcome key barriers, notably debt
risks and budget and financial constraints. The assistance should include both capacity
building and support for technology development, demonstration and deployment, in line withbroader economic and social objectives.
In trade-exposed sectors where clean technologies or sustainable solutions are at a
cost disadvantage to high emitting technologies or practices, level playing fields ininternational trade will be needed. The success of international efforts in this regard will
critically depend on involving countries with the largest production or consumption in therelevant sectors, and on ensuring that any international measures support, and do not
obstruct, broader economic and social objectives of developing countries and local
communities. Countries can build mutual confidence in these sectors by collaborating on
issues including technology demonstration, standards, and the creation of markets for first
deployment.
Coordinated efforts to research, develop and demonstrate technologies can support
progress in many sectors. Testing clean energy technologies and sustainable agriculture
solutions across multiple regions and markets can bring them to widespread commercial
deployment more quickly, especially when supported by commitments and processes toensure sharing of learning.
Coordinated international deployment of low carbon infrastructure such as electricity
interconnectors, hydrogen gas pipelines, and refuelling or recharging facilities for shipping,aviation, and heavy-duty vehicles, can increase the availability of clean energy and thefeasibility of decarbonisation.

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The Breakthrough Agenda Report

EXECUTIVE SUMMARYTABLE OF RECOMMENDATIONS
Power
1Governments, working with companies, multilateral development banks (MDBs)
and investors, should agree a clear set of strategic priority projects to demonstrate
and test power system flexibility solutions, including but not limited to energy
storage, in a wide variety of contexts. This should build upon existing initiatives andinvolve the systematic sharing of learning from different geographical, climatic andmarket settings. This will increase confidence in delivering net zero power systems
in a broader set of markets, supported by increasingly affordable and effective
technologies.

2

Donor governments, working with key institutions, initiatives, and funds, should
increase the scale, coordination, transparency and accessibility of international
support for the power sector transition, building on established frameworks andsuccessful models. Along with other forms of support, donor countries should,
where requested, facilitate more power sector experts working within developing
country governments, to strengthen their capacity to make use of international
support, implement policy and regulatory reforms and leverage private finance. This
will provide developing countries with the resources they need to deliver on a rapid
acceleration towards a net zero power system.

3

Donor governments and MDBs should work together to more strongly aligndevelopment funding with targeted support for local jobs, skills, and investment, forthe repurposing of fossil fuel assets and for environmental restoration, in the fossilfuel-dependent regions and communities. Civil society, governments and industry
should contribute to creating international centres of expertise on the just transition,
within existing institutions. This action will be vital to ensure inclusive andparticipatory transition processes, effective social protection for affected workers
and communities, and better economic and environmental outcomes.

4

Governments should work together to reassess the opportunities for cross-borderand regional power interconnection and smart grids to support the transition toclean power systems, including opportunities that have been previously considered
but not taken forward, given the improving technology, falling costs, and increasingneed for system flexibility. Countries and investors should support international
efforts to identify top regional priorities for interconnection, and to replicate
successful approaches to technical agreements. In doing so, countries can accessnew opportunities to integrate larger shares of renewables and improve system
reliability.

5

Countries, in consultation with industry, should collectively agree to higher
minimum energy performance standards for high energy-consuming appliances,
supported by awareness campaigns and incentives, such as energy efficiency
retrofit programmes. Improved technical assistance should facilitate theimplementation of effective standards in developing countries. This will help to cut
energy costs and reduce emissions, as well as mitigate future electricity demand
growth, easing pressure on renewables and electricity infrastructure deployment.

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EXECUTIVE SUMMARY

Hydrogen1

Governments and companies should coordinate internationally to increase
commitments for the use of low carbon and renewable hydrogen in sectors wherehydrogen is currently used, supported by specific policies and purchaseagreements to collectively send a strong demand signal and mobilise investment inproduction. In new priority application sectors, countries should share learning toaccelerate early deployment. This should be done in a manner that ensures a levelplaying field in international trade.

2

Governments and companies should agree a comprehensive portfolio ofinternational standards and associated certification schemes for renewable and low
carbon hydrogen, addressing emissions accounting, safety, and operational issues,
including leakage. This should be supported by a programme that provides a clear
direction and sufficient resources to relevant technical bodies. This will be vital for
supporting a series of other actions, most notably high-quality demandcommitments and trade agreements.

3

Governments and companies should work together to dramatically increase thenumber and geographical distribution of hydrogen demonstration projects and toensure that these appropriately cover each of hydrogen’s high-value end use
sectors, including maritime shipping, heavy industry, and long-duration energy
storage. Governments and the private sector should agree on principles to guide adeeper and more rapid sharing of knowledge from these demonstrators, including acommitment to share the lessons learned from all publicly funded projects. Doingso will help overcome technology availability barriers and accelerate the pace of
deployment in multiple regions in parallel.

4

Donor governments and multilateral development banks should make increased
levels of concessional finance available for well-targeted, catalytic uses that canmobilise large-scale private investment in hydrogen production, distribution andend-use projects in developing countries. This should be supported by a process inwhich countries work with donors and lending institutions to identify viable projects
that are being delayed by high costs of capital, and to assess obstacles toinvestment, and by technical assistance programs to assist governments with
policy design. This will provide much-needed support for the first-wave of low
carbon and renewable hydrogen projects, ensuring that a wider set of countries candeploy the technologies required.

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EXECUTIVE SUMMARY

Road transport
1

Governments should agree on a timeline by which all new road vehicle sales
should be zero emission, with interim targets for countries taking into account theirlevel of economic development and ability to scale up infrastructure, and shouldalign policies with this target. Pathways compatible with 1.5 °C indicate that a target
date should be around 2035 for cars, for example. Vehicle manufacturers shouldcommit to the same timelines for 100% zero emission vehicle production. This will
send a clear signal to industry and unlock larger economies of scale and faster cost
reductions, making the transition more affordable for all countries.

2

Governments should collectively agree a common understanding of thetechnologies that are consistent with the goal of zero emissions road transport, inorder to send a clear and unambiguous signal to industry. This will accelerate
economies of scale for key technologies, accelerating the pace of innovation andcost reduction, making ZEVs affordable sooner for more people.

3

Governments should exchange best practice in policy to mobilise investment andaccelerate deployment of charging infrastructure, in consultation with vehicle
manufacturers and infrastructure investors. This should be complemented by abroader scaling up of technical and financial assistance to developing countries atcity, provincial, national and regional levels. This will help to mobilise private
investment, and ensure all countries are able to access the benefits of the transition
to zero emission vehicles.

4

Governments should work together and with industry to avoid further divergence ofstandards for charging infrastructure. There are already several competing
charging standards for light-duty vehicles; for heavy-duty vehicles, avoiding further
divergence could limit wasteful investments in multiple charging types, andaccelerate the adoption of zero emission trucks. Aligning standards for hydrogen
refuelling stations can reap similar benefits. Doing so will decrease costs andfacilitate the transition in vehicle importing countries.

5

Governments should work together and with industry to agree harmonised
standards to ensure sustainability and social responsibility along the electric vehicle
battery supply chain, including the extraction and processing of minerals and therecyclability of battery modules. As a priority, these standards should minimise
batteries' lifecycle emissions and the adverse social and environmental impacts
associated with their production, seek to extend their durability and promote reuse,
repurposing and recycling of their components. Similar standards on fuel cell value
chains, including information on platinum and other catalyst materials’ content andorigin, should be put in place. Harmonised standards will send a clearer signal to
the global market, and facilitate compliance by battery and vehicle manufacturersthat sell to multiple markets.

6

Vehicle importer and exporter countries should agree on harmonised regulations on
vehicle trade to improve vehicle efficiency and safety in international trade in used
vehicles. These rules should govern trade in zero emission vehicles as well asinternal combustion engine vehicles, supported by strong mechanisms to enforce
compliance. This will help prevent ‘vehicle dumping’, locking developing countries
into higher emitting vehicles.

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EXECUTIVE SUMMARY

Steel
1

Governments and companies willing to lead the transition in the steel sector should
agree on common definitions for low emission and near-zero emission steel, alongwith a timeframe for the adoption of standards by the mid-2020s. This is an
important market signal and will be vital for unlocking a series of subsequentactions, most notably high-quality demand commitments and trade agreements.

2

Governments and companies should increase the scale of near-zero emission steel
procurement commitments to cover a significant share of their future steel demand.
These commitments should be high quality, supported by appropriate legal andimplementation frameworks, such as advance purchase commitments. Countries
and companies should consider joining public and private sector initiatives wherethese commitments are aggregated. This will strengthen the global demand signal
for near -zero emission steel, increasing the incentives for industry to invest in its
production.

3

Governments should urgently launch a strategic dialogue, including the leading
producer and consumer countries, with the purpose of agreeing ways to ensurenear-zero emission steel can compete in international markets. This is needed toprevent trade acting as a brake on the transition. This may be supported byagreements to cooperate on data, standards, comparability of policies, R&D,
finance and procurement.

4

Governments and companies should identify several commercial-scale pilot
projects, in all major steel producing regions, where international collaboration can
support shared technology learning, business case development and policy
support. Collaborative networks should deliver operational projects in thesecountries by the late 2020s at the latest. Emerging markets and developing
countries’ participation in key R&D and demonstration initiatives should be
increased in support of this aim. This will help eliminate technology availability
issues, providing multiple case studies for a large group of countries andcompanies to further improve upon.

5

Donor countries and MDBs, led by the priorities of developing countries, should
significantly increase funds supporting industry transition to near-zero emission
technologies in emerging and developing countries. This will provide much needed
near-term technology and financial support to unlock additional private sector
capital for the first wave of near zero emission projects in key steel producing
countries, especially for EMDEs.

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EXECUTIVE SUMMARY

Agriculture
1

Governments and companies should work together to deliver higher levels ofinvestment in agricultural research, development, and demonstration (RD&D), to be
maintained over the course of this decade. The scale and diversity of collaborativeinternational RD&D initiatives and programs should also be increased. Priority
should be given to innovations that can reduce food waste, limit emissions fromlivestock and fertilisers, improve alternative proteins, develop climate-resilient crops
and livestock, and protect soil and water resources. This will accelerate thedevelopment and eventual cost-effective deployment of technologies and solutions
that can reduce emissions across multiple regions.

2

The level of international climate finance directed at agriculture should be sharply
increased, in line with its importance to global emissions, adaptation and resilienceand food security. Governments, multilateral development banks and private sector
investors should work together to make finance available to small- to medium-sizedenterprises (SMEs) and smallholder farmers in developing countries on a far larger
scale than has been achieved so far. Finance should be accompanied byassistance with the adoption of practices that increase productivity and resilience
while reducing emissions and protecting natural habitats. This will support
economic development, resilience, and food security, as well as reducing
emissions.

3

Governments, research institutions, international organisations and the private
sector should commit to a long-term process to test, develop evidence, and sharelearning on approaches to redirecting policies and support for agriculture towards
sustainability and climate resilience. This should involve all of the world’s largest
agricultural producer countries, whose policies heavily influence global markets, aswell as countries representing a diverse range of environmental and economic
conditions. This will help countries identify the most effective and feasible ways to
incentivise the transition to sustainable agriculture.

4

Governments should begin a strategic dialogue on how to ensure international
trade facilitates, and does not obstruct, the transition to sustainable agriculture.
International organisations can advise on options to ensure a level playing field sothat policy measures essential to drive a transition to climate-resilient, sustainableagriculture do not put a country’s agricultural sector at a competitive disadvantage
in international trade. Early priority should be given to agreeing sustainability
standards for the agricultural commodities that contribute disproportionately to
deforestation. A level playing field in international trade will give countries andcompanies greater confidence and ability to move ahead in the transition.

5

Countries and international organisations should develop internationally agreed
standards for monitoring and reporting on the state of natural resources on which
agriculture depends, including soil carbon content and health, and pollinator health,as well as on the geographical extent of agriculture. International measurement
standards will help support high-quality knowledge sharing on policy effectivenessand enable international trade to play a positive role in supporting the transition.

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EXECUTIVE SUMMARY

Cross-cutting
1

Countries should work to agree the international fora and institutions through which
they will take forward each of the recommendations for collaborative action
contained in this report, and should then invest in those fora both politically andfinancially. Existing institutional frameworks should be used wherever these areappropriate to the task. This can help to establish the institutional underpinnings
needed for strong and sustained international collaboration over the course of thisdecade.

2

Governments, philanthropies, financial institutions and delivery partners, should
together review the state of international assistance in each major emitting sector,
identify the gaps in assistance that are most important to address, and coordinate
efforts to provide responsive and accessible support in these areas, led by theneeds of developing countries. This will ensure that assistance is appropriately
targeted and available to support countries in relation to each of the major low
carbon transitions.

3

Governments, companies and relevant international organisations should establish
high-level, strategic dialogues in each sector that is highly exposed internationallyand where competition risks being a barrier to the transition, to develop a common
approach to reaching a level playing field. This should include, where relevant,actions on data, standards, procurement, technology collaboration and technicaland financial assistance, as well as trade. This will help to focus dialogue on areas
where collaboration is most urgent, and ensure that competition accelerates
transitions, and does not hold them back.

4

Governments and companies should greatly increase spending on clean
technology demonstration projects, working together to bring new technologies tocommercial-scale deployment as soon as possible. Early deployment projects
should be supported by matchmaking forums and ensuing commitments andprocesses in all regions. This will help ensure deep and sustained sharing ofexperiences gathered with these projects between countries, including those withlimited resources.

5

Wherever not already agreed, governments in each region of the world should
agree the top priority common infrastructure projects that can support near-term
growth in the deployment of clean solutions, such as interconnectors and hydrogenpipelines. In each of the land, sea and air transport sectors, countries andcompanies should identify specific international routes to be prioritised for thecoordinated first deployment of zero emission charging or refuelling infrastructure.
This will support earlier deployment of infrastructure that unlocks accelerated
deployment of clean technologies and solutions in multiple countries and regions.

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CONTEXT

CHAPTER 1. CONTEXT: CLOSING THE
COLLABORATION GAPCountries collectively accounting for over 90% of global GDP have committed to reach net
zero greenhouse gas emissions by around the middle of this century (Net Zero Tracker,
2022). This is a remarkable degree of alignment: there is no doubt about our shared goals
for moving to a resilient, low-carbon economy. To achieve these goals, purposeful,collaborative and structural change in the global economy is required at a pace and scale
unprecedented in human history.
It is clear that we are not yet on track to meet those goals. Global emissions are still rising,
yet they need to be halved within the course of this decade to put the world on course forlimiting the rise in global average temperatures to 1.5°C. As countries all over the world
increasingly suffer from extreme weather events, the need for faster progress in adaptation
and resilience is more urgent than ever.
Where the right policies have already been put in place, progress has, in some cases,
exceeded expectations. Driven by successively stronger deployment policies, solar power
costs have fallen by a steep 85% between 2010 and 2020 (IRENA, 2021) and are now thecheapest source of electricity in history (IEA, 2020a). Its global deployment in 2020 was
more than ten times higher than governments’ targets only fifteen years earlier had
suggested (IRENA, 2021). The growth in wind power has similarly outpaced expectations.
Helped by falling battery costs, supportive policies, and increased industry investment,
electric vehicles are set to be the next chapter in clean energy successes. These
achievements show that rapid change is not impossible.
Nevertheless, much more remains to be done to put all emitting sectors on a pathconsistent with the 1.5°C goal. The Breakthrough Agenda agreed at COP26 aims to do justthis. Designed to help trigger tipping points and stimulate international collaboration
involving both the public and private sectors, the Breakthrough Agenda has set ambitious
goals for 2030 to dramatically accelerate the innovation and deployment of cost-effective
clean technologies and sustainable solutions, with the initial focus on five key emitting
sectors of the economy – power, road transport, steel, hydrogen, and agriculture.
Importantly, international collaboration will not only enable faster progress among emitting
sectors in meeting agreed climate change goals but it will also make significant
contributions to other critical social and economic objectives. The global shift to low-cost,
low-carbon energy sources can increase energy access, affordability and security. Equally,a faster transition to resilient, sustainable agriculture is essential to global food security.
The transformational change required in many sectors to achieve net zero global emissions
involves a multitude of challenges, but it also provides abundant valuable opportunities –for innovation, job creation, societal development and economic growth, among manyothers.

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CONTEXTPULL ALL LEVERS TO ACCELERATE TRANSITIONSThe Intergovernmental Panel on Climate Change (IPCC) has described what it is needed
to reach net zero as ‘system transitions’ in each of the emitting sectors of the global
economy (IPCC, 2018). Essentially, this requires the replacement of one set oftechnologies, practices, business models, infrastructures and institutions with another. In
most sectors these changes, if well designed, will not only reduce emissions but also
contribute to increasing resilience and energy security.
Policy interventions at all points in the system are required to accelerate thesetransformational changes: funding research and development, reform of market structures,investment in new infrastructure, and support for workers and communities in attaining new
skills and opportunities as part of a just transition.
Actors of all kinds can and must contribute to accelerating the deployment of clean
technologies and sustainable practices. The effect of mutually supporting actions cancreate an ‘ambition loop’ for technology development and deployment: a reinforcing
feedback cycle in which policy reallocates finance towards clean technologies; businesses
innovate; technologies improve; and social support for the transition grows, enabling thenext round of policies to move the transition forward (see Figure 1.1).
Reinforcing feedback or ‘ambition loop’ between policy, finance, technology
and social support

Source: Adapted from Victor, Geels and Sharpe, 2019.

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CONTEXTFor example, in the case of solar power, early research and development was supported
by government funding. Later, policies such as feed-in tariffs, tax credits and mandates
supported the deployment of solar panels in electricity systems, initially on a small scale
and at high cost. The existence of this market allowed businesses to access investment,
innovate, and improve their products. This innovation reduced the cost of solar power,
increasing its appeal, leading to more demand and more investment. Meanwhile, thegrowth in deployment of solar power was supported by investments in new infrastructure,strengthening electricity grids and providing new connections, and by market reforms thatmade electricity systems better able to incorporate intermittent sources of power. Civil
society organisations have built support for many of these policies, and the more affordable
solar power has become, the more they have been able to push for faster progress in its
adoption. We need to learn from this success in order to replicate this effect deliberately
and quickly in all emitting sectors.
This is not to suggest that technological progress always follows the example of solar
power. The pace of innovation and cost reduction is very much influenced by attributes
such as unit size, modularity, the service that is offered to consumers, and various otherfactors (IEA, 2020b). Moreover, a low-carbon transition is not simply a change intechnologies. It also involves significant changes in labour markets, in the distribution of its
costs, in the geopolitics of energy and resource security, and in the structure of supply
chains. These broader implications are already very clear in the power sector andincreasingly so in others; in each sector, managing these multiple issues becomes evermore important as the low-carbon transition moves forward.

COLLABORATE INTERNATIONALLY TO INCREASE THE

ECONOMIC GAINS OF TRANSITION

Well-targeted international collaboration can amplify the effect of national government andprivate sector efforts and rapidly advance progress, making structural change on the global
scale quicker, easier, and lower cost. Without widespread collaboration, the transition to
net zero could be delayed by decades. To put it another way, without strong international
collaboration, achieving a resilient net zero emission global economy by around midcentury is likely to be unachievable. The potential gains from international collaboration arelarge. They include:•

More widespread adoption of effective policies to deploy available solutions at
scale, which is essential for halving emissions over the coming decade. This can be
enabled by the sharing of knowledge, and by international technical and financial
assistance. Support to developing countries in this regard is particularly important.

•

Faster innovation, which can result from the deliberate alignment of research,development and demonstration activities, the sharing of learning and building
confidence. This is particularly important given that around 50% of the global emission
reductions needed for net zero are likely to come from technologies that are not yet
fully commercialised (IEA, 2021).

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CONTEXT•

Stronger incentives for investment, which can arise through coordinated actions tocreate a larger and more stable market for the first deployment of new clean
technologies. This is especially valuable early in a transition when investment in the
production of new technologies represents a high-risk decision for industry.

•

Larger economies of scale, which can be generated by the alignment of technology
choices and deployment policies. There is strong historical evidence that mass
deployment of clean energy technologies such as solar PV, wind or electric vehicles
leads to significantly lower cost, and that similar effects are likely to be achieved withnew and emerging technologies such as hydrogen electrolysers.

•

Level playing fields, where needed, which may be established by the coordination or
harmonising of regulations or carbon prices (and supported by the removal of fossil
fuel subsidies, and the reorientation of agricultural subsidies). In sectors where zeroemission solutions are more expensive than their fossil fuel equivalents, such asenergy intensive industries and long-distance transport, the establishment of a levelplaying field internationally can prevent competition acting as a brake on a low-carbon
transition, and instead allow it to act as an accelerator.

These gains imply a different focus for international collaboration at each stage of thetransition (see Figure 1.2). They will only be realised in full if the efforts are appropriately
targeted, substantial and sustained.
How international collaboration can accelerate progress at each stage of thetransition

Source: Adapted from Victor, Geels & Sharpe, 2019.

International collaboration is a complement, not an alternative, to competition. Competition
is an important driver of innovation, and as such a critical ingredient of successful global
low-carbon transitions. Its positive effect will be all the more powerful if countries work

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CONTEXT

together on the goals, direction, pace of change and, where appropriate, on the rules ofengagement. Countries, and businesses too, can collaborate to grow the markets for clean
technologies and sustainable solutions, and at the same time compete to supply them.

FOCUS ON INTERNATIONAL COLLABORATION IN ALL

SECTORS

Significant reductions in both the cost and the difficulty of transitions can be achieved wheninternational collaboration is a major strategic focus within each of the emitting sectors of
the global economy. While there are important connections, commonalities and synergies
among them, which this engagement should seek to exploit, each sector is unique in its
technologies, markets, industrial, financial and social structures, political economy, and thenature of its global connections. Consequently, there is a need for dedicated international
collaboration within each sector, targeted to address its unique characteristics, to speed its
transition.
Important foundations for such collaborations are already in place. The United Nations
negotiations on climate change have established a strong consensus for action, and a large
number of countries have committed to significant individual actions through their
Nationally Determined Contributions. A great many initiatives for practical global
engagement are already operating, and involve governments, businesses, internationaland multilateral organisations, civil society organisations, and investors. The number anddiversity of collaborative international initiatives has grown remarkably over recent years,
and many of these have already made important contributions to the progress in low-carbon
transitions.
Going forward, there is a critical need to strengthen international collaboration to meet the
net zero emissions targets and to capture all the benefits for societies. Critically, expanding
global engagement will increase access to affordable energy and at the same time reducethe damaging impact on health from air pollution. It will also lead to new industries and job
creation, underpinning economic growth. According to one estimate, an energy transitionaligned with limiting global temperature increase to 1.5°C could create close to 85 million
additional jobs by 2030 compared to 2019, more than offsetting losses of 12 million jobs,
mainly in the fossil fuel industries, while supporting increased global GDP (IRENA, 2022).
In agriculture and land use, international collaboration is as important to achieving
resilience and food security as it is to reducing emissions. In every sector, internationalflows of financial assistance and knowledge will be essential to enabling all countries tobenefit from the social and economic advantages of the transition. The BreakthroughAgenda provides a global mandate to close the collaboration gap and opens a new pathway
for accelerating progress.

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CONTEXTTHE CONTRIBUTION OF THE BREAKTHROUGHAGENDAThe leaders of more than forty countries, representing over 70% of global GDP, formallylaunched the Breakthrough Agenda at COP26 in November 2021. They were united intheir commitment to work together ‘to make clean technologies and sustainable solutions
the most affordable, accessible and attractive option in each emitting sector globally
before 2030’ (COP26, 2021).
The Breakthrough Agenda is designed to make three important contributions:
1. Countries committed to work together to fast-track low-carbon transitions ineach emitting sector over the course of this decade. This is the first widely
supported high-level political commitment to collaborate internationally in eachemitting sector. If properly implemented, this could access the gains frominternational collaboration described above – of broader adoption of effective
policies, faster innovation, stronger incentives for investment, larger
economies of scale, and level playing fields where they are needed – all ofwhich will facilitate progress towards a resilient net zero emission global
economy.
2. Countries agreed goals that focus on tipping points, where clean technologies
and sustainable solutions become the most affordable, accessible andattractive option in each of the emitting sectors. These goals are designed tofocus attention on the most critical problems that need solving. As clean power
becomes the most affordable and reliable option for electricity generation,
more countries are choosing it instead of coal or gas. When near-zero steel
becomes the preferred choice in global markets, the incentives for industry will
be unambiguously aligned with the transition. All actors can help to movetransitions towards tipping points, and when they are reached, progress canaccelerate dramatically (Sharpe and Lenton, 2020).
3. A process was established for continually tracking and strengthening
collaboration over time. This is crucial to establish and maintain thecooperative structures to enable rapid progress to 2030 and beyond. It
involves making a number of critical assessments: to distinguish between
sharing information and aligning action; from side-events to sustained
collaboration; and coalitions of first movers versus the critical mass that canshift global markets. Without such assessments, necessary changes are notmade visible.
This inaugural report, envisioned to be repeated annually, along with meetings among
countries, businesses and leaders of international initiatives in each sector, is part of thatprocess of assessment. It aims to set out a clear pathway for international collaboration ineach sector over the course of this decade, highlighting the priority near-term actions that

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could have the greatest impacts. Even more important is the response: the success of the
Breakthrough Agenda will depend on the extent to which governments, businesses,
investors and civil society act to take advantage of the opportunities for stronger
collaboration that have been identified.

THE STRUCTURE OF THIS REPORTThis report focuses on the five sectors for which countries have so far agreed collective
goals as part of the Breakthrough Agenda, and in which the process to assess andstrengthen international collaboration has begun. The focus sectors are power, roadtransport, steel, hydrogen, and agriculture. 1 They are significant for their impact ongreenhouse gas emissions (together accounting for over half of the global total), but also
for their potential to contribute to growing a resilient low-carbon global economy, and foropportunities to strengthen international collaboration and accelerate progress in the nearterm. Given their different stages of maturity and diverse characteristics, together they also
help to illuminate the wide range of ways in which international collaboration can rapidly
advance low-carbon transitions.
The report devotes a chapter to each of these five sectors, in which the following points are
addressed:
Sector goals and the state of the transition. We set out the Breakthrough Agenda goals
in quantitative metrics, provide details on what is needed to meet this goal by 2030, andassess the current state of progress.
Enabling conditions for the transition (or ‘how do we get there?’). We outline theconditions necessary for a faster transition – such as market structures, finance andinvestment, requirements for new or improved infrastructure and supply chains, social
considerations, and trade conditions – and provide recommendations on how they need to
evolve over the course of this decade. The aim of this report is not to describe all the actions
that governments and companies can take individually. Instead, these summary
descriptions of the enabling conditions for the transition provide the context for how
international collaboration can accelerate progress.
Priorities for international collaboration. We assess the current state of international
collaboration, identify the most significant and urgent areas where this could be
strengthened, in order to accelerate the transition; and recommend specific steps that canbe taken now to realise those opportunities. This assessment is informed by dialogues withcountries, businesses, and organisations active in international collaboration in each ofthese sectors, convened this year as part of the Breakthrough Agenda process, as well as
drawing on wider literature and consultation with experts.
In a concluding chapter, we highlight how interventions in different sectors can be mutually
reinforcing. We also consider opportunities to strengthen international collaboration thathave cross-cutting relevance to many sectors. These include ways to deepen collaboration
The hydrogen sector represents more a collection of technologies than a coherent economic sector at present, but to reachthe goals of the Paris Agreement it will become an important sector of the low carbon economy.

1

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on research and development, improve the availability and effectiveness of practical andfinancial assistance, establish critical international infrastructure, and to use trade
agreements in support of transitions. Finally, opportunities are outlined for stronger
international collaboration to advance progress in sectors where countries have not yet
agreed collective goals under the Breakthrough Agenda.

REFERENCES
IEA (International Energy Agency) (2021), Net Zero by 2050, https://www.iea.org/reports/netzero-by-2050
IEA (2020a), World Energy Outlook 2020, https://www.iea.org/reports/world-energy-outlook2020
IEA (2020b), Clean Energy Innovation – Energy Technology Perspectives Special Report,
https://www.iea.org/reports/clean-energy-innovation
IPCC (Intergovernmental Panel on Climate Change) (2018), Global Warming of 1.5°C,
https://www.ipcc.ch/sr15/
IRENA (International Renewable Energy Agency) (2022), World Energy Transitions Outlook,https://irena.org/publications/2022/mar/world-energy-transitions-outlook-2022
IRENA (2021), Renewable Power Generation Costs in 2020,
https://www.irena.org/publications/2021/Jun/Renewable-Power-Costs-in-2020
Net Zero Tracker (2022), Global Net Zero Coverage, https://zerotracker.net/, (accessed July2022).
Sharpe, S. and T. Lenton (2020), Upward-scaling tipping cascades to meet climate goals:
plausible grounds for hope, Climate Policy, Vol. 21, Issue 4, pp. 421-433.
https://doi.org/10.1080/14693062.2020.1870097
UN Climate Change Conference UK 2021 (2021), COP26 World Leaders Summit - Statement
on The Breakthrough Agenda, https://ukcop26.org/cop26-world-leaders-summitstatement-on-the-breakthrough-agenda/
Victor, D., F. Geels and S. Sharpe (2019), Accelerating the low carbon transition: The Casefor Stronger, More Targeted and Coordinated International Action, https://www.energytransitions.org/publications/accelerating-the-low-carbon-transition/
Way et al. (2022), Empirically grounded technology forecasts and the energy transition,
https://doi.org/10.1016/j.joule.2022.08.009

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POWER

CHAPTER 2. POWER"Clean power is the most affordable and reliable option for all countries to meettheir power needs efficiently by 2030." -- Power Breakthrough goal.

KEY MESSAGESThe power sector transition is underway, with significant shifts observed over the lasttwo decades, driven by the increasing pace of renewables deployment and theirdramatic cost reductions. Installed renewable capacity increased by 1.7 TW (8.7%
per year) from 2011-21, while non-renewable sources grew by 1 TW (2.2% per year)
over the same period. The share of low-carbon capacity (renewables and nuclear)in 2021 accounted for 43% of the global total.

The pace and scale of decarbonisation must increase urgently, driving emissions
from the power sector down by more than 7% each year to 2030. This requires the
deployment of readily available low-carbon technologies, coupled with the rapid
phase out of polluting fuels, particularly coal.



To meet the dual challenge of growing demand and decarbonisation, 7.4-8.0 TW of
additional renewable capacity is required by 2030, quadrupling today’s deployment
rate. Moreover, the current rate of decline in the energy intensity of the global
economy should double from 2% to 4% per annum, along with the increasing
deployment of other low-carbon solutions such as nuclear.

Infrastructure upgrade, modernisation and expansion is a high priority in the coming
decade as the share of renewables grows, requiring system flexibility and modern
grids. Infrastructure developments should be aligned with long-term plans andreflective of broader strategies, including regional market integration.



In 2021, annual expenditure in the power sector reached USD 900 billion, from which
USD 400 billion went to renewables and around USD 300 billion to power grids. A
doubling of this annual energy investment is required by 2030, with substantial funds
flowing towards the modernisation of ageing infrastructure and meeting growing
energy demand. Planned investments, especially coal, will have to be reassessed
and redirected to low-carbon technologies.

To drive progress at the required pace and scale, national action by public andprivate sectors is essential. International cooperation is vital to leverage and amplify
national action, support a just transition that leaves no one behind and strengthen
the international flow of finance, capacity and technologies.

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

POWER

Five areas stand out as priorities for strengthening international collaboration towardthe 2030 Breakthrough goal over the next 1-2 years, where we recommend thefollowing actions:

Governments, working with companies, multilateral development banks (MDBs)
and investors, should agree a clear set of strategic priority projects todemonstrate and test power system flexibility solutions, including but not limited
to energy storage, in a wide variety of contexts. This should build upon existing
initiatives and involve the systematic sharing of learning from different
geographical, climatic and market settings. This will increase confidence indelivering net zero power systems in a broader set of markets, supported byincreasingly affordable and effective technologies.



Donor governments, working with key institutions, initiatives, and funds, should
increase the scale, coordination and accessibility of international support for the
power sector transition, building on established frameworks and successfulmodels. Along with other forms of support, donor countries should, where
requested, facilitate more power sector experts working within developing country
governments, to strengthen their capacity to make use of international support,
implement policy and regulatory reforms and leverage private finance. This will
provide developing countries with the resources they need to deliver on a rapid
acceleration towards a net zero power system.

Donor governments and MDBs should work together to more strongly aligndevelopment funding with targeted support for local jobs, skills, and investment,
for the repurposing of fossil fuel assets and for environmental restoration, in thefossil-fuel-dependent regions and communities. Civil society, governments andindustry should contribute to creating international centres of expertise on the justtransition, within existing institutions. This action will be vital to ensure inclusive
and participatory transition processes, effective social protection for affected
workers and communities, and better economic and environmental outcomes.



Governments should work together to reassess the opportunities for cross-borderand regional power interconnection and smart grids to support the transition toclean power systems, including opportunities that have been previously
considered but not taken forward given the improving technology, falling costs,
and increasing need for system flexibility. Countries and investors should support
international efforts to identify top regional priorities for interconnection, and to
replicate successful approaches to technical agreements. In doing so, countries
can access new opportunities to integrate larger shares of renewables andimprove system reliability.

Countries, in consultation with industry, should collectively agree to higher
minimum energy performance standards for high energy-consuming appliances,
supported by awareness campaigns and incentives, such as energy efficiency
retrofit programmes. Improved technical assistance should facilitate theimplementation of effective standards in developing countries. This will help to cut
energy costs and reduce emissions, as well as mitigate future electricity demand
growth, easing pressure on renewables and electricity infrastructure deployment.

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SIGNIFICANCE OF THE SECTOR
The power sector contributes to around a quarter of all global greenhouse gas emissions
and almost 40% of global energy-related CO2 emissions. In 2020, low-carbon technologies
generated nearly 40% of electricity. Renewables generated 28% of electricity, while nuclear
energy produced 9.9%. Over the past decade (2011-21), renewable installed capacity
increased by 1.7 TW or 8.7% per year, while non-renewable sources grew by 1 TW or 2.2%
per year, including 18 GW of nuclear power (IRENA, 2022a). Due to the growth ofrenewables and a decline in energy demand in recent years, the carbon intensity of power
generation fell by 8.4% since 2015 (IEA, 2021a).
To date, investment in the energy transition has been predominantly focused on the power
sector, and relatively geographically concentrated. In 2021, 84% of investment 1 related tothe energy transition was in China, Europe, India, Japan and the United States. However,out of over USD 2.8 trillion of cumulative renewable energy investment made globally
between 2010 and 2020, only 2% was in Africa, despite the region’s massive power needs
and abundant resources (IRENA, 2022b).

Installed capacity (GW)

Renewable generation capacity by region and technology, 2020-21
1 600
5%

1 400
1 200
28%

1 000

3.1 TWin 2021

40%

800
27%

600
400
200
0

2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021
Asia

Hydropower

EuropeNorth
AmericaWind energy

SouthAmerica

Solar energy

Eurasia

Bioenergy

AfricaOceania

Geothermal energy

Middle East

CentralAmerica andthe
Caribbean

Marine energy

Source: IRENA, 2022a.

A widespread effort will be important, as the speed and scale of the power sector transition
have implications beyond decarbonisation. It will not only limit CO2 emissions, but also

Estimate includes energy efficiency; hydrogen; CCS; energy storage; electrified heat; electrified transport; and renewableenergy.

1

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reduce air pollution and expand energy access to achieve SDG7 on energy and, byextension, the United Nations Sustainable Development Agenda for 2030.

SECTOR GOALS
As other major emitting sectors electrify at an increasing rate over the 2020s, and the efforts
on universal access intensify, the low-carbon electricity supply must keep pace, avoiding
lock-in of emissions from fossil fuel assets. Emissions from the power sector need to fallby more than 7% each year out to 2030, from 13.5 GtCO2 in 2020 (IEA, 2021a). Electricity
production may need to grow 2.5-3 times by 2050, underscoring the significance of thesector's rapid decarbonisation in this decade (IEA, 2021b; IRENA 2022c). Coordinatedinternational action will be critical to overcoming key policy, regulatory, technology andfinancial bottlenecks for the next phase to deliver the cost-effective, secure operation ofcarbon-free power systems globally by 2040.
The IPCC, among others, outlines the major options that can contribute to power sector
decarbonisation, including decommissioning and reducing the utilisation of existing fossil
fuel-based power sector infrastructure, retrofitting existing installations with carbon captureand storage (CCS), switches to renewable power and low-carbon fuels, and cancellationof new unabated coal installations. This might include repurposing some existing facilities,
taking advantage of the existing infrastructure and providing local jobs to help offset thoselost. The most appropriate strategies will depend on national and regional circumstances,including resource and technology availability (IPCC, 2022).
Many countries are already on a path to low-carbon power systems, with significant
commitments enshrined in Nationally Determined Contributions (NDCs) and other national
plans. Renewable energy and energy efficiency are chief among the solutions reflected inthese plans. For example, the United Nations Framework Convention on Climate Change(UNFCCC) NDC Synthesis report notes that "domestic mitigation measures for renewableenergy generation were most frequently mentioned by Parties, followed by measures forenergy efficiency improvement” (UNFCCC, 2021). By November 2021, of the 144 NDCs
that had a quantified renewable energy target, 109 focused on power. Among those, only
23 Parties committed to a share higher than 60% of installed capacity by 2030 (IRENA,
2022d).
To put the sector on a Paris-aligned pathway, countries and companies will need to meetthe Breakthrough goal, which 42 countries, representing over 40% of the global power
sector (by electricity consumption), endorsed at COP26:"Clean power is the most affordable and reliable option for all countries to meet theirpower needs efficiently by 2030."

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This will require a significant buildout of clean 2 power generation assets by 2030, alongsidesupporting smart grid infrastructure and flexibility measures. Scenarios aligned withinternational climate goals suggest that by 2030:


Renewables, as a share of total generation, should rise from around 28% today to
between 61-65%. This requires additional 7.4-8 TW of renewable capacity by 2030
(IEA, 2021b; IRENA, 2022c). Other low-emission sources can complement the leadingrole of renewables, with nuclear power generation rising 40% by 2030 (maintaining a
10% share of total generation) and some carbon capture technologies beginning to be
deployed (IEA, 2022a). Power sector emissions intensity should fall from458 gCO2/kWh in 2020 to between 25-138 gCO2/kWh by 2030, a reduction of over60%.

Electricity as a share of total final energy consumption should increase from 20% tobetween 26-30% over this decade (IEA, 2021b; IRENA 2022c).

Electricity access should become universal, reaching 100% of the populationworldwide by 2030.

100

100

80
Share todouble by
2030

60

gCO2/kWh

Renewable power share

Renewable power (% share of total generation) and power sector emissions
intensity (gCO2/kWh), 2015-2030

55

600

450
At least a15%
reduction
each year

300

40
150

20
0
2015

2020

2025

0
2015

2030
Target

138
25
2020

2025

2030

Historical

Sources: IEA, 2021b; IRENA, 2022c.

Investment in the power sector will need to increase substantially to deliver on theseoutcomes. In 2021, annual expenditure in the power sector reached USD 900 billion, fromwhich USD 400 billion went to renewables and around USD 300 billion to power grids.
However, annual investments in the power sector need to reach an estimated USD 2 trillion
by 2030 on a net zero by 2050 pathway, including around USD 1 trillion for renewable
power and USD 650 billion for grids (IEA, 2022b).

For the purposes of this report and how data are analysed, “clean power” is related to near-zero carbon emissions fromproducing electricity. As such, it includes renewable energy (as defined in the IRENA Statute meaning hydropower, solar
energy, wind energy, bioenergy, geothermal energy, and marine energy), nuclear energy, and fossil fuels with very highcarbon capture rates. Effectively, the data here reflect renewables and nuclear power due to the negligible carbon capture
capacity in the world today.

2

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Energy access remains an important priority. In 2020, 91% of the global population had
access to electricity. While the historic rate of access has increased, between 2018 and2020 it fell to 0.5 percentage points per year – mainly due to the complexity of reaching theremaining unserved populations and the potential impacts of Covid-19. At the current rate,
only 92% electrification is expected by 2030, underscoring the need for faster deployment
to reach 100 million people annually.

100

100

80
Rate of increase
needs to double
versus 2020

60
40

% electricity consumption% of population with access

Access to electricity (% of population with access) and electricity
consumption (% share of total final energy consumption), 2015-2030

30

30

26
20
Rate of increase
needs to morethan double
versus the trend
since 2015

10

20
0
2015

40

2020

2025

2030
Target

0
2015

2020

2025

2030

Historical

Sources : IEA, 2021b; IRENA, 2022c.

Renewable power is now the cheapest form of new electricity generation in most countries(IRENA, 2022e), making it the centrepiece of cost-effective energy transitions. Many
countries are now approaching a second tipping point, where it is cheaper to generate
power from newly-installed renewables than from the continued operation of existing coaland gas-fired plants. The global weighted‑average levelised cost of electricity (LCOE) of
onshore wind projects commissioned in 2021 declined by 15% compared to 2020, to
USD 33/MWh, while offshore wind decreased by 13% to USD 75/MWh, and utility‑scalesolar PV fell by 13% to USD 48/MWh. However, the cost declines in 2021 may not continue
into 2022 as supply chain constraints were already being felt in late 2020, and commodity
prices increased further in 2021 (IRENA, 2022e).
Alongside renewables, nuclear is also likely to play an important role in making thetransition faster and more secure. There is currently 413 GW of nuclear capacity operatingin 32 countries, with 70% of this capacity located in advanced economies. This is set tochange, with stronger growth for nuclear power planned in emerging market anddeveloping economies (IEA, 2022a). Of the nearly 60 GW of nuclear capacity underconstruction, over 80% is located in emerging markets or developing countries (IAEA,2022).

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Energy efficiency will also be vital to ensure that that new clean power capacity is put tobest use. Faster action on energy efficiency can help avoid around 96 EJ of final energy
demand by 2030, 5% lower than today (and 23% lower than a scenario where no additional
action is taken) (IEA, 2021d).
Levelised costs of electricity production for key technologies, 2010-2020/22
Coal

USD (2021) per MWh

Gas
300

300

250

250

200

200

150

150

100

100

50

50

0
2010

2020

0
2010

Operating costs for existing plants

Range

2015

USD (2021) per MWh

300

250

250

200

200

150

150

100

100

50

50

2015

2020

AverageWind onshore

Solar PV
300

0
2010

2015

2020
Range

0
2010

2015

2020

Average

Source: IEA, 2021e; IRENA, 2022e.

HOW DO WE GET THERE?
Action is required in the 2020s in all countries and regions to advance decarbonisation of
the sector to reach the Breakthrough goal by 2030, and to pave the way for net zero
emissions by 2050. The availability of cost-effective renewables worldwide, supported byan acceleration in energy efficiency, make this possible. In the short- to medium-term, formany countries this should translate technical and economic challenges into a set ofinvestment, regulatory, and societal actions that can contribute to decarbonisation andcreate millions of jobs.

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The focus of near-term action must be a step change in the deployment of
renewables to quadruple installation rates, enabled by investment in system integrationand infrastructure (IEA, 2021b; IRENA 2022c). In many countries, renewables are alreadythe cheapest source of electricity. The challenges over the 2020s will be integrating rising
shares of variable renewables, overcoming bottlenecks such as permitting and ensuringsystems become increasingly flexible. The intelligent use of distributed energy resources(DERs), supported by growing digitalisation of the electricity system, will be increasingly
important as end uses are electrified. As a result of these systemic changes, annual
investments in the electricity network and overall electricity system flexibility need to morethan double by 2030 (IEA, 2021b; IRENA 2022c).
In parallel, governments and regional bodies will need to collaboratively assess
options for new interconnectors to facilitate increased electricity trade between
countries. This can also provide another important source of system flexibility, supported
by improving technology options and falling costs. Examples include the African Union's
Continental Master Plan focused on an integrated continental power transmission networkor the India-led One Sun, One World, One Grid initiative, which aims to facilitate regional
connections in South Asia.
Governments, together with multilateral development banks, will need to expand andstrengthen international assistance to ensure that developing countries can access,adapt, and rapidly deploy low-carbon technologies to meet their needs and priorities. This
will require increasing the funding levels and improving the coordination and focus offinancial and technical assistance. Working with key institutions, funds and initiatives will
help guarantee that all new generating capacity is low carbon in all markets.
Governments and companies should further increase investments in research,development and demonstration (RD&D). Considerable innovation opportunities
remain, including novel renewable generation technologies, long-term power system
flexibility, and digitalisation (Mission Innovation, 2021). Priorities for RD&D need to address
the differing requirements of countries and contexts, and technology RD&D must be closely
integrated with innovations in business models, system design and markets. Learning
should be shared proactively between countries and companies as the first large-scale
projects are delivered. Delivering many of these outcomes sooner, at a lower cost, will help
accelerate the pace of transitions at the rate needed for a net zero goal.
Governments and companies should develop and implement plans for managing thetransition away from high-carbon power systems and associated supply chains,
working closely with local communities and workers. This will include repurposing obsolete
assets, environmental restoration, and investment in local jobs and skills, particularly infossil fuel-dependent regions and communities.
While clear national targets, implementation strategies and timetables are necessary
starting points, achieving the best outcomes will require broad stakeholder engagement
and holistic policy frameworks to anticipate risks, maximise socioeconomic benefits andvalue creation. By 2030, renewables alone have the potential to add 26.5 million jobs
globally, with an additional 58.3 million jobs in energy efficiency, power grids and flexibility,

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and hydrogen (IRENA, 2021a). It will be important for governments to ensure that strategies
for retraining can use existing skills in the energy sector, where possible, and do not
exacerbate inequalities as fossil fuel jobs wind down.
Governments must set out detailed strategies for net zero power systems as
progress accelerates over the early 2020s, sending a strong long-term signal forcompanies and civil society. These should be supported by appropriate electricity market
reform and long-term contracts and auctions, as the technology options for net zero powersystems become clearer. Governments should also consider institutional changes andagreements to support low-carbon power systems. Examples from countries leading theway in this area should be shared internationally to increase the uptake rate for successfulpolicies and strategies.
As power systems approach higher shares of variable renewables in the late 2020s,
governments will need to scale-up the deployment of mid- and long-term energy
storage options, drawing on the successful RD&D activities from earlier in the decade. It
will be important for countries and companies to share learning from early large-scale
projects, supporting different power systems as they advance toward net zero.
International cooperation will have a significant impact in this decade to achieve the Power
Breakthrough goal. Collaborative efforts should focus on those essential levers that canaccelerate the deployment of low-carbon solutions worldwide or otherwise there will be abottleneck in the medium- to long-term. Only with effective international collaboration will it
be possible to ensure that the transition can occur at the pace and scale required, making
clean power affordable and accessible to all.

RECOMMENDED REPORTS
We recommend the following reports for more detailed descriptions of the technologies for
power sector decarbonisation and of the actions that countries and businesses can takeindividually.


Net Zero by 2050 (IEA, 2021).



Making Clean Electrification Possible (ETC, 2021).

World Energy Outlook 2021 (IEA, 2021).

World Energy Transitions Outlook (IRENA, 2022).



Renewable Power Generation Costs in 2021 (IRENA, 2022).

RE-organising Power Systems for the Transition (IRENA, 2022).



Nuclear Power and Secure Energy Transitions (IEA, 2022).

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Critical path to 2030 for the power sector

CURRENT STATE OF INTERNATIONALCOLLABORATIONInternational collaboration on power sector decarbonisation and wider supporting areas is
at a relatively developed stage compared to the other major sectors assessed in this report,with almost two decades of work in many areas in several global and regional settings. IEA
and IRENA are established platforms for international cooperation on the power sector,
and several streams of work have emerged from the G7 and G20 collaborative efforts.
Regional entities including the Association of Southeast Asian Nations (ASEAN), African
Union (AU), European Union (EU) and Organización Latinoamericana de Energía (OLADE)
all have dedicated streams of work on low-carbon power, with increasing efforts toward
regional integration. Several initiatives and campaigns also exist under the umbrella of the
Clean Energy Ministerial, including Power System Flexibility; Flexible Nuclear Campaign;
Nuclear Innovation: Clean Energy Future; and Carbon Capture Utilization and Storage.
Significant collaborative work is also undertaken by the industry bodies such as Global
Wind Energy Council, Global Solar Council, Long Duration Energy Storage Council andGlobal Power Systems Transformation Consortium.
There are also collaborative efforts to increase the share of renewables in the mostvulnerable countries, such as the Climate Vulnerable Forum where 55 developing countries
committed to 100% renewable pathways. Another example is the Africa Renewable Energy
Initiative (AREI) launched at COP21 in Paris with the goal of 300 GW of renewables by2030. The SIDS (Small Island Developing States) Lighthouses Initiative facilitated by
IRENA, which comprises 38 SIDS and 32 partners, is working to reach 10 GW of

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renewable energy installed capacity in all SIDS by 2030. In addition, there are several
technology-focused initiatives, including the International Solar Alliance, Global
Geothermal Alliance and the Global Offshore Wind Alliance founded by Denmark, GWEC
and IRENA. The IEA Technology Collaboration Programme (TCP) supports the work
across a wide range of energy technologies and related issues, with over 6 000 experts
worldwide representing over 300 public and private organisations in 55 countries. Anotherexample is the Desert to Power initiative led by the African Development Bank andendorsed by heads of state focusing on the 11 countries of the Sahel to increase solar
generation capacity by 10 GW and contribute to providing access to electricity to
250 million people.
In recent years, the number of collaborative initiatives focusing on energy transitions has
increased. For instance, the IEA's Clean Energy Transitions Programme (CETP) leverages
the organisation's expertise across all fuels and technologies to accelerate global clean
energy transitions, particularly in major emerging economies. The Energy TransitionCouncil (ETC) was established to create a closer link between political dialogue andtechnical and financial assistance, with the aim of making low-carbon and sustainable
power the most affordable and reliable option for countries to meet their power needs
efficiently, supporting the transition away from coal power, and improving energy access.
The Green Grids Initiative intends to accelerate the construction of the new infrastructureneeded for a world powered by low-carbon energy. The Green Powered Future Mission(GPF) involving 15 governments and 13 companies and organisations has the goal ofdemonstrating that by 2030 power systems in different geographies and climates are able
to effectively integrate up to 100% variable renewable energies in their generation mix andmaintain a cost-efficient, secure and resilient system. Finally, the recent addition of theRegulatory Energy Transition Accelerator (RETA), co-founded by the IEA, IRENA, the UK’s
Ofgem 3 and the World Bank, reflects the multifaceted nature of the power sectortransformation and the benefits of collective learning and international cooperation forfaster progress.
In summary, collaboration in the power sector is well-established and wide ranging, andthe institutions and initiatives needed to deliver are in place. However, the level of effort
and resources devoted to collaboration is low compared to both the scale of the challenge
and of the opportunity. Countries and companies should resist establishing more initiatives
and should provide a more robust alignment of effort and increased support to existing
initiatives to ensure they are focused and delivering. Greater transparency on who does
what can help improve coordination, along with pressure on initiatives to collaborate more
effectively. This can in part be facilitated by the Power Breakthrough process, crowding-in
more countries and companies behind the most critical leading initiatives, joining-up
between public-private initiatives and plugging key gaps in the landscape where they exist.

3

The Office for Gas and Electricity Markets (Ofgem) is the UK’s energy regulator.

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Landscape map of key international power sector decarbonisation initiatives

Note: The diagram summarises the roles of many public and private sector initiatives in this sector. Initiatives have been
included if they have a global scope, with active members from multiple regions of the world, and have at least one
significant work programme specifically focused on accelerating emissions reduction in that sector. The list is not
exhaustive and will be updated over time.

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PRIORITY AREAS FOR INTERNATIONALCOLLABORATION

The transition to clean power has already significantly benefited from the alignment of many
country, regional, and international actions, especially in support of the deployment of solar
and wind power. With each doubling of their cumulative deployment, the cost of solar PV
has fallen around 28%, and wind power by around 15% (BNEF, 2020). The limited time left
to 2030 accentuates the need for a change of pace, which can be achieved only if
underpinned by strong and focused international cooperation. Five areas stand out as
particularly important for further strengthening: research and innovation; international
assistance and finance; effective and wide-ranging engagement; cross-border trade; anddemand creation and management.

INCREASING RESEARCH AND SYSTEMIC INNOVATION IN KEY
CHALLENGE AREAS TO UNLOCK AFFORDABLE, RESILIENT AND
WIDESPREAD NET ZERO POWER SYSTEMS

Research and innovation within the power sector is key to achieving system-wide synergies
and unlocking solutions for net zero. If the power system is to constantly balance demandand supply, while also relying on large shares of renewable electricity from wind and solar,
electricity systems need to be flexible. Leveraging only existing flexible generation will not
be enough to ensure that variable renewable energy represents a large share of electricity
supply in every region. Solutions such as electricity storage, interconnections, anddemand-side flexibility – including sector coupling (i.e. power-to-mobility, power-to-heating
and cooling, and power-to-gas) – are key. Best practices from systems operating with large
shares of solar and wind today can set the path for others to follow for power sectortransformation in the next decade.
Attaining net zero power systems with high shares of renewables requires a suite ofinnovations. International cooperation will be essential to fill the gaps, scaling-up theinnovation process, and broadening adoption. While it is positive that global investment inenergy RD&D has been rising steadily in recent years (to USD 38 billion in 2021, 90% of
which was low-carbon energy RD&D) (IEA, 2022b), more widespread demonstration
programmes will be required.
Innovation processes must also extend to decentralised systems for universal access toenergy. Beyond technology, innovations in business models and market design play a
critical role.
As the share of variable renewables grows, flexibility-related solutions will increase inimportance. For instance, energy storage will be used to improve the low-carbon
dispatchability of the system. There are many pilot projects, but countries would benefit
from systematic exchange of learning from successful and scalable demonstration projects
to help accelerate collective learning and encourage investment in replicable projects.

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Moreover, creation of a piloting environment that permits the initial deployment and testingof innovative products and services could offer impactful learning opportunities and allow
the highest performing solutions to mature in a learning-focused environment. Innovations
are not only technological; they also include innovations in market designs, system
operation and business models. Collaboration among a broad spectrum of existing andnew players inside and outside the power system greatly enhances the chances ofsuccess. Policy makers, utilities, transmission and distribution system operators, andunions need to work in tandem to realise the necessary change.
There exist well-established platforms and initiatives for facilitating collaboration in power
sector innovation, such as the Green Powered Future Mission (of Mission Innovation). In
2021, its members set out a roadmap identifying 100 innovation priorities that need to be
tackled this decade across system flexibility, data and digitalisation, and improved variable
renewable energy technologies. However, widespread practical learning between major
world-leading projects and respective members is yet to reach the scale required.
Together, public and private funding of RD&D needs to foster innovation across the various
dimensions of the power sector value chain encompassing technology, infrastructure,
financing, business models, market design, regulation, governance, and institutionalframeworks. Given the relative maturity of power sector transitions, the private sector
should be the primary funder of RD&D. However, public funding for RD&D is needed toaddress systemic issues, including market failures and outdated structures.

RECOMMENDATION 1
Governments, working with companies, MDBs and investors, should agree a clear
set of strategic priority projects to demonstrate and test power system flexibility
solutions, including but not limited to energy storage, in a wide variety of contexts.
This should build upon existing initiatives and involve the systematic sharing oflearning from different geographical, climatic and market settings. This will increase
confidence in delivering net zero power systems in a broader set of markets,
supported by increasingly affordable and effective technologies.

INTERNATIONAL ASSISTANCE AND FINANCE
To meet the 2030 Breakthrough goal, levels of investment in low-carbon power generationneed to increase significantly from the USD 400-440 billion in 2021 to USD 1 trillion peryear (IRENA, 2022c). The bulk of this investment will come from the private sector - in2019, USD 1.6 trillion in energy assets were financed by private sources, accounting for
80% of total energy sector investment. Public financing, however, will play a crucial role incatalysing private investment, as markets alone are not likely to move rapidly enough.
Public funds are also needed to create an enabling environment for the transition and to

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ensure: 1) that it occurs fast enough to meet climate goals, and 2) it unfolds in a just andinclusive way, with the best possible socio-economic outcomes. International collaboration
can play an important role in this by supporting policy frameworks, transition-related funds,
concessional finance and de-risking mechanisms.
In support of the development of clean energy infrastructure, countries and multilateralfinance institutions dedicated over USD 100 billion to international development assistanceover the period 2002-2019. A large share of this has been focused on the power sector.
To date, these financial flows have been concentrated in a limited number of countries andregions, with 80% going to just 30 countries from 2010 to 2019 (Aid Atlas, 2022).
International assistance has, in some cases, been difficult for developing countries toaccess, involving long and burdensome application processes. The profusion ofprogrammes in the sector can lead to duplication of efforts and lack of clarity from both
donors and recipients regarding the assistance being provided, for what purpose, andwhether or not it is relevant or effective. Importantly, they often have been a burden on
already-limited local capacities. While highly valuable to transfer knowledge and develop
local expertise, technical assistance efforts can also underperform when they are not linked
to on-the-ground realities since significant policy reforms typically require politicalleadership and commitment, and the buy-in of local stakeholders such as utilities.
In recent years, there have been improvements in the structures for international
assistance in the power sector to make it more coherent and effective. At the UN Climate
Action Summit in 2019, the Climate Investment Platform was launched by IRENA, SE4ALL
and UNDP in cooperation with GCF, with the aim of “decluttering the finance landscape”
by matching available funds and developing country needs. In 2020, the Energy TransitionCouncil (ETC) was launched by a group of countries, multilateral development banks, andinternational organisations to bring scaled-up practical and financial assistance for the
power sector transition together with political dialogue. The ETC includes a Rapid
Response Facility, in which experts from leading institutions aim to provide practicalassistance in response to developing countries' requests within short timelines. Similar
assistance could be tapped through the Climate Technology Centre and Network (CTCN)
and the Clean Energy Solutions Centre hosted by the National Renewable Energy
Laboratory (NREL). At COP26, the Global Energy Alliance for People and Planet was
launched, offering more flexible finance through a combination of philanthropic grants anddevelopment bank lending.
For the transition to low-carbon power to proceed at the necessary pace, efforts need tobe continued, streamlined and strengthened. The support available to developing countries
must be made clearer, easier to access, and more responsive. It also should be inclusive,
to ensure all who need to play a role are at the table. Accompanying this assistance with
political dialogue is essential to build the confidence that developing countries need to
implement significant policy reforms and integrate climate action in national budgets andstrategies, and that development partners will require to commit to higher-risk investments.
Donors should strive to better align their efforts to respond to the urgent needs to accelerate
deployment of low-carbon power solutions, while avoiding duplication of effort and the

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unnecessary burden on already limited human resources. Such streamlining of supportshould be done along three dimensions: 1) greater upfront engagement and coordination
to better identify local priorities and needs; 2) upon request, strengthening in-country
capacity (including, for example, by embedding advisers in the ministry responsible forpower who can provide technical advice and support donor coordination); and 3) creating
an accessible and transparent system that makes clear what technical and financial
assistance may be available to each developing country.

RECOMMENDATION 2
Donor governments, working with key institutions, initiatives, and funds, should
increase the scale, coordination, transparency and accessibility of international
support for the power sector transition, building on established frameworks andsuccessful models. Along with other forms of support, donor countries should,
where requested, facilitate more power sector experts working within developing
country governments to strengthen their capacity to make use of international
support, implement policy and regulatory reforms and leverage private finance. This
will provide developing countries with the resources they need to deliver on a rapid
acceleration towards a net zero power system.

ENSURE EFFECTIVE AND WIDE-RANGING ENGAGEMENT AND

ACCEPTANCE OF TRANSITION PLANS ACROSS THE POWER
SECTOR AND ASSOCIATED SUPPLY CHAINSSocial support for the transition to low-carbon power is important in all countries, but
especially so in countries and regions where many people are employed by the fossil fuelindustry. The global project pipeline of proposed new coal power plants has been reducedby over 75% since 2015 (E3G, 2021), and the cost gap between coal and renewables isonly going to widen in renewables' favour. In 2019, 56% of utility-scale renewable capacity
added already cost less than the cheapest new coal option (IRENA, 2022e). These trends,
bolstered by the political commitment of all countries at COP26 to phase down the use of
unabated coal power, accentuate the need for a carefully managed transition.
Research indicates that investing in renewable energy creates more jobs than investing infossil fuels (IRENA, 2021a). Thus, as the energy transition unfolds, it is likely that mostcountries will be able to create growing energy sector employment. However, there may
be a variety of misalignments, since new jobs may not be created on the same timescaleor the same geographies as the loss of old jobs. In regions of high economic dependence
on fossil fuel-related industries, the potential loss of many jobs, as well as local tax
revenues, can pose substantial risks to social wellbeing, economic development, and thepolitical feasibility of energy transition policies. Therefore, it is essential to design and

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implement a set of just transition policies that help affected workers and communities
successfully navigate through the energy transition, and that give them a strong voice along
the way.

Box 2.1

South Africa's Just Energy Transition Partnership

South Africa has the most coal-intensive economy of the G20 - depending on it for
87% of its electricity. The Just Energy Transition Partnership (JET-P) was
developed in cooperation with South Africa and France, Germany, the European
Union, the United Kingdom, and the United States, who agreed to provide an initialcommitment of USD 8.5 billion through just transition interventions, power sector
decarbonisation, and economic diversification into future energy sectors, including
electric vehicles and green hydrogen.
In June 2022, the G7 agreed on the implementation plan, with the view to having
the final JET-P investment plan signed off by November. Also, the G7 affirmed theirintent to move forward in negotiations with Indonesia, India, Senegal and Vietnam
on JETPs to support energy policy reforms, with a view to decarbonising energy
systems and increasing energy efficiency.

This process will require social dialogue 4 and adherence to existing labour standards,
supporting the strengthening of social security and protection provisions, providing
technical assistance for the repurposing of fossil fuel infrastructure, investing in regional
revitalisation programmes and providing targeted regional development finance to support
the creation of new jobs and industries. New jobs in clean energy must be jobs that pay
well and adhere to occupational health and safety standards. The National Offshore Wind
Agreement between Ørsted and the North America's Building Trades Unions (NABTU)
represents a positive example to learn from (Ørsted, 2022).
Historically, most of the international assistance in the power sector has focused on more
technical market reform issues. Recently, this has begun to change. In the European Union,
the Just Transition Mechanism will provide EUR 55 billion over 2021-2027 to support themost coal-intensive regions through the transition (EC, 2019). Since 2019, the European
Bank for Reconstruction and Development (EBRD) has provided support for coaltransitions in countries neighbouring the EU, including for retraining of workers andeconomic diversification (EBRD, 2020). The World Bank provides support for coal mineclosures, investment and regional development. In 2021, the Climate Investment Funds(CIF) launched the Accelerating Coal Transition Investment Program (CIF, 2021), which
will support repurposing of fossil fuel infrastructure, retraining of workers, and planning for
economic and social development, beginning with pilot projects in four countries.
International cooperation and targeted support to countries on just transitions is also
4See, for example, the International Labour Organization’s (ILO) Guidelines for a Just Transition report negotiated in 2015.

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provided by expert organisations, including the International Labour Organization (ILO),
IRENA, the International Trade Union Confederation, and initiatives such as the IEA Global
Commission on People-Centred Clean Energy Transitions, and the Sustainable Energy
Jobs Platform, among others.
Exchange of best practices and experiences already takes place in these fora. However,given the scale of the challenge, there is a clear need to increase international cooperation
systematically and comprehensively. It is essential to recognise that regions and countries
face markedly different contexts with varying starting points, socio-economic development
priorities and resources. Strong institutions will be needed to coordinate structural and justtransition policies and manage potential misalignments. Importantly, achieving a justtransition will depend on healthy international flows of finance, capacity and technology.
MDBs, in particular, are well placed to target development assistance where it is mostneeded and should aim to support governments in developing plans and mobilising
investment for economic diversification, institution-building, retraining of workers, andsocial security through the course of the transition.

RECOMMENDATION 3
Donor governments and MDBs should work together to more strongly aligndevelopment funding with targeted support for local jobs, skills, and investment, for the
repurposing of fossil fuel assets and for environmental restoration, in the fossil-fueldependent regions and communities. Civil society, governments and industry should
contribute to creating international centres of expertise on the just transition, within
existing institutions. This action will be vital to ensure inclusive and participatorytransition processes, effective social protection for affected workers and communities,
and better economic and environmental outcomes.

PROMOTE ELECTRICITY TRADE THROUGH INTERCONNECTIONS
Cross-border or regional cooperation is often essential to boosting efficiencies and bringing
about economies of scale in the deployment of low-carbon energy technologies. Adopting
an integrated approach to trans-boundary energy issues – such as planning, trade,regulatory frameworks and policies, regional power infrastructure and other factors – allows
countries to benefit from access to a wider range of resources at affordable prices.
Importantly, an integrated approach facilitates the investment at scale that is necessary forcountries to meet their development and climate targets.

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Impact of interconnections and regional markets on operation costs

Source: IRENA, 2020.

Creating a regional market by building or taking advantage of interconnections between
countries is also an effective way of increasing flexibility in power systems. Increasedtransmission capacity and interconnections allows electricity to be transported more
readily, meaning that more resources can be used to help balance supply and demand.
Consequently, operators in different systems can buy and sell electricity and other grid
services from one another, creating regional markets. By sharing resources over larger
regions, the need for operating reserves, as well as curtailment requirements and costs,
are reduced.
There are several regional interconnections currently operational in the world. The largest
is the European interconnection managed by European Network of Transmission System
Operators (ENTSO-E), trading around 445 TWh of electricity across 35 countries in 2019
(UNSD, 2022). A number of other projects are under development. For instance, the African
Continental Power Systems Master Plan (CMP) is an ongoing initiative led by the African
Union Development Agency (AUDA-NEPAD) that aims to establish a long-term continentwide planning process for power generation and transmission involving all five African
power pools (IRENA, 2021). The economic case for these projects is only strengthening as
the technology of interconnectors continues to improve. 5
While there is plenty of room for innovation and technical improvement of cross-border andregional interconnections, the current solutions already provide increased grid flexibility andstability to the countries where in use. The techno-economic feasibility of multiple new
regional interconnections has been demonstrated, but the implementation is lagging, inlarge part due to lack of political support. Regional interconnections are complex projects
that require agreements between national governments, transmission system operators(TSOs), market regulators, and electricity producers, among others. Traditionally, many ofthese stakeholders operate in strictly national settings so creating new or leveraging
existing regional agreements and entities to devise rules for the interconnection is crucial
for success.
For example, ultra-high-voltage direct current (UHVDC), high-voltage direct current (HVDC), voltage source converters(VSC), and smart grids.

5

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International cooperation can help overcome barriers and create blueprints across areas
to accelerate progress in the ongoing efforts. Countries should identify and prioritise nontechnical barriers for regional interconnections that are usually the most common and mostdifficult to overcome, and that often require diplomatic support and international
cooperation for platforms/institutions. Existing regional institutions should help harmonise
the rules of all participating markets. Given the need for substantial infrastructure
investment, MDBs should be an active player in supporting the planning and resource
mobilisation efforts.

RECOMMENDATION 4
Governments should work together to reassess the opportunities for cross-borderand regional power interconnections and smart grids to support the transition toclean power systems, including opportunities that have been previously considered
but not taken forward given the improving technology, falling costs, and increasingneed for system flexibility. Countries and investors should support international
efforts to identify top regional priorities for interconnection, and to replicate
successful approaches to technical agreements. In doing so, countries can accessnew opportunities to integrate larger shares of renewables and improve system
reliability.

RAPIDLY MOVE THE LARGEST MARKETS FOR KEY ELECTRICALAPPLIANCES TO HIGHER COMMON MINIMUM ENERGY EFFICIENCYSTANDARDS
Energy efficiency will be vital in enabling all new demand for power to be met by low-carbon
sources, particularly within emerging economies. A doubling of the current rate of decline
in the energy intensity of the global economy from 2% to 4% per year over this decade isrequired for a 1.5°C aligned pathway, and yet rates of energy efficiency improvements haveslowed in recent years. Compared to the current policies, a doubling of the current rate ofenergy intensity improvement has the potential to avoid 96 EJ a year of final energy
consumption; equivalent to the current final energy consumption of China (IEA, 2021b).
There is renewed interest from countries to prioritise energy efficiency, particularly whenfacing the challenge of electrifying major end-use sectors such as heating, cooling, andtransport, alongside growing energy security concerns. Rapid adoption of the best available
end-use technologies enables a faster transition to low-carbon power systems, allowing
low-carbon power generation to supply a greater share of demand.
Best practice efficiency policies, such as standards and labelling, have already halvedenergy consumption of high energy using appliances and are delivering a reduction of 15%

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of total current electricity consumption in countries that have adopted them. In ninecountries covered in an analysis of such policies, energy efficiency programmes reduced
annual electricity consumption by around 1 580 TWh in 2018. This is a similar order ofmagnitude to the total electricity generation of wind and solar energy in those countries in2018 (IEA, 2021d).
The principal organisations and initiatives involved in facilitating international collaboration
around energy efficient electrical appliances are the IEA’s Energy-Efficient End-use
Equipment initiative (4E) and the CEM’s Super-Efficient Appliance Deployment initiative(SEAD).
4E was established under the IEA's Technology Collaboration Programme (TCP) in 2008,
with representatives from 15 countries regularly engaging in detailed, technical discussions
around energy efficient appliances.
SEAD was established in 2009 and has been active in facilitating international collaboration
on energy efficiency. Current membership covers 22 governments, plus the EU. At COP26,
SEAD launched the Product Efficiency Call to Action, with the goal of doubling the efficiency
of four priority products by 2030, which account for 40% of global electricity consumption,and includes air conditioners, refrigerators, motors, and lighting.
Countries should build on the Product Efficiency Call to Action under SEAD and work toagree higher minimum energy performance standards (MEPS) for the highest energyconsuming appliances, aiming to cover a majority of the global market. This would send aclear signal to industry, moving markets towards higher efficiency products that reduce
costs as well as emissions.
Higher MEPS should also be complemented by wider information and incentives
programmes, such as awareness raising around energy consumption for different
consumer groups, and energy efficiency retrofit incentive programmes. Bringing all
appliances in the economy in line with MEPS takes time, because once new standards are
put in place it can be many years before the existing inefficient stock is replaced. Thishighlights the role of incentives and replacement schemes to remove old, inefficientequipment from use faster, especially in countries with less mature programmes.
To increase the uptake of energy efficient appliances in emerging economies, developed
countries should improve the current financial and technical assistance offers to support
the implementation of policies such as appliance and equipment standards, incentive
schemes and information campaigns. This can facilitate the adoption of these policies incountries which currently lack the resources and or expertise. This needs to be replicatedacross multiple jurisdictions simultaneously, with coordinated support from donor countries
and expert organisations.

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RECOMMENDATION 5Countries, in consultation with industry, should collectively agree to higher minimum
energy performance standards for high energy-consuming appliances, supported
by awareness campaigns and incentives, such as energy efficiency retrofit
programmes. Improved technical assistance should facilitate the implementationof effective standards in developing countries. This will help to cut energy costs andreduce emissions, as well as mitigate future electricity demand growth, easingpressure on renewables and electricity infrastructure deployment.

REFERENCES
Aid Atlas (2022), All Donors to All Recipients for Climate Change (total), https://aidatlas.org/profile/all/all/climate-change-total/2002-2020?usdType=usd_commitment,(accessed August 2022).
BNEF (Bloomberg New Energy Finance) (2020), The First Phase of the Transition is About
Electricity, Not Primary Energy, https://about.bnef.com/blog/the-first-phase-of-thetransition-is-about-electricity-not-primary-energy/
CIF (Climate Investment Funds) (2021), Accelerating Coal Transition,
https://www.climateinvestmentfunds.org/topics/accelerating-coal-transition
CLASP (Collaborative Labeling and Appliance Standards Program) (2021), New appliancepolicies expand efficiency in Indonesia, https://www.clasp.ngo/updates/new-appliancepolicies-expand-efficiency-in-indonesia
E3G (2021), No New Coal by 2021: The collapse of the global coal pipeline,
https://www.e3g.org/publications/no-new-coal/
EBRD (European Bank for Reconstruction and Development) (2020), EBRD joins efforts to
support coal transition in Western Balkans, Ukraine,
https://www.ebrd.com/news/2020/ebrd-joins-efforts-to-support-coal-transition-inwestern-balkans-ukraine.html
EC (European Commission) (2019), The Just Transition Mechanism: making sure no one isleft behind, https://ec.europa.eu/info/strategy/priorities-2019-2024/european-greendeal/finance-and-green-deal/just-transition-mechanism_en
IAEA (International Atomic Energy Agency) (2022), Power Reactor Information System,
https://pris.iaea.org/pris/
IEA (International Energy Agency) (2022a), Nuclear Power and Secure Energy Transitions,
https://www.iea.org/reports/nuclear-power-and-secure-energy-transitions
IEA (2022b), World Energy Investment 2022, https://www.iea.org/reports/world-energyinvestment-2022
IEA (2022c), Unlocking the Potential of Distributed Energy Resources,
https://www.iea.org/reports/unlocking-the-potential-of-distributed-energy-resources
IEA (2021a), Tracking Power 2021, https://www.iea.org/reports/tracking-power-2021
IEA (2021b), Net Zero by 2050, https://www.iea.org/reports/net-zero-by-2050

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IEA (2021c), Reforming Korea's Electricity Market for Net Zero,https://www.iea.org/reports/reforming-koreas-electricity-market-for-net-zero
IEA (2021d), Achievements of energy efficiency appliance and equipment standards andlabelling programmes, https://www.iea.org/reports/achievements-of-energy-efficiencyappliance-and-equipment-standards-and-labelling-programmes
IEA (2021e), World Energy Outlook 2021, https://www.iea.org/reports/world-energy-outlook2021
IPCC (Intergovernmental Panel on Climate Change) (2022), Climate Change 2022: Mitigationof Climate Change, Sixth Assessment Report, https://www.ipcc.ch/report/ar6/wg3/
IRENA (International Renewable Energy Agency) (2022a), Renewable Capacity Statistics,
https://irena.org/publications/2022/Apr/Renewable-Capacity-Statistics-2022
IRENA (2022b), Renewable Energy Market Analysis: Africa and its Regions,
https://www.irena.org/publications/2022/Jan/Renewable-Energy-Market-Analysis-Africa
IRENA (2022c), World Energy Transitions Outlook 2022,
https://irena.org/publications/2022/mar/world-energy-transitions-outlook-2022
IRENA (2022d), NDCs and Renewable Energy Targets in 2021,
https://www.irena.org/publications/2022/Jan/NDCs-and-Renewable-Energy-Targets-in2021
IRENA (2022e), Renewable Power Generation Costs in 2021,
https://irena.org/publications/2022/Jul/Renewable-Power-Generation-Costs-in-2021
IRENA (2021a), Renewable Energy and Jobs - Annual Review 2021,
https://www.irena.org/publications/2021/Oct/Renewable-Energy-and-Jobs-AnnualReview-2021
IRENA (2021b), African Continental Power Systems Master Plan,
https://irena.org/energytransition/Energy-Planning-Support/African-Continental-PowerSystems-Master-Plan
IRENA (2020), Innovation Toolbox, https://www.irena.org/publications/2020/Oct/InnovationToolbox
Mission Innovation (2021), Joint Roadmap of Global Innovation Priorities, http://missioninnovation.net/wp-content/uploads/2021/11/Power-Mission-Joint-Roadmap-of-GlobalInnovation-Priorities.pdf
National Grid ESO (2022), Net Zero Market Reform, https://www.nationalgrideso.com/futureenergy/projects/net-zero-market-reformOECD (Organisation of Economic Co-Operation and Development) (2022), Development
Assistance Committee, https://www.oecd.org/dac/development-assistance-committee/Ørsted (2022), North America’s Building Trades Unions and Ørsted Agree to Build an
American Offshore Wind Energy Industry with American Labor,
https://us.orsted.com/news-archive/2022/05/national-offshore-wind-agreement
UNFCCC (United Nations Framework Convention on Climate Change) (2021), NDC
Synthesis Report, https://unfccc.int/process-and-meetings/the-parisagreement/nationally-determined-contributions-ndcs/nationally-determinedcontributions-ndcs/ndc-synthesis-report
UNSD (United Nations Statistics Division) (2022), Energy Balance Visualization,
https://unstats.un.org/unsd/energystats/dataPortal/ (accessed July 2022).

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United States Department of Energy (2022), DOE Announces First Loan Guarantee for a
Clean Energy Project in Nearly a Decade, https://www.energy.gov/articles/doeannounces-first-loan-guarantee-clean-energy-project-nearly-decade

ANNEX
Enabling
condition

Pathway to 2030

Tracking

Long-term
vision andaction plans

Governments and companies should develop andimplement plans for managing the transition away fromhigh-carbon power systems and associated supply
chains, working closely with local communities andworkers. These long-term plans should start to set out
the practicalities of delivering net zero power systems,
including details on technology and policy.

56 electricity utilities, independent
power producers and energy
traders have near-term targets
approved by the Science-based
Targets initiative (SBTi), in linewith 2°C or below.

Demandcreation andmanagement

In the early 2020s, governments and companies should
continue to build short-term confidence in the demand
for low-carbon electricity, through policies andcommitments, such as procurement strategies.

377 members in RE100,
committed to 100% renewables.

(as of July 2022)

Beyond creating demand, governments and companies
should also take actions to maximise the efficiency ofelectricity use. This should include aligning regulations
across multiple markets, such as minimum energy
performance standards. This should be accompanied
by incentives and awareness raising campaigns, toaccelerate deployment in the early 2020s.

Infrastructureand supply
chainsInvestments in grid infrastructure will need to scale
rapidly to support increased renewable supply andelectrification of end-uses.
Governments and companies should work to further
diversify vital supply chains, to mitigate against supplyside shocks, such as the world saw during the Covid-19
pandemic.

Finance andinvestment

Governments and companies will need to accelerate
the recent positive trends in investment in the power
sector. This includes continued investments inrenewables, as well as supporting infrastructure, suchas electricity grids. At the same time, investments infossil fuel power generation, particularly coal, will needto decline.
Governments, together with multilateral developmentbanks, will need to expand and strengthen international
assistance to ensure that developing countries canaccess, adapt, and rapidly deploy low-carbon
technologies to meet their needs and priorities by the

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Over USD 900 billion in
investment in the power sector in
2021.
Over USD 100 billion of climate
finance provided for the energy
sector between 2002-2019.

The Breakthrough Agenda Report

Enabling
condition

Researchandinnovation

POWER

Pathway to 2030

Tracking(as of July 2022)

early 2020s. This will require increasing the levels andimproving the coordination and focus of financial andtechnical assistance.

At least USD 8 billion of climate
finance for electricity provided in2020.

Governments and companies need to further increase
investments in research, development anddemonstration (RD&D). In particular, this should focus
on deploying novel renewable generation technologies,
long-term power system flexibility and digitalisation thatwill be vital for the delivery of net zero power systems.

TRLs for key technologies

Marketstructures

Governments will need to implement electricity market
reforms to accelerate the shift away from fossil fuelpower generation, while ensuring affordable and securesupply. This may require new auction mechanisms,
processes for valuing firm, low-carbon supply andminimising the use of fossil fuel power generation.

Trade
conditions

In the early 2020s, governments and regional bodies
should assess and or reassess options for new
interconnectors to facilitate increased electricity trade
between countries. This will help improve grid flexibility
and security of supply, supporting further integration ofrenewables.

Knowledge,
capability
and skills

Governments and companies will need to undertake
broad stakeholder engagement and holistic policy
frameworks to anticipate risks, maximise socioeconomic benefits, and value creation in order toachieve desired outcomes. It will be important forgovernments to ensure that strategies for retraining canuse existing skills in the energy sector, where possible,and do not exacerbate inequalities as fossil fuel jobs
wind down.

Socialacceptance

Governments and companies, in close collaboration
with affected communities, should develop andimplement plans for managing the transition away fromhigh-carbon power systems and associated supply
chains, working closely with local communities andworkers. This will include repurposing obsolete assets,
environmental restoration, and investment in local jobs
and skills, particularly in fossil fuel-dependent regions
and communities.

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Ocean wave – TRL 4
Tidal stream – TRL 5
Compressed air storage – TRL 8
Redox flow batteries – TRL 8

12 million renewable energy jobs
in 2020, up from 10 million in2015.

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HYDROGEN

CHAPTER 3. HYDROGEN“Affordable renewable and low-carbon hydrogen is globally available by 2030” -Hydrogen Breakthrough goal

KEY MESSAGESHydrogen only plays a narrow role in today’s energy system, mainly as an industrial
feedstock in the oil refining process and in the production of chemicals, with almost
all hydrogen in use derived from fossil fuels.

Renewable and low-carbon hydrogen need to replace existing fossil fuel-basedhydrogen, and is set to play a vital role in supporting a rapid clean energy transition,
primarily in hard-to-abate applications where there are limited alternative clean
energy solutions, such as heavy industry, maritime shipping, aviation, seasonal
electricity storage, and potentially segments of heavy-duty trucking. We refer tothose sectors as “new priority applications”.

Progress to date has been limited, with less than 1 Mt/yr of renewable and lowcarbon hydrogen produced in 2020, versus the 140-155 Mt/yr needed by 2030. Thisimplies that production capacity needs to approximately double every year from 2023
to 2030. This in turn will require an accelerated deployment of renewable power. To
reach these targets, a sharp escalation in financing across the hydrogen value chain
is required.

Common standards, higher and sustained investment in RD&D, and increased
demand commitments for both low-carbon and renewable hydrogen in sectors where
unabated fossil fuel hydrogen is currently used and in new priority applications can
all contribute to overcoming the challenges to cost-effectively support
decarbonisation.

International collaboration on low-carbon and renewable hydrogen has a long
history, with substantial activity since the mid-2000s, although there has been asignificant increase in activity over the past 3-5 years.

Stronger international action across multiple enabling conditions is imperative toaccelerate the transition in the hydrogen sector and put it on track for the 2030
Breakthrough goal. Four areas stand out as priorities for strengthening international
collaboration over the next 1-2 years, where we recommend the following actions:

Governments and companies should coordinate internationally to increase
commitments for the use of low-carbon and renewable hydrogen in sectors wherehydrogen is currently used, supported by specific policies and purchase

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HYDROGENagreements, to collectively send a strong demand signal and mobilise investmentin production. In new priority application sectors, countries should share learning
to accelerate early deployment. This should be done in a manner that ensures alevel playing field in international trade.
Governments and companies should agree a comprehensive portfolio ofinternational standards and associated certification schemes for renewable andlow-carbon hydrogen, addressing emissions accounting, safety, and operational
issues, including leakage. This should be supported by a programme thatprovides a clear direction and sufficient resources to relevant technical bodies.
This will be vital for supporting a series of other actions, most notably high-quality
demand commitments and trade agreements.



Governments and companies should work together to dramatically increase thenumber and geographical distribution of hydrogen demonstration projects and toensure that these appropriately cover each of the high-value end-use sectors,
including maritime shipping, heavy industry, and long-duration energy storage.
Governments and the private sector should agree on principles to guide a deeper
and more rapid sharing of knowledge from these demonstrators, including acommitment to share the lessons learned from all publicly-funded demonstration
projects. Doing so will help overcome technology availability barriers andaccelerate the pace of deployment in multiple regions in parallel.



Donor governments and MDBs should make increased levels of concessional
finance available for well-targeted, catalytic uses that can mobilise large-scale
private investment in hydrogen production, distribution, and end-use projects indeveloping countries. This should be supported by a process in which countries
work with lending institutions to identify viable projects that are being delayed byhigh costs of capital and to assess obstacles to investment, along with technicalassistance programmes to assist governments with policy design. This will
provide much-needed support for the first wave of low-carbon and renewablehydrogen projects, ensuring that a wider set of countries can deploy thetechnologies required.

SIGNIFICANCE OF THE SECTOR
In today’s energy system, hydrogen plays a relatively marginal role as an energy vector. It
is largely used as an industrial feedstock in the oil refining process and the production ofchemicals, such as fertilisers. Hydrogen production currently is almost entirely derived fromfossil fuels and emitted around 900 Mt of carbon dioxide in 2020, equating to approximately
3% of global energy-related CO2 emissions (IEA, 2021).
China accounts for nearly 30% of global demand, followed by the United States and India.
These three countries combined use nearly half of the hydrogen produced. About 60% of
the production is sourced from natural gas, close to 20% from coal – mainly in China – and
20% as a by-product from industrial processes. The two main routes to produce hydrogenwith low greenhouse gas emissions are renewable hydrogen from electrolysis using

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HYDROGEN

renewable electricity, and low-carbon hydrogen from fossil fuels with carbon capture,utilisation and storage (CCUS). Both will be needed in a net zero energy system.
Hydrogen is set to play a vital role in supporting a low-carbon future, not least because it
has promising potential in new priority applications where emissions are hard to abate, andwhere there are limited viable clean energy alternatives, including heavy industry, maritime
shipping, aviation, seasonal electricity storage, and segments of heavy-duty trucking, whichcurrently account for approximately 30% of global carbon dioxide emissions (IEA, 2020).
We refer to those as “new priority applications”.

SECTOR GOALS
The production and use of low-carbon and renewable hydrogen is at a very early stage ofdevelopment. Under 1.5°C-aligned pathways, it is projected that hydrogen could satisfy 1222% of global final energy demand by 2050, versus less than 1% today (IEA, 2021b;
Hydrogen Council, 2022; DNV, 2021; IRENA, 2022a; BP, 2022). 1 While scenarios project
demand for hydrogen to accelerate towards 2030, the next couple of years will be highly
consequential for laying the groundwork to meet this potential.
Firstly, existing hydrogen use must be decarbonised by the uptake of rapidly increasing
shares of both low-carbon and renewable hydrogen. The latter has the largest costpremium compared to today’s unabated fossil hydrogen production (see Figure 3.3) andhas the greatest potential for cost reduction in this decade. Lower costs will result from thereinforcing feedbacks of learning-by-doing and economies of scale linked to the targeted
deployment of low-carbon hydrogen.
While this report does not define a specific carbon intensity limit for low-carbon andrenewable hydrogen, both of these production routes will need to achieve verifiable lowcarbon intensities that trend towards near zero by 2030. This implies that fossil-basedhydrogen production must operate with high carbon capture rates applied to all streams
containing carbon dioxide, and that the captured carbon is permanently stored
underground to prevent its release into the atmosphere. Additionally, it is critical thatmethane leakage is minimised to near zero, if not completely avoided. Rigorous
measurement, reporting and verification of emissions will be necessary.
Secondly, the large-scale deployment of low-carbon and renewable hydrogen in newpriority applications from 2030 onwards hinges on a number of key actions that must be
taken this decade. Hydrogen use in those applications remains – to varying degrees – precommercial, which means that unlocking this potential will require concerted and globally
harmonised efforts relating to RD&D, development of operational standards and guidelines,
and targeted supportive policies to spur hydrogen use. Additionally, expanding renewable
and low-carbon hydrogen into new priority applications will require the buildout of enabling

1

This share excludes hydrogen use for refineries since it is not final energy demand.

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infrastructure starting in this decade—including renewable electricity projects, electricity
transmission, and targeted storage and transportation infrastructure, underpinned by
efficient permitting processes.
To achieve a Paris-aligned pathway, countries and companies will need to meet the
Breakthrough goal for hydrogen, which 35 countries and the European Union, representing
more than two-thirds of global hydrogen production and demand, endorsed at COP26:“Affordable renewable and low carbon hydrogen is globally available by 2030.”
This will require a dramatic increase in the supply of renewable and low-carbon hydrogen,meeting growing shares of demand in relevant sectors, accelerated by falling costs. By
2030, scenarios aligned with international climate goals suggest that:•

The supply of renewable and low-carbon hydrogen increases from less than 1 Mt/yr in2020 to 140-155 Mt/yr by 2030 (see Figure 3.1). This implies that production capacity
must approximately double every year from 2023 to 2030.

•

The share of hydrogen in final energy demand in the chemicals sector increases fromaround 28% in 2020 to up to 44% in 2030 (see Figure 3.2). The rate of growth required
is even higher in other sectors where there is no current use of hydrogen and whererenewable and low-carbon hydrogen needs to reach shares up to 10% by 2030.

•

The production cost of renewable hydrogen falls by 40-55% over the course of thisdecade, to almost USD 1/kgH2 in the most favourable locations (see Figure 3.3).
Supply of unabated fossil, low-carbon and renewable hydrogen, 2020 and in
2030 in 1.5°C-compatible pathways

Mt hydrogen

100
80
60
40
20
0

UnabatedfossilhydrogenRenewable Low-carbon UnabatedhydrogenhydrogenfossilhydrogenToday

Renewable Low-carbonhydrogenhydrogen2030

Note: Shaded bars represent the range of supply across various scenarios.
Sources: IEA, 2021b; BNEF, 2021; IRENA, 2022a; and BP, 2022.

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There is a large gap to achieve such levels of hydrogen production and use. In 2020, lowcarbon hydrogen production was around 0.7 Mt/yr, requiring carbon capture and storage
capacity of 10 MtCO2/yr (IEA, 2021a). As for renewable hydrogen, expected to have a large
share of production by 2030, electrolyser capacity was less than 0.5 GW in 2020, producing
below 0.1 Mt/yr.
The project pipeline for electrolysers is expanding quickly, and stands at around 50-90 GW
over the coming decade (a number constantly changing with business decisions), although
only a small fraction of the projects under development have reached final investment
decision. While this represent a significant increase in the levels of committed projects
compared with only a few years ago, it is still well below the 350-850 GW of electrolysis by2030 that is needed to produce the 50-80 Mt/yr of renewable hydrogen projected under
1.5°C-compatible scenarios (see Figure 3.1) (IEA, 2021b; Hydrogen Council, 2021a). The
upper bound of this estimate would require electricity equivalent to the entire current global
wind and solar capacity.
Share of total final energy consumption in selected sectors met byhydrogen today and in 2030 in 1.5°C-compatible pathways
10

Share of TFC (%)

Share of TFC (%)

50
40
30
20
10
0

8
6
4
2

Today

2030

Chemicals

0

Today

2030

Steel

Today

2030

Road transport

Today

2030

Shipping

Today

2030

Aviation

Notes: Shipping and aviation include hydrogen derivatives. Hydrogen used for direct reduction of iron with natural gas is
excluded.
Sources: IRENA, 2022a; BP, 2022; IEA, 2021b; and BNEF, 2021.

Hydrogen production from renewables was 3-5 times more expensive than hydrogen fromunabated fossil fuels before the high gas prices experienced in late 2021 and 2022, but it
also offers the greatest opportunities for large cost reductions (see Figure 3.3). Based on
gas prices as of mid-2022, the cost of unabated fossil hydrogen could reach up to
USD 10/kg H2. If ambitious action to scale-up renewable hydrogen production is taken,
costs could fall by 40-55% by 2030, driven by a reduction in the cost of electricity and in
the steep capital costs of the electrolyser. The cost premium for low-carbon hydrogen iscurrently smaller but still significant with 40-85% higher costs than the unabated route. By
2030, the cost reduction is more modest, between 0-20%, with future natural gas prices
being a key uncertainty.

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USD/kg H₂

Levelised cost of hydrogen production by technology in 2021 and 2030
9
8
7
6
5
4
3
2
1
0

Unabated fossil

Low-carbon

Renewable

2021

Unabated fossil

Low-carbon

Renewable

2030

Notes: All references were published before gas prices started to rise as a consequence of the current energy crisis. Basedon gas prices of USD 200/MWh (vs historical averages of USD 15-20/MWh in Europe), the levelised cost of unabated fossilhydrogen could reach up to USD 10/kg H2.
Sources : IRENA 2022c; IEA, 2021a; ETC, 2021; IRENA, 2020; and BNEF, 2020.

HOW DO WE GET THERE?
Ambitious and thoughtfully tailored action across a set of enabling conditions early in thisdecade will be critical to ensure the requisite production, storage, transportation and enduse technologies can support fast-paced growth in low-carbon and renewable hydrogen
supplies. However, there are a multitude of risks and challenges that require carefulattention. 2 Beyond increasing affordability and availability, the manner in which the
Breakthrough goal is achieved – including the specific low-carbon and renewable hydrogenend uses that are stimulated along the way and the climate impacts of hydrogen
deployment – is just as important.
Governments and companies need to create dependable and durable demand tohelp de-risk near-term investments in capital-intensive low-carbon and renewablehydrogen supply. This includes supportive policy mechanisms and purchase agreements
to boost the deployment where hydrogen is already used, such as fertiliser production andoil refining. Potential mechanisms include volume instruments such as minimum quotas for
low-carbon hydrogen use, public procurement policies and carbon contracts for differences(CFDs).
Supportive policy mechanisms should also be adopted to increase use in new priority
applications where hydrogen and its derivatives are poised to be a more cost-effective
decarbonisation solution than alternatives.
Hydrogen production, transport and use incur high energy losses, such that its widespread use across sectors that can be
more efficiently decarbonised with alternative clean energy solutions may increase the costs of transitioning to a clean
economy. Hydrogen production can be highly emitting absent rigorous and verifiable emissions standards. Hydrogen is anindirect GHG which, when it leaks into the atmosphere, can contribute to climate warming.

2

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Hydrogen deployment must be underpinned by rigorous emission standards. Thisshould complement demand-side actions in the early 2020s, ensuring this deployment isaligned with climate targets, fostering consumer and investor confidence in a low-carbonhydrogen market and harmonising investment signals across jurisdictions.
Alongside emission standards, governments and companies must develop common
and robust hydrogen leakage detection and repair protocols and solutions. Thisshould be supported by diligent measurement, reporting and verification schemes toprevent high hydrogen leakage rates contributing to global warming. 3 In addition, globally
harmonised safety and operational standards must be developed for new priority hydrogen
applications, including maritime shipping, heavy-duty trucks and steelmaking. Theseshould be developed alongside the RD&D programmes and demand-side commitments
associated with these applications. This should result in technologies reaching commercialscale for new end uses by the mid- to late-2020s.
Governments and companies will need to increase investments in research,development and demonstration to accelerate the advancement of hydrogen and its
derivatives in new priority applications. Hydrogen use in those applications is largely
pre-commercial today and requires concerted RD&D to reach commercial viability. Manyof the relevant technologies should be demonstrated to reach commercialisation by themid-2020s (e.g. steel), and all should be commercially viable by no later than 2030.
This will require adequate and sustained financing across the hydrogen value chain.
Hydrogen deployment consistent with a 1.5ºC-aligned pathway will require an annual
investment of around USD 60-130 billion through to 2030, relative to the less than
USD 1 billion invested annually, on average, over the last decade (IEA, 2021a; IRENA,
2022b; Hydrogen Council, 2021a; BNEF, 2021; ETC, 2021). While the bulk of thisinvestment must come from the private sector, governments have a key role to play inmobilising investments by putting in place policies that can de-risk early projects andsupport private sector engagement. As the pace of deployment increases, governments
and companies will need to develop long-term plans for supporting infrastructure. This
needs to include renewable electricity generation, electricity and gas transmission anddistribution, and carbon capture, storage and infrastructure. These should make best useof existing assets, where possible, including the repurposing of natural gas infrastructure.
Governments and companies will need ensure major ports are ready to handlehydrogen (and derivatives), facilitating the global trade of renewable and low-carbonhydrogen. Again, there will be opportunities to reuse existing infrastructure to reduce costs.
Through the mid- to late-2020s, this will support the signing of long-term contracts for the
trade of hydrogen, further building confidence in supply chains.

RECOMMENDED REPORTS
We recommend the following reports for more detailed descriptions of the actions thatcountries and businesses can take individually to bring low-carbon and renewablehydrogen to scale.

3

Hydrogen has an indirect global warming potential equivalent to 11 +/- 5 for a 100-year horizon (Warwick et al., 2022).

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HYDROGENThe Future of Hydrogen (IEA, 2019).



Making the Hydrogen Economy Possible: Accelerating Clean Hydrogen in an
Electrified Economy (Energy Transitions Commission, 2021).

Global Hydrogen Review 2021 (IEA, 2021).

Methodology for Determining the Greenhouse Gas Emissions Associated With theProduction of Hydrogen (IPHE, 2021).

Geopolitics of the Energy Transformation: The Hydrogen Factor (IRENA, 2022).

Global Hydrogen Trade to Meet the 1.5°C Climate Goal: Green Hydrogen Cost andPotential (IRENA, 2022).

International Trade Rules for Hydrogen and its Carriers: Information and Issues for
Consideration (IPHE, 2022).

Critical path to 2030 for low-carbon and renewable hydrogen and derivatives

CURRENT STATE OF INTERNATIONALCOLLABORATIONInternational collaboration on low-carbon and renewable hydrogen has a long history. Its
initial focus was on setting long-term visions on the role of hydrogen in the energy sector,
defining common standards, and research, development and demonstration.

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Since 2003, the International Partnership for Hydrogen and Fuel Cells in the Economy(IPHE), has been sharing information and facilitating work on standards and safety issues,
more recently emphasising collaborative work on GHG quantification methodologies.
International collaboration on research and development began under the IEA’s Hydrogen
Technology Collaboration Programme (TCP) in 1977, covering 26 Contracting Parties(24 countries, the European Commission and UNIDO) and seven private Sponsor
Members. The Hydrogen TCP publishes regular reports with the research outcomes of thetasks in which its network of researchers collaborate. The Advanced Fuel Cells TCP(16 members) conducts analyses and shares knowledge on stationary, transportation andportable applications of fuel cells. In 2021, Mission Innovation launched the new Clean
Hydrogen Mission, which focuses on catalysing cost reductions by increasing research anddevelopment in hydrogen technologies and industrial processes.
Over the past five years, there has been rapid growth in both public and private sector
collaboration on hydrogen. The Japan-led Hydrogen Energy Ministerial was established in2018, and this was followed by the launch of the Hydrogen Initiative under the Clean Energy
Ministerial in 2019 (24 members), and the Collaborative Framework on Green Hydrogen,from IRENA (with 168 members) in 2020.
With these new initiatives, collaboration on hydrogen has expanded from research anddevelopment into exchange of policy best practice, accelerating near-term deployment, anddefining international market principles. While interest in hydrogen during the 2000s largely
focused on its use as a road transport fuel, more recently the scope of collaboration has
encompassed end-use applications including steel, aviation, and power system balancing.
And while much of the initial activity took place among advanced economies, developing
countries are now also launching collaborative initiatives. For example, the members of theAfrica Green Hydrogen Alliance, founded by Egypt, Kenya, Mauritania, Morocco, Namibia
and South Africa, are collaborating on public and regulatory policy, financing andcertification, to mobilise green hydrogen production for domestic and international use. As
governments start to implement hydrogen strategies, collaboration in these fora has
become more meaningful, allowing countries to learn from real-world examples ofsuccessful technology deployment of policy support.
Key private sector initiatives include the Hydrogen Council, which has over 130 members
representing all parts of the supply chain. The Hydrogen Council has been proactive inpublishing reports about the status and perspectives of hydrogen technologies, policy
instruments to support their deployment and coordinating member advocacy to shape
government policy. The Green Hydrogen Organisation, Green Hydrogen Catapult and First
Movers Coalition are three examples of additional private sector initiatives that aim tocreate lead markets for low-carbon and renewable hydrogen. The Green Hydrogen
Organisation, which also engages extensively with civil society organisations, has recently
presented a first of a kind green hydrogen certificate to be voluntarily adopted by hydrogenprojects. Additionally, the WEF Accelerating Clean Hydrogen Initiative aims to remove key
barriers, boost the hydrogen economy towards a fully realised net zero economy, andexpedite the pathway of projects from announcement to operation.

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Landscape map of key international hydrogen initiatives

Note: The diagram summarises the roles of many public and private sector initiatives in this sector. Initiatives have been
included if they have a global scope, with active members from multiple regions of the world, and have at least one
significant work programme specifically focused on accelerating emissions reduction in this sector. The list is not
exhaustive and will be updated over time.

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HYDROGENIn summary, international collaboration around hydrogen is well established and wide
ranging, and the institutions and initiatives needed to deliver are largely in place. That said,
additional resources and stronger collective actions within this structure will be necessary
to make faster progress in the development of the sector.

PRIORITY AREAS FOR INTERNATIONALCOLLABORATION

There are four key areas that stand out as immediate priorities for strengthening
international collaboration: demand creation; standards and certification; research andinnovation; and financial and technical assistance. These represent priorities forinternational collaboration over the next 1-2 years, which can unlock further actions andfaster progress later in the decade.

COORDINATING ACTION TO CREATE TARGETED DEMAND FOR
LOW-CARBON AND RENEWABLE HYDROGEN, STARTING WITH
EXISTING INDUSTRIAL APPLICATIONS

As noted previously, almost all hydrogen produced today is sourced from fossil fuels. And insome of the sectors where it may be most useful for decarbonisation, hydrogen is barely
used at all. As a result, an entirely new set of demand creation policies, trade structures,
regulations and business models are needed for a renewable and low-carbon hydrogenmarket.
Strong demand creation policies are a key pillar for low-carbon and renewable hydrogen in
sectors where unabated fossil-fuel hydrogen is currently used, and for hydrogen and its
derivatives in applications where it is not yet used. At the national level, governments cancreate demand using policies that either act on price (to close the cost gap with fossil fuelalternatives) or on volume. Volume-based policies include public procurement and mandates
that require a minimum share of renewable and low-carbon hydrogen use in specific sectors.
The private sector, similarly, can support demand creation through commitments to use afixed volume (or achieve a certain share) of hydrogen in specific applications, and byinvesting in hydrogen-using assets.
International collaboration can support faster growth in demand for low-carbon andrenewable hydrogen in three ways: exchanging policy best practice; aggregating demand toaccelerate cost reduction; and creating level playing fields in competitive sectors.
Exchanging best practice on policy design and implementation. Understanding what
has worked in specific countries and settings can help to replicate successes and avoid
mistakes. Countries are already developing and implementing a diverse range of policy
approaches: the United Kingdom is proceeding with a contractual producer-focusedhydrogen business model which also encourages end-user uptake; Germany is considering(carbon) contracts for difference to promote hydrogen use in industry; Portugal and India are
testing auctions for hydrogen supply; and the United States is considering a production tax

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HYDROGENcredit to reduce the cost of low-carbon hydrogen production. Comprehensively sharing thelessons learned from the design and implementation of these and other policies could help
many countries identify more quickly the approaches that will be effective in their own national
circumstances.
Several international initiatives already support mutual learning between countries onhydrogen policy. Faster progress could be supported by a more concerted effort to sharelearning between international initiatives that have differing regional or thematic focus areas.
For example, some initiatives focus on the conditions of a particular geographic region, andaim to tackle local barriers to hydrogen deployment. While each of these can be valuable,
regional initiatives cannot easily tap into the experience and lessons learned in more distantmarkets. This leaves knowledge to percolate gradually from one region to another throughinternational companies, or through bilateral relationships. A more systematic linking ofefforts across regions—building on existing efforts—could lead to less duplication of effort
and faster shared learning. Industry can also support this process by sharing its insights on
why some policies have proven more effective than others.
Aggregating demand to accelerate cost reduction. Countries acting together can achieve
the volumes of hydrogen production needed for significant cost reductions more quickly.
Coordinated action on this front will enable reaching the required demand with lower
individual effort. Coordinated deployment can reduce risks as well as costs, by sending astronger signal to investors, and by allowing the testing of a range of business models andapplications. This opportunity applies equally to the public and private sectors.
In addition, coordinating efforts to promote low-carbon and renewable hydrogen demand canbe beneficial for infrastructure development. Pipelines, facilities at ports and trading routes
all benefit from economies of scale. By working together, several users can plan theconversion or construction of hydrogen transport, storage or refuelling facilities, increasing
the value and reducing the risks of investing in such infrastructure. The benefits include lower
transport costs, access to sites with lower production costs, and greater resilience of thesystem (as more suppliers can be connected in a network, avoiding reliance on a single one).
Many international initiatives are working on demand creation in ways that support both thesharing of lessons learned related to policy implementation, and the reduction of costs
through increased market size. Mission Innovation has a target of 100 hydrogen valleys by
2030 covering production, storage, and end use worldwide. The Hydrogen Initiative of the
Clean Energy Ministerial has set up a Global Ports Hydrogen Coalition aimed at driving
demand for low-carbon hydrogen technologies and hydrogen-based fuels in ports andsurrounding areas, recognising that ports present opportunities to bring multiple hydrogenuses together and to build upon good connectivity and infrastructure. The World Economic
Forum’s (WEF) First Movers Coalition brings private sector actors together to set explicit
targets for the use of low-carbon technologies and fuels including hydrogen across aviation,
shipping, aluminium, carbon dioxide removal, trucks, and steel. WEF and IRENA have issued
enabling measures roadmaps (for Europe and Japan) that provide an overview of thedifferent ways governments can support demand creation. The Green Hydrogen Catapult
initiative focuses on increasing the supply of green hydrogen (targeting 45 GW of electrolysis
and a USD 2/kg cost target) but also aims to aggregate demand in ‘hydrogen hubs’.

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Each of these initiatives, among others, are helping to build the global market for low-carbon
and renewable hydrogen, and some are successfully aggregating efforts across multiple
actors. However, the overall level of confirmed demand remains low: announced targets andcommitments would create a demand for less than 3 Mt of low-carbon and renewablehydrogen (CEM, 2022; IRENA, 2022c). This corresponds to around 3% of the current globalhydrogen demand. Such a low level of demand creation will not achieve the full extent of cost
reduction that is possible over the coming years. To accelerate cost reduction, countries andcompanies should agree on stronger near-term targets for the deployment of low-carbon andrenewable hydrogen, translating these into specific policies and purchase commitments tomobilise investment in hydrogen production. In the near term, the largest opportunity toincrease deployment and drive down costs is in the sectors where hydrogen is already used
– including fertilisers, chemical manufacturing and refining.
Creating level playing fields in competitive sectors. Some of the sectors where there is
the greatest opportunity for near-term deployment are significantly exposed to international
trade. These include ammonia (for fertilisers) and methanol, of which 15% and 28% of global
production is traded internationally, respectively (UNSW, 2021; IRENA, 2022d). Given thecurrently higher cost of low-carbon and renewable hydrogen compared to unabatedhydrogen, there is a risk that first mover countries and companies could be penalised, withindustries relocating or trade flows being diverted to lower cost and higher emittingcompetitors. Deployment of low-carbon and renewable hydrogen could stall as a result. Overthe longer-term, the same risk applies to some new end use sectors for hydrogen, such as
steel.
Countries can mitigate this risk by coordinating hydrogen deployment policies in the relevant
sectors. This could involve alignment either of quantity-based policies, such as sectoral
mandates, or of carbon pricing. Either approach could be used to establish a level playing
field, with similar cost premiums for low-carbon hydrogen products across regions. Countries
that are significant producers of ammonia and methanol or that have interest in scaling-up
production should initiate discussions aimed at agreeing coordinated measures in these
sectors as an immediate priority. Over time, the participation of a larger group of countries insuch an agreement is likely to be needed, to avoid the risk of first movers on low-carbon andrenewable hydrogen deployment being undercut in global markets.

RECOMMENDATION 1
Countries and companies should coordinate internationally to increase
commitments for the use of low-carbon and renewable hydrogen in sectors wherehydrogen is already used, supported by specific policies and purchase agreements,
to collectively send a strong demand signal and mobilise investment inproduction. In new priority application sectors, countries should share learning toaccelerate early deployment. This should be done in a manner that ensures a levelplaying field in international trade.

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URGENTLY AGREEING COMMON STANDARDS FOR HYDROGENEMISSIONS, SAFETY AND OPERATIONS
Robust and globally harmonised standards relating to emissions, safety, and operations
are essential for hydrogen’s potential in the low-carbon economy to be fully realised.
International collaboration on hydrogen standards has so far largely focused on safety andoperational protocols in traditional hydrogen-using sectors such as refining and chemicals.
The wider range of hydrogen uses in the low-carbon economy now requires a new andbroader set of standards to be agreed. This is a critical enabler of many of the other policies
and priorities for international collaboration.
There are already several international initiatives active in the development andimplementation of hydrogen standards. The International Partnership for Hydrogen and
Fuel Cells in the Economy (IPHE) is notable as an intergovernmental forum with thepotential to support the development of common and harmonised hydrogen standards andregulations. Its focus is on the research and identification of priorities related to hydrogen
emissions, safety and operational protocols and guidelines, which subsequently inform
Standards Development Organisations (SDOs) such as the International Organization forStandardization (ISO), the International Electrotechnical Commission (IEC), among others.
However, these efforts have not received the levels of political attention and resources thatare needed to make rapid progress. There is insufficient funding allocated to the prenormative research that supports the development of standards. 4 Many of the gaps instandards identified by technical bodies have not yet been addressed, and processes in
SDOs are often protracted.14 More concerted efforts, including political commitment andfunding, are needed to make progress in two areas: measurement of emissions; and safety
and operations.
Standards for the measurement of emissions. Since hydrogen can be produced througha wide array of technological methods, from unabated fossil fuels to renewable-powered
electrolysis, a broad range of emissions intensities of production is possible. Emissions canalso be created in hydrogen’s transport and use.
To support the rapid growth of markets for low-carbon and renewable hydrogen, it will be
important to have standards for the measurement of emissions created by hydrogenproduction, delivery and use, accompanied by certification schemes. These are needed togive public or private sector buyers of hydrogen and its derivative goods and services
confidence in what they are buying. Over time, there may also be advantages to extending
these standards and certification schemes to cover other sustainability criteria, such as
land and water use, air pollution and social development.
International collaboration is critical in this area. Urgent agreement between governments
on a common and harmonised methodology for GHG accounting can support international

4Pre-normative research (or pre-standardisation research) refers to the technical and scientific knowledge that is required to
inform the development of standards.

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trade in low-carbon and renewable hydrogen and can provide a foundation for international
efforts to coordinate deployment, as described above. Conversely, absence of an agreed
standard would likely be an obstacle to international trade. The adoption of differing
methodologies with varying degrees of rigor and transparency could undermine investor
and consumer confidence in the low-carbon hydrogen market and complicate theoperations of hydrogen companies that operate across international borders.
A related and essential need is for international collaboration on methods to detect andrepair hydrogen leakage. New scientific research suggests that hydrogen is more potent
as an indirect greenhouse gas than previously assessed (Warwick et al., 2022), and thatcurrent leakage detection practices and technologies do not provide sufficiently accurate
measurements. Internationally agreed guidelines and protocols for the measurement andreporting of hydrogen leakage, and for the verification of measures to address it, will beurgently needed to maintain confidence in any systems for the measurement andcertification of hydrogen emissions, and in hydrogen’s role as a climate solution.
Safety and operational standards. Internationally agreed safety and operational
standards will be crucial to enabling the use of hydrogen in sectors where it has not beenused before. In the long-term, these are the sectors where hydrogen is likely to make thegreatest contribution to decarbonisation. Priorities include:
Shipping: Standards and guidelines to ensure the interoperability and safety of vessels
powered by hydrogen or hydrogen-based fuels, and for the storage and bunkering ofhydrogen and hydrogen-based fuels at ports. Standards should also be consistent withexisting International Maritime Organization guidelines on vessel design and operational
measures, e.g. guidelines related to reducing underwater radiated noise from maritime
vessels (IMO, 2014).
Road transport: Safety protocols for hydrogen refuelling stations for heavy-duty trucks, inparticular as it relates to requisite setback distances (minimum distance from otherstructures).
Steel production: Operational and safety standards for the use of hydrogen in the direct
reduction of iron.
Countries should align on all those priorities and work together through fora such as IPHE
and SDOs to accelerate the development of standards. The private sector can greatly
support those efforts by pressing for the development and implementation of priority
standards, and advancing the technological innovation needed to underpin standards
development.
Governments should also work towards greater alignment between the activities ofinternational bodies focused on standards and regulations (such as IPHE and SDOs), andthose focused on research and development (such as Mission Innovation and theHydrogen TCP). This will ensure that the development of harmonised operational andsafety standards closely follows the development of relevant technologies. Stronger

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HYDROGENalignment could be achieved through the creation of joint task forces focused on developing
the needed technologies as well as the safety and operational standards for hydrogen use
in new priority applications, including maritime shipping, heavy duty trucks andsteelmaking. 5

RECOMMENDATION 2
Governments and companies should agree a comprehensive portfolio ofinternational standards and associated certification schemes for renewable andlow-carbon hydrogen, addressing emissions accounting, safety, and operational
issues, including leakage. This should be supported by a programme that provides
a clear direction and sufficient resources to relevant technical bodies. This will bevital for supporting a series of other actions, most notably high-quality demandcommitments and trade agreements.

ACCELERATING THE RESEARCH, DEVELOPMENT AND

DEMONSTRATION OF HYDROGEN TECHNOLOGIES

Research, development and demonstration is important both to demonstrate the viabilityof the next generation of hydrogen technologies, and to support continued cost reduction.
On the supply side, innovation will be required to reduce the costs of renewable and lowcarbon hydrogen production, storage and transport, including its conversion into othercarriers (such as ammonia or liquid organic hydrogen carriers) and their reconversion backto hydrogen. Innovation will also be needed to improve the sustainability of manufacturingof key hydrogen technologies such as electrolysers, including by decreasing the demandfor critical materials, which may be achieved both by improving the design of the equipment
and by facilitating the recovery and recycling of these materials at the end of their lifetime.
On the end use side, while the near-term opportunities for renewable and low-carbonhydrogen deployment are concentrated in the sectors where it is already used, the potential
for its larger deployment over the longer-term will only be realised after technologies for theuse of hydrogen and its derivatives in new priority applications have been fully
demonstrated. Most of these technologies are at pilot or demonstration stage, with only a
few exceptions that are at the very early stages of commercialisation.

5
The International Association for Hydrogen Safety (HySafe) has mapped state-of-the-art and recent progress in normative
research to support standards development and identified and ranked pending research needs. Similarly, the IPHE has put
together a compendium of high priority standards that must be developed.

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Technology readiness levels of key hydrogen and hydrogen-derivatives
end-use technologies

Notes:BF = blast furnace. DRI = direct iron reduction. FC = fuel cell. HRS = hydrogen refuelling station. HD = heavy-duty.
HT = high throughput. ICE = internal combustion engine. LD = light-duty. MeOH = methanol. MTO = methanol to olefins.
PEM FC = polymer electrolyte membrane fuel cell. SOFC = solid oxide fuel cell. VRE = variable renewable electricity.
Cogeneration refers to the combined production of heat and power. TRL classification based on Clean Energy Innovation(2020), p. 67.
Source: IEA, 2022.

In the net zero scenario, a significant fraction of renewable and low-carbon hydrogen
demand in 2030 onwards comes from new priority applications where hydrogen use is not
yet commercialised. An urgent priority is therefore to demonstrate these new technologies
in time to ensure their commercial viability before the end of this decade, allowing theirdeployment to significantly accelerate thereafter. This implies a strong prioritisation of thedemonstration of:
The use of renewable hydrogen in refining, and the production of chemicals (methanol andammonia) and synthetic fuels. While this presents lower barriers relative to new hydrogenuses, there remain challenges with the operation of chemical plants under variable inputsof hydrogen—which would be the regime when using renewable hydrogen. This may
require the demonstration of innovative processes to deal with variable operation regimes
or new business models to address high storage needs to smooth out the variability.


The use of hydrogen, methanol and ammonia fuel in maritime shipping and thedevelopment of vessel technologies using such fuels that simultaneously reduce
vessel-radiated underwater noise.

The use of low-carbon and renewable hydrogen in the direct reduced iron (DRI)
production process for steelmaking.

The use of hydrogen in heavy duty trucks, including high throughput refuelling stations.



The use of renewable hydrogen for long-duration energy storage of power and thedevelopment of turbines capable of being powered by 100% hydrogen and ammonia,
to support power system balancing and seasonal electricity storage.

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The large-scale production of synthetic hydrocarbons that can be used as sustainableaviation fuels and the development of technologies for the direct use of hydrogen inaviation.



The use of renewable and low-carbon hydrogen in high-temperature heating
operations in industry.



The use of porous reservoirs such as rock caverns for underground storage of large
quantities of gaseous hydrogen.



Lower energy consumption for hydrogen (re)conversion to (from) hydrogen carriers
such as liquid hydrogen, ammonia, and liquid organic hydrogen carriers.

There are three major international initiatives focused on the research and development of
renewable and low-carbon hydrogen technologies: the IEA’s Hydrogen and Advanced Fuel
Cells TCPs and Mission Innovation’s Clean Hydrogen Mission. The IEA’s Hydrogen andAdvanced Fuel Cells TCPs are the main source of scientific knowledge, bringing together
the largest pool of leading researchers across the world, whereas the Clean Hydrogen
Mission aims to promote research, development, and innovation and deploy at least 100
clean hydrogen valleys.
Ongoing efforts are bringing certain technologies closer to commercialisation. In heavyduty road transport there is a scattered set of demonstration efforts, mainly in China,
Europe and the United States (FuelCellsWorks, 2021; IVECO, 2020; Truckinginfo, 2021).
In shipping, there are several ongoing demonstration projects for the use of hydrogen insmall, short-distance vessels, and major industry stakeholders have announced plans tomake 100% ammonia-fuelled maritime engines available by as early as 2023 (Wärtsilä,2021). In industry, however, there is only one operational pilot for the production ofammonia from renewable hydrogen (Iberdrola, 2022), one demonstrator for the use ofrenewable hydrogen in direct reduction of iron (Hybrit, 2022), and a limited number of trials
for the use of hydrogen in high-temperature heating. International efforts to createhydrogen valleys are currently highly concentrated in Europe and the United States, andthere is a lack of emphasis on industrial and maritime applications.
Although these efforts are encouraging, they are insufficient to develop the knowledge,
operational experience and confidence needed to bring these technologies to commercial
scale and begin their large-scale deployment before the end of this decade. Governments
should work together to develop a critical mass of demonstration projects in each of theareas listed above. Aligning efforts with respect to areas of focus, objectives, and timelines,
can significantly accelerate innovation. The private sector should participate in this process,informing the definition of common objectives, and helping governments understand what
support is needed to bring new technologies to the market.
The benefits of internationally coordinated research, development and demonstration
efforts will be greater if there is deeper sharing of knowledge between countries.
Knowledge that is useful to share includes not only the results of testing hydrogen

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HYDROGENtechnologies in different applications, but also the lessons learned in the project
management, planning and implementation of large-scale demonstrators, which tend to becomplex ‘first-of-a-kind’ projects. Knowledge sharing is particularly valuable for industrial
applications of hydrogen that are capital intensive, where perceived high risk can prevent
private investment.
Knowledge sharing is already encouraged and supported by initiatives including the IEA’s
Technology Collaboration Programme (TCP), which normally publishes a report after theconclusion of major tasks, and the Clean Hydrogen Mission of Mission Innovation.
However, the quality of information shared depends on the openness of participating
countries. From our discussions with stakeholders, we believe there is significant scope fordeeper sharing of knowledge, without prejudice to countries’ national industrial interests.
We suggest that governments should agree a set of knowledge sharing principles that
include, at a minimum, mandates for the production of ‘lessons learned’ reports from all
publicly-funded demonstration projects, addressing issues of project management as wellas technical performance. Deeper knowledge sharing can also be enabled by opening
national research programmes to the participation of experts and companies from othercountries, rather than limiting them to national participation as is the most common practiceat present.
International cooperation of this kind can particularly benefit emerging economies that arelikely to deploy hydrogen technologies after developed economies. To support faster global
progress, knowledge sharing should be extended as much as possible to all countries
active in the development and demonstration of hydrogen technologies, not only those thatparticipate in the IEA TCPs and Mission Innovation.
Aside from the development of technologies, there is also a need for international
collaboration to measure the extent of hydrogen leakage from infrastructure (especiallyrepurposed natural gas infrastructure), to better understand hydrogen’s global warming
potential, 6 and to develop best practice in hydrogen leakage, detection and repair (LDAR)
systems. Governments and companies should participate in these efforts, supported byinternational hydrogen initiatives, to ensure that effective leakage, detection and repair
systems are widely adopted as soon as possible.
Stronger collaboration and priority alignment is necessary between research anddevelopment and knowledge-focused bodies such as the IEA’s TCPs, Mission Innovation’s
Clean Hydrogen Mission and IRENA’s Collaborative Framework on Green Hydrogen, as
well as standards-focused bodies such as the IPHE. Enhanced collaboration can beaccomplished through the creation of joint tasks focused on research for the developmentof norms and standards to mobilise a large pool of scientific resources and experts torapidly close research gaps that are necessary for the development of safety andoperational standards for hydrogen use in new priority applications.

6

According to recent research, the global warming potential of hydrogen over a 100-year time horizon is in the order of 11±5

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HYDROGENRECOMMENDATION 3
Governments and companies should work together to dramatically increase thenumber and geographical distribution of hydrogen demonstration projects and toensure that these appropriately cover each of hydrogen’s high-value end use
sectors, including maritime shipping, heavy industry, and long-duration energy
storage. Governments and the private sector should agree on minimum reporting
principles to guide a deeper and more rapid sharing of knowledge thesedemonstrators, including a commitment to share the lessons learned from all
publicly funded demonstration projects. Doing so will help overcome technology
availability barriers and accelerate the pace of deployment in multiple regions inparallel.

RAPIDLY SCALE-UP INVESTMENTS IN RENEWABLE AND LOWCARBON HYDROGEN PRODUCTION, AND SUPPORT THE
DEVELOPMENT OF THE SECTOR IN EMERGING ECONOMIES

Making renewable and low-carbon hydrogen affordable and globally available by 2030
requires an enormous increase in investment. Around USD 60-130 billion per year is likely
to be needed until 2030. Currently, less than USD 1 billion per year is invested in the
production of renewable and low-carbon hydrogen and its derivatives, and in the required
infrastructure (IEA, 2021a).
Private sector investment can be mobilised by putting the right policies in place. According
to the Hydrogen Council, private sector commitments for hydrogen investments are
growing rapidly and projects announced from now through 2030 account for more than
USD 160 billion across production, infrastructure and end uses (Hydrogen Council, 2021b).
However, most of these relate to projects that are still in feasibility or pre-feasibility stages;
only a third are associated with projects that are in planning or at a more advanced stageof development. Converting these into actual projects requires a rapidly growing flow ofinvestment and strong demand creation policies, as well as demonstration of key
technologies.
This can be achieved by the adoption of targeted policies and supporting mechanisms, as
discussed above. Some governments are already taking the initiative by deploying novel
financing mechanisms, such as the H2Global instrument of the German government,
based on a mechanism similar to contracts for difference, the US Department of Energy
loan guarantees or the European Green Hydrogen Acceleration Center, which supports
projects with an industrial vision and a whole value chain scope at early stage ofdevelopment (DOE, 2022). Sharing and promoting successful best practices can facilitate
their widespread adoption and speed up project deployment, increasing investor
confidence.

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HYDROGEN

Mobilising investment can be more difficult in emerging markets and developing
economies, which typically suffer from higher costs of capital and may have more difficult
business environments. Many such countries are interested in developing the hydrogen
economy as a source of jobs, exports, and clean energy, and there is growing interest in
the opportunity for renewable hydrogen to meet domestic demand for products such as
fertilisers while shielding consumers from the high price of imported gas. Some developing
countries have locations and resources that are particularly well suited to the production of
low-cost renewable and low-carbon hydrogen.
International assistance can help developing countries mobilise finance for the hydrogen
economy by providing technical assistance with policy design and project preparation, andby providing targeted concessional finance for first-of-a-kind projects. At present,
assistance of this kind appears to be sparse. Multilateral development banks have provided
support for governments to develop strategies outlining the role of hydrogen in theirdecarbonisation plans, and to some extent for the design of policies to implement thesestrategies, but so far they have provided no financial support for renewable and low-carbonhydrogen projects.
This is a substantial gap that needs to be closed. Financial assistance should also becomplemented by technical assistance programmes that address issues including thepolicies and finance models that are most effective at mobilising private finance andminimising the government’s share of total project costs; and approaches to risk-sharing
among the various actors along the hydrogen value chain.

RECOMMENDATION 4
Donor countries and multilateral development banks should make increased levelsof concessional finance available for well targeted, catalytic uses that can mobilise
large-scale private investment in renewable and low-carbon hydrogen production,
distribution and end use projects in developing countries. This should be supported
by a process in which countries work with lending institutions to identify viable
projects that are being delayed by high costs of capital and to assess obstacles toinvestment, along with technical assistance programmes to assist governmentswith policy design. This will provide much-needed support for the first wave of lowcarbon and renewable hydrogen projects, ensuring that a wider set of countries candeploy the technologies required.

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REFERENCES
BNEF (Bloomberg New Energy Finance) (2021), New Energy Outlook 2021,
https://about.bnef.com/new-energy-outlook/BP (2022), Energy Outlook 2022, https://www.bp.com/en/global/corporate/energyeconomics/energy-outlook.html
CEM (Clean Energy Ministerial) (2022), Global hydrogen targets,
https://www.cleanenergyministerial.org/content/uploads/2022/05/aspirational-targetsbriefing-100522.pdf
DNV (2022), Hydrogen Forecast to 2050, https://www.dnv.com/focusareas/hydrogen/forecast-to-2050.html
ETC (Energy Transitions Commission) (2021), Making the Hydrogen Economy Possible:
Accelerating Clean Hydrogen in an Electrified Economy, https://www.energytransitions.org/publications/making-clean-hydrogen-possible/
FuelCellsWorks (2021), Great Wall Motor’s Subsidiary FTXT Delivers 100 Hydrogen Heavy
Trucks Demonstration Project for Xiongán New Area,
https://fuelcellsworks.com/news/great-wall-motors-subsidiary-ftxts-delivers100hydrogen-heavy-trucks-demonstration-project-for-xiongan-new-area/
HYBRIT (2022), Fossil-free steel, https://www.hybritdevelopment.se/en/
Hydrogen Council (2021a), Hydrogen for Net Zero, https://hydrogencouncil.com/en/hydrogenfor-net-zero/
Hydrogen Council (2021b), Hydrogen Insights July 2021,
https://hydrogencouncil.com/en/hydrogen-insights-2021/
Iberdrola (2022), His Majesty the King inaugurates Iberdrola's green hydrogen plant in
Puertollano, the largest for industrial use in Europe, https://www.iberdrola.com/salacomunicacion/noticias/detalle/su-majestad-el-rey-inaugura-planta-hidrogeno-verdepuertollano
IEA (International Energy Agency) (2022), Global Hydrogen Review 2022, (forthcoming).
IEA (2021a), Global Hydrogen Review 2021, https://www.iea.org/reports/global-hydrogenreview-2021
IEA (2021b), Net Zero by 2050, https://www.iea.org/reports/net-zero-by-2050
IEA (2020), Energy Technology Perspectives 2020, https://www.iea.org/reports/energytechnology-perspectives-2020
IMO (International Maritime Organization) (2014), Guidelines for the Reduction of Underwater
Noise from Commercial Shipping to Address Adverse Impacts on Marine Life,
https://cetsound.noaa.gov/Assets/cetsound/documents/MEPC.1Circ%20883%20Noise%20Guidelines%20April%202014.pdf
IRENA (International Renewable Energy Agency) (2022a), Geopolitics of the Energy
Transformation: The Hydrogen Factor,
https://www.irena.org/publications/2022/Jan/Geopolitics-of-the-Energy-TransformationHydrogen
IRENA (2022b), World Energy Transitions Outlook 2022,
https://irena.org/publications/2022/mar/world-energy-transitions-outlook-2022

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The Breakthrough Agenda Report

HYDROGENIRENA (2022c), Global Hydrogen Trade to Meet the 1.5°C Climate Goal: Green Hydrogen
Cost and Potential, https://www.irena.org/publications/2022/May/Global-hydrogentrade-Cost
IRENA (2022d), Innovation Outlook: Renewable Ammonia,
https://www.irena.org/publications/2022/May/Innovation-Outlook-Renewable-Ammonia
IRENA (2020), Green hydrogen cost reduction,
https://www.irena.org/publications/2020/Dec/Green-hydrogen-cost-reduction
IVECO (Industrial Vehicles Corporation) (2020), H2Accelerate – new collaboration for zero
emission hydrogen trucking at mass-market scale, https://www.iveco.com/en-us/pressroom/release/Documents/2020/H2Accelerate.pdf
Truckinginfo (2021), Hyundai to Deploy Hydrogen-Fuel-Cell Trucks in California,
https://www.truckinginfo.com/10148044/hyundai-to-deploy-hydrogen-fuel-cell-trucks-incalifornia
United States Department of Energy (2022), DoE Announces First Loan Guarantee for a
Clean Energy Project in Nearly a Decade, https://www.energy.gov/articles/doeannounces-first-loan-guarantee-clean-energy-project-nearly-decade
Wärtsilä (2021), Wärtsilä launches major test programme towards carbon-free solutions withhydrogen and ammonia, https://www.wartsila.com/media/news/14-07-2021-wartsilalaunches-major-test-programme-towards-carbon-free-solutions-with-hydrogen-andammonia-2953362
Warwick, N., P. Griffiths, J. Keeble, A. Archibald, J. Pyle (2022), Atmospheric implications ofincreased hydrogen use, https://www.gov.uk/government/publications/atmosphericimplications-of-increased-hydrogen-use

ANNEX
Enabling
condition

Pathway to 2030

Long-term
vision andaction plans

By early 2020s, governments should put in place a supporting
policy framework to promote the uptake of low-carbon andrenewable hydrogen in existing industrial applications. This
includes policy instruments to tackle the higher cost, creating alevel playing field for trade-exposed commodities (such as
ammonia) to prevent carbon leakage and setting a clear timeline
for decarbonisation of these applications including the use of
sectoral quotas. Countries should also have an international
platform to share lessons learned from early implementation ofdemand-pull policies to inform policy design across countries.
Leading countries have identified hydrogen valleys with different
conditions that can trigger initial demand and economies of scale
for common infrastructure. At the same time, the private sector
should set targets for near zero emissions materials and fuelsthat promote demand for low-carbon and renewable hydrogen(derivatives).

Tracking(as of July 2022)

PAGE | 76

17 countries plus theEuropean Union havehydrogen strategies,
including targets for
production and use.

The Breakthrough Agenda Report

Enabling
condition

HYDROGEN

Pathway to 2030

Tracking(as of July 2022)

By mid-2020s, governments should put in place a supporting
policy framework to promote the uptake of low-carbon andrenewable hydrogen in key applications such as steel,international shipping, aviation, and long-term storage. This
includes using policies that promote fuel shift rather than only
incremental emission reductions since the hydrogen pathways
are new in these applications.
By the end of the decade, all governments should haveregulatory frameworks in place to make sure that demands in
new sectors are met only with renewable and low-carbonhydrogen. All developed economies have defined a strategy tophase out unabated fossil-based hydrogen production forexisting industrial applications. Efforts should be aligned to meet
Mission Innovation’s Clean Hydrogen Mission of delivering atleast 100 large-scale hydrogen valleys globally.
Demandcreation andmanagement

By early 2020s, all developed and major emerging economies
should have assessed whether hydrogen can play a role in theirlong-term decarbonisation plans and defined a hydrogen strategy
accordingly and integrated within an overarching strategy for
decarbonising the energy system. These should be accompaniedby short-term action plans that can be fully implemented before
2030, with milestones to track progress.

Announced
commitments andtargets cover 3 Mt ofhydrogen demand.

These strategies should also incorporate plans to share lessons
learned with emerging economies during their development andimplementation. This would facilitate that all economies havedeveloped a vision for the role of hydrogen in their energy
systems by 2030 and adopted an implementation plan.
Government action should be complemented by a response fromthe private sector, which needs to develop its own vision on how
to adopt renewable and low-carbon hydrogen as adecarbonisation tool.
Finance andInvestment

Leading countries need to put in place in early 2020s policies,
regulatory frameworks and novel financing mechanisms to help
the private sector to de-risk investment in renewable and lowcarbon hydrogen projects. They should create a cooperation
platform for sharing and promoting those best practices that are
proven more efficient in unlocking investment.
By mid-2020s, governments and the private sector should
increase annual investments in renewable and low-carbonhydrogen above USD 50 billion. Developed economies shouldmake available international finance for renewable and lowcarbon hydrogen projects in emerging economies. Financial
institutions should understand risks and mitigation measuresassociated with various business models for hydrogen.

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Total investment inelectrolysers reached
USD 200 million in 2021.

The Breakthrough Agenda Report

Enabling
condition

HYDROGEN

Pathway to 2030

Tracking(as of July 2022)

By the end of the decade, the risk perception for the mostconventional parts of the value chain like electrolysis ortransmission should be low enough to compete with a cost ofcapital premium in line with equivalent projects in the chemicals
and electricity sectors. At this stage, the most advanced
applications (e.g. ammonia production) are transitioning frommainly relying on public capital to private.
Research
innovation

As soon as possible, governments in advanced economies
should take decisions about funding and actions for mitigating
investment risks associated with demonstration at scale of enduse technologies for hydrogen and its derived fuels. Publichydrogen R&D agendas across countries should be aligned,
maximising synergies and coordination gains, and targeting
those applications for hydrogen and its derived fuels where it
should be prioritised due to the lack of other efficient low-carbon
technology alternatives.
By mid-2020s, technologies such as the production of ammonia
and methanol using variable renewables or the use of ammonia
and methanol engines for maritime applications should havebeen demonstrated and be ready for commercialisation. By
2030, the use of 100% hydrogen reduction in DRI for steel
production and liquid hydrogen ships should reach fullcommercial scale. In addition, research gaps related to safety
protocols for liquid hydrogen storage and use, materials
compatibility or leak detection should be filled as soon as
possible to build the necessary evidence for the development ofrobust standards and regulations.
Knowledge transfer, particularly for public-funded projects,
should be guaranteed to facilitate and accelerate deployment,
especially in emerging economies.

TRLs for key
technologies
Alkaline electrolysis –TRL 9
PEM electrolysis – TRL
9Solid oxide electrolysis –TRL 7
AEM electrolysis – TRL
4
Steam methane
reforming with CCUS –TRL 8Autothermal reformingwith CCUS – TRL 8
Partial oxidation – TRL 7
Methane pyrolysis –TRL 6For other technologies(including infrastructureand end uses ofhydrogen) see
forthcoming Global
Hydrogen Review 2022.
Marketstructures

By the mid-2020s, a long-term emissions reduction policy
framework is in place to provide certainty for new renewable andlow-carbon hydrogen production capacity. Alongside initial
demand-side measures such as contracts for difference andprocurement, this should also include mass-market carbon
pricing and emissions performance standards that will limit the
production of high emission hydrogen.

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The Breakthrough Agenda Report

HYDROGEN

Enabling
condition

Pathway to 2030

Tracking

Standards
andregulations

A globally harmonised methodology for calculating GHG
emissions for all major hydrogen production pathways should beurgently agreed. The methodology should extend to hydrogentransport and use later in the decade. Countries should urgently
collaborate to develop and test at scale hydrogen leakage
measurement technologies and leakage detection and repair(LDAR) best practices. Governments and organisations should
regularly participate in information-sharing regarding hydrogenleakage research and LDAR best practices. By 2030, leakage
measurement, detection, and repair systems should be widelyadopted.

(as of July 2022)

By the mid-2020s, there are globally harmonised standards andguidelines that guarantee interoperability across countries andjurisdictions (I.e. vessels need to be able to refuel with the same
hardware in all the calling ports). In particular, there are globally
synchronised safety protocols, guidelines and regulations for the
storage and bunkering of hydrogen and hydrogen-based fuels at
ports, as well as for the on-board storage of hydrogen andhydrogen-based fuels in maritime vessels. Furthermore, there
are globally agreed safety and operational standards for the useof hydrogen in the direct reduction of iron for steelmaking, and inheavy-duty trucking.
Supplychains andinfrastructure

By early 2020s, the largest global ports have mapped out the
infrastructure to handle hydrogen (derivatives) on a scale alignedwith net zero targets. Countries that have an existing natural gas
network have assessed the suitability of the network forrepurposing to hydrogen, the techno-economics and risks ofconversion (including hydrogen leakage) and, if suitable, haveidentified a roadmap for conversion. Storage capacity around theworld for various types of reservoirs is well understood along withstorage needs.
By mid-2020s, there are clear guidelines for regulation, including
cost recovery, operation, access, and planning of the hydrogen
network. Leading economies have already started financing andbuilding the hydrogen infrastructure needed to cater for the longlead times and make sure it is ready for later stages. Major ports
around the world are ready to handle hydrogen derivatives andhave a plan for ramping down fossil fuel infrastructure while
maximising repurposing for hydrogen to reduce costs.
Electrolyser and fuel cells are manufactured globally with adiversified and robust supply chain. The project pipeline isexpanding quickly, and stands at around 50-100 GW forelectrolysers and 270 GW for fuel cells over the coming decade(a number constantly changing with business decisions),
although only a small fraction of the projects under development
have reached final investment decision (IRENA, 2020; IEA,
2021a).

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Zero ports that haveterminals ready forreception of hydrogen(derivatives) and theirinland distribution
Zero hubs that handlehydrogen flows larger
than 1 MtH2/yr

The Breakthrough Agenda Report

Enabling
condition

HYDROGEN

Pathway to 2030

Tracking(as of July 2022)

By the end of the decade, leading countries are buildinghydrogen pipelines to connect the main hydrogen clusters.
International
markets andtrade

By early 2020s, the conditions that make each transport pathway(shipping, pipelines, hydrogen carriers) attractive and the steps
needed to reduce their costs have been defined. There areregional coalitions of ports established and international
platforms for knowledge exchange between ports. Importing andexporting countries should align the timeline for development,
sizing, and characteristics (carriers) of the trade infrastructure toenable the development of a widespread and reliable network ofports that can facilitate hydrogen trade and reduce costs.
By mid-2020s, regional price benchmarks are being establisheddifferentiated by production process. The first long-term contracts
for low-carbon hydrogen and ammonia are signed andimport/export terminals are starting to be built. All countries thathave identified trade as a relevant part of their system are setting
explicit targets for import/export of hydrogen (derivatives) in theirhydrogen strategies. By now, codes, import custom duties, taxes,
and more broadly, rules within the WTO framework have been
adapted to cater for hydrogen and promote early emergence oftrade.
By the end of the decade, the main hydrogen hubs have several
suppliers and users, there are established price benchmarks
across regions that guide future investment, there is astandardised guidance for drafting new contracts. There is aparallel (emerging) spot market for hydrogen (derivatives) thatcomplements the long-term contracts. There is consistency
between the scope of regulation and decarbonisation targets
which facilitates the linking of different markets and hydrogen
trade between them.

Knowledge,
capability &skillsRepresentatives from all interested developing countries (as well
as from initiatives focused on developing countries) are active
participants in major global hydrogen and energy-related
initiatives.
By the mid-2020s, all national education systems havedeveloped plans (including technical and university degrees) for
training a specialised workforce of professionals able to respondto the challenges of adopting a new energy vector. These plansinclude inter-country exchange programmes to ensure that theknowledge developed in more advanced countries is shared anddoes not create gaps with lagging countries. Capacity-building
and training programmes are accessible to all and cover relevant
skill sets including construction, equipment manufacturing, facility
operation, and regulatory requirements. Special attention isplaced on capacity-building and training programmes in

PAGE | 80

0 Mt of import andexport flows fromcountries
Zero long-term supply
contracts signed
Today the largest projectis the Hydrogen Energy
Supply Chaindemonstration which
can export up to 300t H2
per year from Australia
to Japan.

The Breakthrough Agenda Report

Enabling
condition

HYDROGEN

Pathway to 2030

Tracking(as of July 2022)

communities experiencing displacement from fossil fuel intensive
sectors and in historically underserved communities.
By 2030, there is a robust pool of qualified and experienced
professionals in hydrogen deployment as it relates to its full value
chain. There are high quality careers in the clean hydrogensector in both developed and developing countries. There aresustainable jobs in construction projects, operations andmaintenance, and along the hydrogen supply chain, fromproduction to end use.
By 2030, the knowledge gap between countries has significantly
closed and there are established platforms across countries totransfer lessons across policies, project execution,
manufacturing, and regulation.

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The Breakthrough Agenda Report

ROAD TRANSPORT

CHAPTER 4. ROAD TRANSPORT“Zero-emission vehicles are the new normal and are accessible, affordable, andsustainable in all regions by 2030.” -- Road Transport Breakthrough goal

KEY MESSAGESTransport has the highest level of reliance on fossil fuels of any sector today,
which supply about 95% of its final energy demand. It accounts for more than
20% of global energy-related direct CO2 emissions, and produces a significant
share of air pollution and related threats to public health.



The transition to zero-emission road transport is at a relatively early stage interms of global market adoption, but progress is accelerating rapidly, with
substantial take-up of electric cars, urban buses, and two- and three-wheelers
in many countries.



That progress, while welcome, falls short of what is required to put the sector
on a Paris-aligned pathway. Just over 1% of cars on the road in 2021 werezero-emission vehicles (ZEVs), versus 20-25% needed by 2030. In 2021, ZEVs
accounted for under 9% of new car sales globally; by 2030, about 60% of newcars sold will need to be zero emission. Zero-emission trucks, which have only
just begun to enter the market in appreciable shares, will need to constitute atleast 35-40% of new sales by 2030. Zero-emission buses will also need to risefrom nearly 14% of new sales in 2021 to 60% by 2030.

Eliminating emissions from road transport will also need policies to reduce
unnecessary travel and encourage modal shifts to the least carbon-intensive
option and energy efficiency measures to reduce the carbon intensity of alltransport modes. International collaboration on road transport decarbonisation
is growing rapidly, both at national and subnational levels, with new initiatives
focused on a range of political and technical challenges.

Action across multiple enabling conditions, further strengthened byinternational collaboration, is urgently required to accelerate the transition andput it on track for the 2030 Road Transport Breakthrough goal. Six areas standout as priorities for strengthening international collaboration over the next 1-2
years, where we recommend the following actions:

Governments should agree on a timeline by which all new road vehicle sales
should be zero emission, with interim targets for countries taking into
account their level of economic development and ability to scale up
infrastructure, and should align policies with this target. Pathways

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ROAD TRANSPORT

compatible with 1.5°C indicate that this target date should be around 2035
for cars, for example. Vehicle manufacturers should commit to the sametimelines for 100% zero-emission vehicle production. This will send a clear
signal to industry and unlock larger economies of scale and faster cost
reductions, making the transition more affordable for all countries.


Governments should collectively agree a common understanding of thetechnologies that are consistent with the goal of zero-emissions roadtransport, in order to send a clear and unambiguous signal to industry. This
will accelerate economies of scale for key technologies, accelerating thepace of innovation and cost reduction, making ZEVs affordable sooner for
more people.



Governments should exchange best practice in policy to mobilise
investment and accelerate deployment of charging infrastructure, in
consultation with vehicle manufacturers and infrastructure investors. Thisshould be complemented by a broader scaling-up of technical and financial
assistance to developing countries at city, provincial, national and regional
levels. This will help to mobilise private investment, and ensure all countries
are able to access the benefits of the transition to zero-emission vehicles.

Governments should work together and with industry to avoid further
divergence of standards for charging infrastructure. There are alreadyseveral competing charging standards for light-duty vehicles; for heavy-duty
vehicles, avoiding further divergence of standards could limit wastefulinvestments in multiple charging types, and accelerate the adoption ofelectric trucks. Aligning standards for hydrogen refuelling stations can reap
similar benefits. Doing so will decrease costs and facilitate the transition in
vehicle importing countries.

Countries should work together and with industry to agree harmonised
standards to ensure sustainability and social responsibility along the entire
electric vehicle battery supply chain, including the extraction and processingof minerals and improving the recyclability of battery modules. As a priority,
these standards should minimise batteries' life-cycle emissions and theadverse social and environmental impacts associated with their production,
seek to extend their durability and promote reuse, repurposing and recyclingof their components. Similar standards on fuel cell value chains, including
information on platinum and other catalyst materials content and origin,should be put in place. Harmonised standards will send a clearer signal to
the global market, and facilitate compliance by battery and vehicle
manufacturers that sell to multiple markets.

Vehicle importer and exporter countries should agree on harmonised
regulations on vehicle trade to improve vehicle efficiency and safety ininternational trade in used vehicles. These rules should govern trade in zeroemission vehicles as well as internal combustion engine vehicles, supported
by strong mechanisms to enforce compliance. This will help prevent ‘vehicle
dumping’, locking developing countries into higher emitting vehicles.

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The Breakthrough Agenda Report

ROAD TRANSPORTSIGNIFICANCE OF THE SECTOR
Transport has the highest level of reliance on fossil fuels of any sector and accounted for
40% of CO2 emissions from all end‐use sectors at 7.7 GtCO2 in 2021, with road transportalone accounting for three-quarters at 5.9 GtCO2 (IEA, 2022a). It offers the largest markets
in which to quickly scale-up the deployment of batteries, bringing down their costs andthereby supporting the decarbonisation of the power sector. Furthermore, as the largest
market for oil, a rapid transition in road transport can help incentivise faster diversificationof investment in the energy industry towards clean technologies.
Cars and vans currently contribute the largest share of road transport CO2 emissions ataround 60%, but heavy-duty vehicles (HDVs) 1 also contribute a large share, at more than
35%, despite accounting for less than 5% of the vehicles on the road (IEA, 2022b). In somecountries, two- and three-wheelers also make up a significant share of vehicles on the road,such as Indonesia, where they consume in aggregate nearly as much gasoline as cars, orViet Nam, where they consume more than 50% more gasoline than cars. These vehicle
types are likely to be decarbonised at different rates, as technology maturity varies
markedly between them, with two- and three-wheelers first (overwhelmingly battery
electric), followed by cars and light-duty commercial vehicles (mostly battery and plug-in
hybrid electric) and urban buses (largely battery electric, with some fuel cell electric sales).
HDVs and intercity buses are at an earlier stage, with zero-emission models (mostly battery
electric, with some plug-in hybrid and fuel cell electric models) only just beginning to enter
the market.
Decarbonisation of road transport will require the implementation of a broad set of policies,
often summarised as a hierarchy of actions, as “avoid, shift, improve” (IRENA, 2021a). The
frequency and distance of discretionary car trips can be reduced (“avoid”) through policies
that provide alternatives to private car trips, reduce distances, and make car travel more
expensive. Modal shifts to the least carbon-intensive travel options can similarly be
encouraged through a range of push and pull policies (“shift”), Finally, “improve” measures
can target operational and technical energy efficiency measures to reduce the CO2 intensityof all transport modes, and the scale-up of zero-emission vehicles and low-emission fuels. 2
Simultaneously, continuing investments in road, rail, and other transport infrastructures areneeded to ensure equitable access to mobility, and that diverse mobility options andvehicles operate efficiently.
Government and industry targets point towards a decarbonisation of the road transport
sector dominated by a transition towards electric mobility (plug-in hybrid electric vehicles(PHEV), battery electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs). This will1
Throughout the text, “cars and vans” is used synonymously with “light-duty vehicles”. “heavy-duty vehicles” includes all
medium- and heavy-duty commercial vehicles (“trucks”) with greater than 3.5 tonnes Gross Vehicle Weight.
2
The Road Transport Breakthrough focuses on ZEVs, which is a key shift measure. However, in general context,
decarbonisation of road transport also requires “avoid” and “shift” to be in place, for example, replacing cars with public
transit.

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require policy interventions to stimulate investment in the supply of electric vehicles andcharging infrastructure and to incentivise consumer uptake, as well as to address othertechnological and market barriers.

SECTOR GOALS
Road transport is more advanced in its low-carbon transition compared to other transport
subsectors, such as shipping and aviation. There are already nearly 18 million zeroemission cars, light commercial vehicles, buses and trucks on the roads, plus more than
36 million electric two- and three-wheelers. In 2012, just 120 000 electric cars were soldworldwide but by 2021 more than that number were sold each week, totalling 8.7% of global
sales; yet, there remains a long way to go (IEA, 2022a). The ZEV share of car sales in
2021 was over 85% in Norway, and between 10% and 30% in other leading large markets
in the European Union (EU), as well as China, and the state of California. However, it wasmuch lower in most developing countries, 3 and less than 9% globally. Adoption of electric
heavy-duty vehicles or trucks (HDVs) is at a much earlier stage, with a share of global sales
at less than 0.5%. With the right policies to stimulate their adoption, however, zero-emission
vehicle technologies are poised to gain market share rapidly.
There is an imperative to significantly increase the uptake of zero-emission vehicles andtheir enabling infrastructure. 4 Paris-aligned pathways make clear that road transport
operations must be almost entirely decarbonised by 2050 (Khalil et al., 2019; IEA, 2021a;
IRENA, 2022). The IEA, for example, has highlighted the need to quickly signal the end ofsales of new internal combustion engine (ICE) cars globally by 2035.
To ensure that the pace and scale of deployment continues to ramp-up over the 2020s,
especially in developing countries, coordinated international action will be required. To put
the road transport sector on a Paris-aligned pathway, countries and companies will needto align their policies with an accelerated transition to 100% ZEV. Thus far 28 countries anda number of subnational governments, representing more than 16% of global passenger
vehicle sales in 2020, have announced policies in line with this.
The Breakthrough goal for road transport endorsed at COP26 is:“Zero emission vehicles are the new normal and are accessible, affordable, andsustainable in all regions by 2030.”
Meeting this goal will require rapid progress on deployment, cost reduction, availability, andsustainability. By 2030, scenarios aligned with international climate goals suggest that:3
It is estimated that almost all of vehicle stock growth and two out of three vehicles will be found in low- and middle-income
countries in 2050. The majority of this growth is likely to be ICE vehicles in the absence of additional policies promoting theirelectrification.
4
A zero-emission vehicle is capable of operating without emitting CO2 or other pollutants from the tailpipe when relying on
an onboard source of power, and includes battery electric vehicles (BEVs) plug-in hybrid electric vehicles (PHEVs)] and fuelcell electric vehicles (FCEVs). Note that greenhouse gas emissions may be incurred to produce the electricity or hydrogenthat fuels zero-tailpipe vehicle operations; hence it is critical to move to low-carbon power generation and hydrogenproduction in tandem with rolling out zero-emission vehicles.

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ROAD TRANSPORTZEV sales will need to reach 60% of global car sales, 60% of buses, at least 80% of
two- and three-wheelers and around 35-40% of heavy truck sales by 2030. All new car
sales should be zero emission by around 2035 globally (IEA, 2021a).



It will be essential for publicly available charging infrastructure to keep pace with zeroemission vehicle deployment, requiring a network of 18 million publicly accessible
charging points, about 10 times the stock of publicly available charging points in 2021.
As the utilisation of chargers increases, this will support an even faster growth in thenumber of EVs on the world’s roads (meaning that the ratio of EVs per charger willroughly double).



Costs of ZEVs will need to fall to achieve total cost of ownership (TCO) parity, as wellas purchase price parity (for most operations except for some long-distance bus andtruck operations).
Shares of ZEV sales and stock, affordability and accessibility metrics, 2021
and 2030

Sources: IEA, 2021a; IRENA, 2022.

The current gap in the purchase price of a battery electric vehicle (BEV) versus an internal
combustion engine (ICE) vehicle varies considerably by segment and across markets. The
price of the average BEV is estimated to be 20% higher than that of the average
conventional vehicle in China, compared to about 45-55% in Europe and the United States(IEA, 2022a). Zero-emission cars are likely to become less expensive than conventionalcars in terms of total cost of ownership within the next few years, and in advanced markets,
cheaper in terms of purchase price before the end of the decade. For HDVs, parity in total
cost of ownership could be reached in the next few years for certain truck duty cycles andoperations, depending on fuel and electricity prices (MPP, 2022). These cost parity tipping
points need to be brought forward, and realised across all regions, to enable theBreakthrough goal to be met.

HOW DO WE GET THERE?
Action across multiple ‘enabling conditions’ is required to accelerate the transition to net
zero emissions in the road transport sector, putting it on track for the 2030 Breakthroughgoal.

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Governments need to set clear timeframes by which all new road vehicle sales
should be zero emission, along with interim targets taking account of their level of
economic development. This action is crucial to create greater levels of confidence in thepace and direction of the transition to ZEVs in all markets. A range of analyses suggestthat this should be around 2030 for two- to three-wheelers, 2035 for cars and vans inleading markets and 2040 for the rest of the world, and during the 2040s for HDVs (IEA,
2021a; IRENA, 2022; ICCT 2021a).
Near-term actions are essential to rapidly accelerate the supply of vehicles to ZEVs
and to strengthen demand, supplementing the longer-term vision. Sales requirements(often referred to as ‘ZEV mandates’) are particularly effective for shifting supply, ensuring
ZEV models are available in all market segments, and rapidly increasing their market share(ICCT, 2019). Purchase incentives such as capital grants or ‘feebates’ (a combination of
tax and subsidy) can be effective in increasing demand. These measures were successfully
adopted in Germany, the United Kingdom, and Italy, building upon previous success in
Norway and France. 5 Developing countries can fast-track the transition to ZEVs byaggregating demand across similar and proximate markets, thereby leveraging buying
power, harnessing economies of scale and de-risking investments.
Favourable financing terms to reach total cost of ownership (TCO) parity faster,
supported by international development banks and by government policy, canfurther stimulate uptake, particularly in EVs for commercial or municipal use.
Procurement commitments from governments and companies, which guarantee a pipelineof demand, can also help to support manufacturers’ investments, and may be particularly
important to stimulating the transition in HDVs. Governments will also need to support
vehicle manufacturers in making the required investments in re-tooling their assets todeliver ZEVs in large numbers.
Governments and companies will need to work closely with infrastructure providers
to ensure a rapid scale-up of high-quality charging options, providing consumers withthe confidence to make purchase commitments. This includes ensuring that charging
points are maintained and always operating, as well as that they are easy to use andpayments are transparent, secure and simple. A further goal should be to provide smart
charging infrastructure that can reflect differentiated pricing and variable charging rates
based on wider system electricity demand, which will require extensive availability of timeof-use or real-time retail electricity prices for residential and businesses consumers. By themid-2020s, governments and industry should aim to make smart charging available inmajor markets with ZEVs contributing to a greater share of power system flexibility by 2030.
In the same time frame, governments should integrate and simplify regulatory
frameworks to de-risk private-sector investment and develop regulations tostreamline international and/or regional charging standards for LDVs and HDVs.
Agreement on standards for hydrogen refuelling stations, and sharing experiences in
deploying fuel cell electric buses and trucks can similarly help countries to ensure thatinvestments in these technologies are targeted to applications where they are economicallyand technically most viable. The expansion of fuel cell supply chains will also be required
to support the decarbonisation of HDVs.
Ramji, A., Fulton, L., Sperling, D. (2022). Vehicle Feebate Designs: Lessons for a ZEV Transition from Europe. Institute ofTransportation Studies, University of California Davis.

5

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A range of complementary policy measures can support the transition. Implementing
more stringent fuel economy and tailpipe emissions standards can help to reduce theemissions of fossil fuelled cars. In developed markets where zero- or low-emission vehicles
have become widely available, discontinuing fossil subsidies in a way that takes the needsof the poorest parts of the population into account, and shifting the burden of road and fueltaxes onto the most polluting vehicles, can help to align incentives with the transition. Other
measures, such as low- and zero-emissions zones in cities can support the transition while
also improving public health. Lowering emissions would also benefit from a holistic
rethinking of the way people move, including by reducing the frequency and distance oftravel though better urban planning, and by policies to promote shifts to more efficient andlower emitting modes, such as public transit, walking and cycling. Governments canpromote the transition to zero-emissions mobility in cities by making ZEV procurement
common practice for public transit operators and municipal fleets, with an aim to reach
100% ZEV procurement by well before 2030.
Governments will need to coordinate actions with companies and civil society toensure an orderly transition of the existing ICE supply chains, contributing to thescale-up of new material supply chains for ZEVs. This includes steps to avoid the dumpingof old ICE vehicles in developing countries, which can be highly polluting and unsafe.
Nonetheless, many developing countries rely on second-hand ICE vehicles to meetgrowing mobility needs. Hence, coordinated regulations that set age limits and/or
emissions technology minimum standards should be implemented by vehicle importing andexporting countries.
Tracking of international used-vehicle flows can bring much needed transparency tosupport the development and implementation of the necessary regulations. Alongside antidumping policies, developed countries should also expand ZEV-dedicated financing
facilities via existing and new programmes, providing effective technical and financial
assistance to developing countries to support the manufacture and purchase of new ZEVs,
alongside support for the buildout of charging infrastructure.
As the scale of ZEV deployment accelerates through the mid-2020s, securing
material supply chains will become increasingly important. Governments should
implement supply chain standards for ZEVs and key components (e.g. batteries) to
encourage upstream suppliers to adopt sustainable practices and foster feasible
downstream battery reuse or recycling. Regulations on battery product information will be
required to ensure they are sourced responsibly, to measure and report the carbon footprintof their production, and to promote a circular value chain. The European Union’s draft
regulation on batteries provides a useful example of this kind of regulation which should be
implemented globally by the mid-2020s (EC, 2020).
Governments and companies should also increase their support for RD&D ofalternative battery chemistries, as supply chain standards shift to support moresustainable practices. This will be necessary to reduce reliance on critical minerals that are
in limited supply, such as cobalt, and meet the increasing needs for lithium while improving
battery performance and reducing production costs.
Governments and companies must work to ensure comparable employment
opportunities are provided, supported by retraining and recertification programmes andlook for synergies with new jobs in EV supply chains. The decline of the ICE vehicle industry

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will have a major impact on the communities that currently benefit from employment inassociated supply chains. At the VW Zwickau plant in Germany, for example, a major
training initiative was successful in preparing 3 000 production workers to make the shift
from producing ICE cars to electric ones. Such policies and measures to ensure a justtransition should be adopted by all major vehicle producing countries by the mid-2020s.
Governments and industry should take actions to develop standards andregulations to ensure the safety, quality and sustainability of batteries’ end-of-life
management, ahead of the first wave of battery electric vehicles coming to the end of their
lifetime in the mid- to late 2020s. This includes repurposing EV batteries for their second
life (e.g. stationary storage and home energy storage), as well as the recycling of materials.
By 2030, the transport sector will need to be firmly on track for reaching net zero emissions
by mid-century as the uptake of ZEVs increases worldwide. Governments and companies
are confident in the positive role that they will play in decarbonising the sector, incentivisingmore investments and further accelerating the pace of deployment in all regions.
Coordination in key areas such as battery standards, financial and technical assistance,and charging infrastructure can help close the gap between progress in developed anddeveloping countries, ensuring sustainable, efficient ZEVs are affordable and accessible
to all.
Critical path to 2030 for the transport sector

RECOMMENDED REPORTS
We recommend the following reports for more detailed descriptions of the technologies forroad transport decarbonisation and of the actions that countries and businesses can takeindividually.

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Decarbonizing Road Transport by 2050: Effective Policies to Accelerate the Transition
to Zero-Emission Vehicles (ICCT, 2021)



Decarbonising road transport by 2050: Accelerating the Global Transition to ZeroEmission Vehicles (ICCT, 2021)



Renewable Energy Policies for Cities: Transport (IRENA, 2021)

Global EV Outlook 2022 (IEA, 2022)

CURRENT STATE OF INTERNATIONALCOLLABORATIONInternational collaboration on road transport decarbonisation is less extensive than in the
power sector or land use, but is more advanced than several other sectors at earlier stagesof their transitions, such as steel. Governments exchange best practices on road transport
ZEV policy in several initiatives, including through the Zero-Emission Vehicle TransitionCouncil and its International Assistance Taskforce, the Global EV Advisory Council, theInternational Zero Emission Vehicle Alliance, and the Climate Group’s EV100 initiative.
There are also several important international conferences where governments work
together on transport issues, including the OECD’s International Transport Forum and theannual China EV100 Forum. 6
An early step towards coordination on the pace of the transition was taken in 2017 by the 10
countries (now 14) participating in the Electric Vehicle Initiative of the Clean Energy
Ministerial, which committed to achieving a 30% ZEV share of car sales by 2030. In 2020,
members of the Zero Emission Vehicles Transition Council (ZEVTC), which brings together
ministers from governments that represent over 50% of the global car market and one quarterof the global truck and bus market, have committed to overcoming strategic, political andtechnical barriers, and to rapidly move forward on the production of zero-emission vehicles
and increase economies of scale. More recently, the COP26 ZEV declaration on accelerating
the transition to 100% zero-emission cars and vans was signed by almost 40 national
governments and many other stakeholders. Signatories pledged to work towards all sales of
new cars and vans being ZEVs globally by 2040, and by no later than 2035 in leading
markets. Also, at COP26, stakeholders from governments signed a Global Drive to Zeropledge, committing to enabling and expediting the growth of ZEVs with the “vision that ZE
technology will be commercially competitive by 2025 and dominant by 2040 in specificvehicle segments and regions”.
The main initiative promoting ZEV adoption in heavy-duty vehicles is the Drive to Zero
Initiative. Its members, including national and subnational governments, manufacturers, fleet
operators, and infrastructure providers have agreed to work together to identify viable
pathways and supportive implementation action for deployment of Zero Emission Mediumand Heavy-Duty Vehicles (ZE-MHDVs) and related infrastructure that enable ZE-MHDVs toreach 30% of sales of new MHDVs by 2030, as well as enable a full transition to ZE-MHDVs
in new fleets by 2040.
Business-led initiatives have played an important role in creating early demand for ZEVs.
Notably the Climate Group’s EV100’ initiative, which includes large fleet-owning companies
6

China EV100 is an industry and expert body in China, and is not the same as the Climate Group’s EV100 initiative.

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that have committed to achieving entirely zero-emission fleets by 2030. There are now
several initiatives looking to mobilise private-sector buying power in the same way to catalyse
the transition to zero-emission HDVs, including the World Economic Forum’s First Movers
Coalition (FMC).
There has also been significant international collaboration on ZEV infrastructure, withinitiatives such as the ZEV Transition Council, the Green Grids Initiative, and the World
Business Council on Sustainable Development's Mobility Decarbonization Initiative whichaims to accelerate the deployment of charging infrastructure and ZEVs. On battery supply
chain sustainability, countries have worked together on platforms such as the Global Battery
Alliance (GBA) and European Battery Alliance (EBA).
In the used car trade, there are several existing international initiatives aiming to promotesustainability. These include the UN Economic Commission for Europe’s (UNECE) Road
Safety Fund (RSF), the UN’s Environment Programme’s Partnership for Clean Fuels andVehicles (PCFV), and the Global Fuel Economy Initiative, each of which aim to promote theintroduction of cleaner, more energy efficient vehicles in developing and transitionalcountries.
At the UNECE’s World Forum for Harmonization of Vehicle Regulation, governments
representing more than 90% of global road vehicle production discuss and agree globallyunified technical policies including regulations and other instruments relating to pollution,
safety, security and technical standards for the automotive sector. The forum has developed
and adopted several regulatory instruments to ensure the safe and sustainable deployment
of ZEVs.
Support to developing countries has been provided by initiatives such as the Global
Environment Facility (GEF-7) project and the World Bank's Global Facility to Decarbonize
Transport, launched at COP26. There are numerous other projects funded by donors suchas the European Union, global foundations or through bilateral development aid
organisations such as the German Society for International Cooperation (GIZ) and the US
Agency for International Development (USAID). Nonetheless, compared to the scale of thechallenge for the road transport transition, the level of international assistance is still relatively
low. Many more countries could benefit from increased technical and financial support.
Since 2020, governments of most of the largest car markets have met at the ministerial levelfor strategic discussions on many of the above topics under the Zero Emission Vehicle
Transition Council. This initiative may be seen as an indication of countries’ willingness totake seriously the need and opportunity for stronger international collaboration in the sector.
In addition, civil society and business-led initiatives such as those already mentioned areincreasingly aligning their efforts to promote fully zero-emission vehicle manufacturing andfleets on timelines consistent with international climate goals.
In summary, international collaboration around zero-emission road transport is increasing
rapidly, covering demand creation, infrastructure, trade and alignment of targets for the paceof transition. In each of these areas, however, there are significant opportunities to further
strengthen international collaboration and improve coordination in ways that will lead to fasterprogress towards the Breakthrough goal.

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Landscape map of road transport decarbonisation initiatives

Note: The diagram summarises the roles of many public and private sector initiatives in this sector. Initiatives have been
included if they have a global scope, with active members from multiple regions of the world, and have at least one
significant work programme specifically focused on accelerating emissions reduction in this sector. The list is not
exhaustive and will be updated over time.

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ROAD TRANSPORTPRIORITY AREAS FOR INTERNATIONALCOLLABORATION

Six areas stand out as priorities for strengthening international collaboration: the pace ofthe transition to ZEVs; the choice of technologies to needed to achieve zero-emission
goals; investment in charging infrastructure and alignment of standards; financing fordeveloping countries; standards governing the electric battery supply chain; and regulationof the international trade in used vehicles.

ALIGNING THE PACE OF THE TRANSITION INTERNATIONALLY TOSHIFT INVESTMENT AND ACCELERATE COST REDUCTION

For many countries, the higher cost of ZEVs compared to ICE vehicles is a barrier to afaster transition. International collaboration will be key in driving currently more expensive
technologies, such as batteries, down the cost curve. Until recently, the cost of a typicalelectric vehicle battery pack fell by around 18% with each doubling of cumulative global
deployment (BNEF, 2019). Consequently, if large markets align their policies with a fasttransition, the cost of ZEVs is likely to fall more quickly, benefiting all countries.
Analysis suggests that if the governments of the three largest car markets (China, the EU,
and the United States) implement policies ensuring a transition to 100% ZEV car sales by2035, from which larger economies of scale and faster innovation can be achieved, thencost-parity between ZEVs and ICEs could be reached several years earlier in thesemarkets than without such a coordinated effort (Lam and Mercure, 2022).
To put the road transport sector on a zero-carbon trajectory, countries and companies willneed to align their policies with an accelerated transition for all new car sales to be ZEVs.
Some 28 countries, as well as a significant number of subnational governments,
representing more than 16% of global passenger vehicle sales in 2020, have announced
policies in line with making all new car sales zero emission globally by 2040, and in leading
markets by 2035. Automakers representing 32% of the car market in 2020 have also
committed to this pathway (BEIS and DfT, 2022). Strong, collective commitments on thepace of transition will have a positive effect not only in the automotive sector, but acrossthe EV ecosystem, including companies in the supply chain for batteries, as well as gridplanners and charging infrastructure installers and operators.
The transition to zero-emission HDVs is at an earlier stage than that of cars. Nevertheless,coordination on the pace of the transition can send an important signal to the market. At
COP26, 16 countries, supported by over 30 other subnational governments and privatesector companies, including vehicle manufacturers and fleet operators, signed a
Memorandum of Understanding that commits country signatories to achieving 100% zeroemission new truck and bus sales and manufacturing by 2040, with an interim goal of 30%
for new medium-duty and HDV sales by 2030. Subnational governments and private-sector
companies that have endorsed the MoU now total 42. The signatories have since held aseries of discussions on HDV technologies, policy and infrastructure.

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ROAD TRANSPORTRECOMMENDATION 1
Governments should agree on a timeline by which all new road vehicle sales shouldbe zero emission, with interim targets for countries taking into account their level of
economic development and ability to scale up infrastructure, and should alignpolicies with this target. Pathways compatible with 1.5°C indicate that this target
date should be 2035 for cars, for example. Vehicle manufacturers should commit to
the same timelines for 100% zero emission vehicle production. This will send a clear
signal to industry and unlock larger economies of scale and faster cost reductions,making the transition more affordable for all countries.

AGREEING A COMMON POSITION ON TECHNOLOGIES CONSISTENT

WITH THE GOAL OF ZERO EMISSIONS

Coordinating agreement around technologies compatible with zero emissions can unlock
larger economies of scale, driving faster innovation. Analysis of life-cycle emissions
suggests that only two currently commercialised technologies can be fully consistent withthe long-term goal of zero emissions from the road transport sector: battery-electricvehicles (BEVs), and fuel cell electric vehicles (FCEVs). Although achieving this goal will
depend on decarbonisation of the power sector (or hydrogen supply), deployment of BEVs
already saves emissions even in countries where the power supply is dominated by coal
as a result of their high energy efficiency compared to ICEs. The emissions saving willcontinue to increase as the power sector is decarbonised (Knobloch, 2020).
Plug-in hybrid electric vehicles (PHEVs), which can run without emitting CO2 when drawing
solely on their battery, can play an important role in reducing emissions and transitioning
to full ZEVs in road transport, provided the right regulatory framework is put in place.
However, they are not consistent with the goal of net zero emissions if they continue toburn fossil fuels for a substantial portion of their energy. The emissions savings from theirdeployment vary widely depending on their use, and in some cases appear to be modest(ICCT, 2020; ICCT 2022). Conventional hybrid-electric vehicles, which use a battery torecover energy losses from braking, can reduce fuel consumption by 30% relative toconventional ICE vehicles, and hence can continue to contribute to reducing oil
dependence and emissions in the short term, especially in developing countries, but are
not a viable mid- to long-term technology option to decarbonise road transport.
The blending of biofuels and biomethane appears to have limited potential for emissions
savings for cars and vans, with life-cycle greenhouse gas emissions estimated to be
reduced by a maximum of 9% compared to ICE vehicles, based on current policies andprojected changes in biofuel blends to 2030, according to a detailed study of their actualand potential use in Europe, India and the United States (ICCT, 2021b). Larger life-cycle
emissions reductions could be achieved by moving to more advanced and sustainable
blends, but supply of these blends would take time to ramp up. Moreover, a key factor is

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the limited global supply of sustainable biomass feedstock, and a greater need for it insectors where there are fewer viable alternatives, such as long-haul aviation and thechemical industry (ETC, 2021).
Electrofuels (E-fuels) could in principle be consistent with the zero emissions goal, but theirearly stage of development and very high production costs, together with the lower lifecycle efficiency of their production, transport, and combustion in vehicles, limits their ability
to contribute substantially to the global emissions reductions required over the course ofthis decade (ICCT, 2021b).
All of the above considerations regarding technology options apply to HDVs as much as to
LDVs.
Governments inevitably influence technology choices through the design of policies tosupport the road transport transition, including regulations, incentives, and investments incharging or refuelling infrastructure. If countries align support with the technologies that arecompatible with their long-term goal of decarbonisation of road transport, vehicle
manufacturers worldwide will be able to concentrate their resources on improving thesetechnologies, yielding faster progress, and avoid making wasteful investments that resultin stranded assets. The more countries support the deployment of BEVs, for example, thefaster the cost of batteries will come down, thereby making the technology more affordable
for a broader set of consumers.
Policies in major markets are not yet fully aligned with choices consistent with a zero
emissions goal. While recognising differing national circumstances and preferences,countries should aim to reach agreement on the issue of which technologies are consistent
with zero emissions, since stronger alignment of policy in this respect would provide
important support to accelerating the global transition.

RECOMMENDATION 2
Governments should collectively agree a common understanding of thetechnologies that are consistent with the goal of zero-emissions road transport, inorder to send a clear and unambiguous signal to industry. This will accelerate
economies of scale for key technologies, accelerating the pace of innovation andcost reduction, making ZEVs affordable sooner for more people.

WORKING TOGETHER TO MOBILISE INVESTMENT IN CHARGINGINFRASTRUCTURE

The availability of charging infrastructure for electric vehicles is likely to be one of thestrongest determinants of the pace of the transition. Even among advanced markets, there
is a wide gap between countries that have gone the furthest in installing charging
infrastructure, and those that have done less. The Netherlands has around one public EV

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charger for every five EVs, while the average across Europe is one charging point for every
15 EVs (IEA, 2022a). Wide differences in this ratio, and in the ratio of kW of public charging
capacity per EV, mean there is great potential for countries to learn from each other onwhat level of public charging is required at different stages of EV deployment, whileaccounting for differences in regional EV usage and regional context. We recommend
countries collect a wide range of data needed to share the lessons from their own
experiences, and support in-depth analysis that compares countries’ experiences to
identify in detail the policies that can most effectively support rapid deployment of charging
infrastructure. (This will need to take into account differences between countries related toroad typology, driving patterns, grid network capacity and accessibility).
Cooperation on knowledge and data sharing can be valuable in relation to the deploymentof electric charging or hydrogen refuelling infrastructure for HDVs. Estimates suggest there
could be between six million and eleven million zero-emission HDVs on the road globallyby 2030. These numbers will require a dense network of charging and refuelling
infrastructure that has yet to be built, including around two million overnight depot chargers,
0.6-0.7 million public high-speed chargers for battery electric vehicles, and 16 000 to
25 000 hydrogen refuelling stations (IEA, 2021a; IRENA, 2022; BNEF, 2022). International
coordination will need to be strengthened to support this massive infrastructure investment
in regions where there are significant volumes of cross-border road freight.
In emerging market and developing economies, except for some large EV markets such as
China and India, the challenge of attracting investment in charging infrastructure may begreater as a result of smaller market size, lack of technical capacity in government, higher
costs of capital, and other factors. There is a clear role for international assistance to playin providing technical support for policy development and concessional finance to catalyse
early private investments. This may be useful not only for investment in BEV chargers, butalso in infrastructure for two- and three-wheelers and battery swapping in some cases. This
will need to be linked to support in the power sector, given the critical importance of
upgrading electricity grids. This support should be a high priority, since without theappropriate infrastructure networks, countries will be unable to participate in the transitionand share its benefits. The World Business Council for Sustainable Development isdeveloping a global roadmap for charging infrastructure deployment, accompanied by anaction prioritisation tool that identifies regional investment readiness and provides regional
recommendations of financing mechanisms. This could be a useful guide to support
international investment and assistance.

RECOMMENDATION 3Countries should exchange best practice in policy to mobilise investment andaccelerate deployment of charging infrastructure, in consultation with vehicle
manufacturers and infrastructure investors. This should be complemented by abroader scaling-up of technical and financial assistance to developing countries atcity, provincial, national and regional levels. This will help to mobilise private
investment, and ensure all countries are able to access the benefits of the transition
to zero-emission vehicles.

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ROAD TRANSPORTPROVIDING INTERNATIONAL ASSISTANCE AND FINANCE TOSUPPORT DEVELOPING COUNTRIES IN THE TRANSITION

There are important opportunities for international assistance and finance to support
developing countries in the transition to zero-emissions road transport. These include:

Policy design and investment in electric vehicle charging infrastructure, including
support for smart charging systems and electricity grid upgrades.



Development of comprehensive strategies and policy packages to support the
deployment of ZEVs.

Development of local supply chains, including both localised manufacturing andassembling of imported parts.

Technical assistance, coordinating among financiers and private and public-sector
stakeholders, integrating electrification into a broader framework of plans forsustainable urban mobility, and bundling of subnational projects, to enable theprocurement of fleets of ZEVs for public transport (including two-and three-wheeler
taxis, as well as minibuses and buses).



Support for innovation, incubators and small businesses in developing countries tocatalyse the development of locally appropriate road transport solutions.

In addition to supporting policy and infrastructure development at the national level, in many
countries there is an opportunity for international assistance to facilitate action at theprovince or city level. Many cities are interested in purchasing and operating fleets of zeroemission buses or electric two- and three-wheelers, for example, but to do so they needaccess to financing, and support with project preparation. Often, there is a mismatch
between the scale of finance required for these projects, which may be in the tens of
millions of dollars, and the typical size of loans given by MDBs, which are at least an orderof magnitude larger. At the same time, vehicle manufacturers sometimes lack interest insmall fleet purchase orders from developing country markets.
Aggregating subnational projects to the national or regional level may help, but thisapproach on its own is unlikely to be sufficient. These projects are complex, since theyrequire coordination across diverse networks of public sector entities (e.g. transport andurban planners), and private sector actors (e.g. fleet providers and operators, utilities,
vehicle manufacturers). Cities need support with this coordination, preparing viable
investment plans, enhancing grids and charging infrastructure, and, more broadly, with
policy and planning for sustainable transport.
One example of how subnational projects can be successfully coordinated at a national orregional level is the work of the UN Environment Programme, the IEA, the AsianDevelopment Bank, the European Bank for Reconstruction and Development, and theCentro Mario Molina Chile under the Global Electric Mobility Programme, and the GEF-7
project. Together, these partners have successfully begun to mobilise EV and charging
infrastructure supply, investment, and financing for two- and three-wheelers and electric

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buses across a number of emerging markets and developing countries in Latin America
and the Caribbean, Sub-Saharan Africa, East and Southeast Asia, Eastern Europe, andWest Asia and the Middle East. The programme is also launching a number of regional
support and investment platforms for assistance to be aggregated.
The ZEVTC International Assistance Task Force (IAT), which will report its findings at
COP27, has convened stakeholders with the aim of assessing the current status ofinternational finance and assistance for the ZEV transition, identifying both gaps andopportunities to scale-up successful approaches. To date, the IAT has categorised a rangeof principles for effective international assistance, including:The use of a business ecosystem approach for bringing together relevant
stakeholders.



Developing coalitions to accurately communicate ZEV benefits to stakeholders and the
public.



Facilitating knowledge sharing.



Making information available on details of successful case studies and lessons
learned.



Integrating efforts across multiple cities or countries to create an aggregated regional
market for investment.



Sharing technology and providing technical assistance, and running pilot projects forassessing the feasibility of electromobility and retrofitting technology.

Collaborating with international manufacturers and other industries for investment inelectric public transport.

The World Business Council on Sustainable Development's Mobility Decarbonization
project has also established regional business dialogues, developed tools to support
investment decisions, and connected public and private partners, including for the GEF7 project. Other notable projects such as the Zero Emissions Bus Rapid-deployment
Accelerator (ZEBRA), the Transformative Urban Mobility Initiative (TUMI), and the
SOLUTIONSplus, have all made progress in deploying electric buses.
Despite these valuable initiatives, two key problems remain. First, the overall level offinancial and technical assistance dedicated to the transition in road transport, while it has
grown in recent years, remains low. The sector has typically received the second largest
share of climate finance, after the power sector, but absolute levels remain below what isneeded (Aid Atlas, 2022). Second, there remains a difference in scale between theopportunities for investment available at city and regional level as described above, andthe funding projects that international development institutions are accustomed todesigning.
All actors can play a role in overcoming these challenges. Developed countries cancoordinate together and increase funding for programmes that matches technicalassistance with targeted financial support. One example of a new funding stream of this

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kind is the World Bank's Global Facility for Decarbonizing Transport. Multilateraldevelopment banks can coordinate activities and develop offers, which includes financing
for city and regional level investments, that can be provided as part of their larger support
for transport infrastructure. Developing countries can draw on a number of these crosssector streams of climate finance to support the transition in transport. For example,
countries that prepare and implement Nationally Appropriate Mitigation Actions (NAMAs)
in the transport sector may be able to secure funding from climate mitigation funding
streams such as the UNFCCC's Green Climate Fund (GCF). Support for electricity-gridupgrades may be accessible from a wide range of funds focused on energy transitions in
the developing countries, including the Climate Investment Funds. Subnational
governments (e.g. cities) in both developing and developed countries can also shareexperiences and lessons in policies, practices, investments and partnerships to advancethe deployment of ZEVs and related infrastructures.

MOVE TOWARDS HARMONISATION OF CHARGINGINFRASTRUCTURE STANDARDSThe availability of charging infrastructure is a crucial determinant of the pace of thetransition to zero-emission vehicles. The interoperability of charging infrastructure is also a
critical success factor. When electric vehicles cannot be charged at available charging
points, consumers are disincentivised from making the switch from conventional ICE cars.
Harmonised charging standards can reduce the risks for investors in charging stations, aswell as increasing convenience and accessibility for consumers.
Chargers can be differentiated across three characteristics, each of which has implications
for interoperability: electric current type (AC or DC) and level; socket and connector
method; and mode of communication protocol between the vehicle and the charger.
Fortunately, the wide diversity of charging types and protocols that characterised the first
decade of EV deployment has begun to consolidate in the past couple of years. Withineach of the largest car markets, interoperability issues arising from differences in charging
connectors have been largely, though not completely, addressed. Public charging stations
often offer multiple plugs with different charging standards to accommodate all EV models.
In addition, some previously incompatible standards have been made interoperable.
However, significant differences remain between the major markets in the standards thatare used. This creates problems for countries that import vehicles from major
manufacturers in different regions of the world. At present, these countries are forced tochoose between options that are all unsatisfactory: allowing imports of vehicles with only
one set of standards, which would limit their domestic market to a subset of vehicle brands;
developing a charging network that accommodates multiple standards but which risks
requiring overinvestment in infrastructure; or setting one standard for public chargers but
requiring drivers to use multiple different adaptors. Any of these options entails trade-offs
that could delay the transition, particularly in developing countries.

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Adjustments in standards can be difficult to achieve, not least given that nearly two million
public chargers and over eight times as many private chargers that have already been
deployed worldwide (IEA, 2022a). However, these are a small fraction of the number ofchargers that need to be in place by the end of this decade. There remains an opportunity
for governments of the largest markets to work towards greater convergence in charging
standards, which could have important benefits for developing countries and the transition.
International discussions are underway, within fora such as the International Organizationfor Standardization (ISO), UNECE’s World Forum for Harmonization of Vehicle Regulations(WP.29) and the International Electrotechnical Commission (IEC), but progress has beenslow.
Installation of charging infrastructure for HDVs has barely begun worldwide. China is the
only country to have started to build a network of charging stations at significant scale.
Globally, two competing and incompatible standards for HDV charging infrastructure arebeing developed; namely the Megawatt Charging System (MCS) standard, and codevelopers China Electricity Council (CEC) and CHAdeMO’s “ultra ChaoJi” for up to
several megawatts for heavy-duty ZEVs. At this early stage, there is still an opportunity to
avoid the cost, inefficiency, and problems for vehicle importers and international operators
created by manufacturers following divergent paths. Countries and manufacturers should
work together to take advantage of this window, and aim for the maximum possible
convergence of standards and interoperability.
Over time, standardisation of communication protocols (modes) that enable smart charging
and bidirectional charging will become increasingly important, so taking a proactive
approach now to harmonisation would provide greater market certainty for manufacturers,
and encourage more innovation and investment in these new forms of EV charging. This
could hasten the economic viability and scale-up of these important demand-side
management and energy market flexibility options, which will also contribute to thedecarbonisation of the power sector.

RECOMMENDATION 4
Governments should work together and with industry to avoid further divergence ofstandards for charging infrastructure. There are several competing charging
standards for light-duty vehicles; for heavy-duty vehicles, avoiding divergence of
emerging standards could limit wasteful investments in multiple charging types, andaccelerate the adoption of zero emission trucks. Aligning standards for hydrogen
refuelling stations can reap similar benefits. Doing so will decrease costs andfacilitate the transition in vehicle importing countries.

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The Breakthrough Agenda Report

ROAD TRANSPORTAGREEMENT ON STANDARDS FOR THE SUSTAINABILITY OF
BATTERY SUPPLY CHAINS

Sustainable battery supply chains are essential for the transition to ZEVs and to enable
them to maximise their contribution to reducing global emissions as well as avoiding socialand environmental damage.
Batteries require a number of critical materials, including, in the most common battery
types, nickel, copper, cobalt, and lithium. Nickel, for example, typically accounts for 1215% of the weight of a lithium-ion battery. Owing to high demand and strained supply, theprices of some of these critical materials are increasing. IRENA estimates that demand forcobalt may double between 2020 and 2030, with vehicle batteries accounting for 60% of
the total in 2030 (IRENA, 2021b). To realise the ten-fold increase in EV battery capacity by
2030 that would be needed to achieve countries’ announced climate pledges, mining of
critical battery metals would have to nearly double (for cobalt and nickel), or increase nearlysix-fold (for lithium) (IEA, 2022a). Meeting 1.5°C targets will necessitate even more rapid
EV adoption, as outlined in the IEA’s Net Zero Emissions by 2050 Scenario, which wouldin turn require even faster scale-up of metals mining and processing. Higher mineral prices
could have a significant effect: a doubling of lithium or nickel prices would induce a 6%
increase in battery costs. Furthermore, many minerals come from a small number of
producing countries. In the cases of lithium, cobalt and rare earth elements, for example,
the world’s top three producing countries control well over three-quarters of global output(IEA, 2021b; IEA 2022a). These factors not only pose risks to the transition but also offer
opportunities to expand or enhance mining and processing operations, especially toregions where the production and processing of critical materials is concentrated.
Poorly managed mineral development can lead to significant GHG emissions, negativeenvironmental impacts and damaging social consequences such as human rights
violations and modern slavery. The mining of hard-rock lithium uses extensive amounts ofwater and energy, resulting in local water stress and up to 15 tonnes of CO2 emissions forevery tonne of lithium produced. Copper and lithium are particularly vulnerable to water
stress given their high level of usage, with over 50% of today’s production of the twominerals concentrated in areas with high water stress levels (IRENA, 2021b; IEA, 2021b).
Other adverse environmental impacts of mining activities include waste generation,
reduced biodiversity and contaminated soil. Mining activities for EV battery materials havealso been linked to child labour. In the Democratic Republic of Congo (DRC), which
provided 68% of global total cobalt production in 2020, 20% of mining activities take placein artisanal mines where child labour and human rights concerns have been identified(USGS, 2022; UNCTD, 2020).
Regulations and other measures are necessary, therefore, to establish environmental,social and governance standards, to minimise the adverse effect of battery supply chains
and to promote sustainable practices. While the adoption of corporate responsibility
policies and processes has led to mineral supply chain improvements, performance varies
significantly within the industry. Local stakeholders, such as governments and civilsocieties, should be engaged to find ways to maximise socio-economic benefits to theadvantage of people living in areas of mining operations.

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The pressures on production of critical materials can be lessened by adopting a circular
economy approach to battery supply chains. Repurposing end-of-life electric vehicle
batteries for energy storage and household appliances is an important opportunity. For
example, lithium-ion batteries whose capacity has declined by 70–80% can still be used forstationary energy storage applications in the electricity grid. Recycling is another way to
avoid waste of materials. China currently has the most stringent national level regulations
for EV batteries, wherein producers are responsible for labelling and tracing batteries
following their first use in EVs, and for the creation of recycling channels that include battery
collection (IEA, 2020). The European Union similarly puts responsibility for battery end-oflife on battery producers, and is nearing adoption of even more robust battery regulations.
In the United States, California leads on developing supportive policies.
Ensuring EV batteries last longer can help ease pressure on demand for critical raw
materials and reduce waste. Importantly, the Working Party on Pollution and Energy, a
subsidiary body of UNECE’s World Forum for Harmonization of Vehicle Regulations, hasagreed a standard on electric vehicle battery durability, which many countries havecommitted to transpose into national legislation. 7
Several international standards relating to waste batteries have already been developed,
and some can be applied to enable the reuse of batteries. The Global Battery Alliance(GBA), for example, works with over 100 governments and organisations to ensure thatbattery production not only supports energy transitions, but also safeguards human rights
and promotes health and environmental sustainability. The Circular Cars Initiative, jointly
run by the World Economic Forum and World Business Council for Sustainable
Development, works with more than 100 organisations to accelerate the transformation of
circular manufacturing and business models within the automotive and mobility industry.
The International Electrotechnical Commission has developed standards to provide
guidelines for manufacturers and recyclers regarding the end-of-life management andoperation of battery recycling. The OECD oversees a number of initiatives for responsible
mineral production and sourcing to support a just low-carbon transition, with an emphasison critical minerals and the role of supply-chain due diligence. Many standards lack binding
force, however, unless they are adopted by countries as part of their national or regional
regulatory frameworks.
There is an urgent need for a significant increase in the pace and depth of international
collaboration to ensure the sustainability and responsible conduct of battery supply chainsas global sales of electric vehicles accelerate. Today’s battery supply chains are very
concentrated: China produces three-quarters of all lithium-ion batteries and is home to 70%
of production capacity for cathodes and 85% for anodes (both of which are key components
of batteries). Over half of the world’s lithium, cobalt and graphite processing and refining
capacity is located in China. In contrast, Europe produces over one-quarter of global EVs
but it is home to very little supply chain activity apart from cobalt processing at 20%, while
7
To ensure that batteries meet minimum durability standards, the Working Party on Pollution and Energy (GRPE) adopted
in March 2022 UN Global Technical Regulation No. 22 on In-Vehicle Battery Durability, which requires EV manufacturers tocertify that the batteries will lose less than 20% of initial capacity over five years or 100 000 km and less than 30% over eight
years or 160 000 km. Countries that committed to add it into legislation include Australia, Canada, China, India, Japan, Korea,
Malaysia, Norway, Russia, South Africa, Tunisia, United Kingdom and the United States. The European Union also hascommitted to transpose it into legislation, with the provisions expected to be part of the forthcoming new vehicle emission
standards, Euro 7/VII.

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the United States accounts for only 10% of EV and 7% of battery production capacity (IEA,
2021b). Working together, countries can influence the incentives for manufacturers
throughout the global market. As the transition moves forward, the expansion anddiversification of these supply chains would help to increase the sector’s resilience.
Finally, as energy transitions gain momentum, security of mineral supply is gaining
prominence in the energy security debate. Governments can take a number of measures
to broaden supply. Support for geological surveys, and streamlining of planning processes
can help. Reducing material intensity and encouraging material substitution via technology
innovation can also play major roles in alleviating strains on supply, while also reducing
costs.
International efforts should focus on agreeing harmonised international standards forlifetime sustainability, design, operation and end-of-life treatment of EV batteries, to reduce
dependency on critical materials from mining and increase sustainability throughout supply
chains. Factors to consider include the carbon intensity of power inputs and processing ofbattery metals, the quantity of water use for battery production, the social responsibility ofsourced minerals, and other environmental, societal and economic aspects. This may beenabled by transparency standards that mandate actors along the supply chain to provide
fully traceable products, and to ensure that third party independent organisations adopt
internationally consistent methods to track, assess and verify the sustainability
performance of mining and production practices for battery supply chains. It can also becomplemented by harmonising the way that recycling-relevant information is provided, oreven setting standards for battery disassembly. Further, international cooperation on
recycling processes and technologies could spur their cost-effective and widespread
adoption.
Countries should also consider how to ensure security of supply and increase the resilienceof battery supply chains. This could include measures to reduce material demand in novel
battery chemistry designs, to diversify regional distribution and market players within eachstep of supply chain, to create coalitions to procure supplies, and to ensure that minerals
in used battery re-enter the value chain.

RECOMMENDATION 5Countries should work together and with industry to urgently agree harmonised
standards to ensure sustainability and social responsibility along the electric vehicle
battery supply chain, including when sourcing critical minerals and increasing therecyclability of battery modules. As a priority, these standards should minimise
batteries' life-cycle emissions and the social and environmental impacts associatedwith their production, ensure minimum cycle and calendar lifetimes and seek toextend battery durability, and promote reuse, repurposing and recycling of theircomponents. Similar standards on fuel cell value chains, including information on
platinum and other catalyst materials’ content and origin, should be put in place.
Harmonised standards will send a clearer signal to the global market, and facilitate
compliance by battery and vehicle manufacturers that sell to multiple markets.

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ROAD TRANSPORTTAKE THE MOST POLLUTING VEHICLES OUT OF INTERNATIONAL
TRADE

The standards governing trade in used vehicles matter greatly to emissions from roadtransport, as well as to public health and safety.
Nearly ten million used cars were imported by developing countries in 2020. These included
countries in Africa (4 million used cars imported), Eastern Europe (2.4 million), Asia Pacific(1.5 million), the Middle East (1.2 million) and Latin America (0.9 million). In Africa, morethan 60% of the vehicles added to the roads each year are imported used vehicles. The
largest exporters of these vehicles were the European Union, Japan and the United States(UNEP, 2020).
Most used vehicle-importing countries have weak policies to regulate the safety, quality,
efficiency and emission performance of imported used vehicles. More than 100 of the
146 countries investigated by UNEP have no regulation on emission standards for used
vehicles. Even when importing countries impose standards for quality and environmental
performance, their regulations are usually less restrictive than those of the countries inwhich the vehicles are produced. A study published by the Netherlands Human
Environment and Transport Inspectorate (ILT), for example, revealed that many used
vehicles exported from Europe to Africa cause significant pollutant and climate emissions
and endanger road safety (ILT, 2020).
While most African countries (32 out of 54) have implemented standards on imports ofsecond-hand vehicles, including four that have banned them altogether, the standards varyby country. The most stringent standard, Euro 4, which is applied in Morocco, Rwanda andthe 15 Economic Commission of West African States (ECOWAS) countries, wassuperseded in Europe around a decade ago. A significant share of used vehicles imported
to Africa are more than 15-years old (around 30 countries in Africa do not impose any
regulatory age limit on cars). These vehicles typically have low safety levels because of
missing safety-related components (as well as lacking components for environmental
protection). In addition to being highly polluting and often unsafe, older vehicles typicallyhave very low efficiency, resulting in high operational costs (IEA, 2022a).
The export of used cars is similarly under-regulated. A few exporting markets (such as theEU) have regulations in place regarding the export of vehicles as waste, for example, theEU Waste Shipment Regulation EC/1013/2006, and Directive 2000/53/EU on end-of-life
vehicles (EC, 2020a, 2020b). However, there are limited regulations in place governing theexport of vehicles to the second-hand market, which is usually in developing countries.
Neither exporting nor importing countries have effective measures in place to assess andmonitor the environmental performance of the traded second-hand vehicles.
There have also been moves by groups of countries to apply standards to imports, including
by ECOWAS, which recently adopted the standard of importing only Euro 4 vehicles, andimposed an age limit of five years for imported light-duty vehicles (LDV) and ten years forheavy-duty vehicles (HDV) (Africa Times, 2020). The East African Community (EAC) is in
the process of setting minimum standards for imported used vehicles, after which each

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country will work towards passing these standards into legislation (UNECE, 2021). In
addition, the African Organisation for Standardisation (ARSO) has a mandate to unify theregion’s standards to promote international and inter-African trade. It has been working ona harmonised minimum requirement for the import of vehicles to the Continent, coveringboth new and used vehicles. Supporting these efforts, UNEP has developed a Global
Electric Vehicles Database containing information on fiscal, regulatory and other mobilityrelated policies (including policies promoting electromobility) in countries around the world(UNEP, 2018).
At a global level, the World Forum for Harmonization of Vehicle Regulations has recently
created an Informal Working Group on Safer and Cleaner Used and New Vehicles. Thisaims to establish harmonised minimum performance requirements for safe and clean
vehicles in developing economies.
Despite these important efforts, there are currently few regional agreements and no global
ones on environmental sustainability in the trade of used vehicles. There is little
harmonisation between importing and exporting countries regarding the regulations onused vehicles. This lack of coordination contributes to air pollution and safety problems,and holds back the decarbonisation of road transport.
There are clear opportunities for international collaboration to bring about trade conditions
that more strongly support the transition:


Individually, exporting countries should test and certify used vehicles before export toensure they meet appropriate safety and emissions standards. This should include
confirming key components such as particulate filters, catalytic converters and airbags
are attached and working.



Importing countries should set age restrictions and/or minimum standards for fuelefficiency for the vehicles they import. Setting an age limit for second-hand vehicle
imports is an effective policy instrument for importing countries, as exporters are
increasing the stringency of their fuel economy and emissions standards, notably in
the European Union. Applying fuel economy standards on all new car registrations andvehicle imports would lead to improvements in the average fuel economy of the fleet.
Other measures include providing incentives or tax exemptions for high efficiency or
ZEVs and higher taxes for more emissions-intensive vehicles; and strengthening
systems for inspection and verification of imported vehicles’ safety and environmental
performance.

Together, importer and exporter countries can reinforce each other’s efforts byagreeing harmonised regulations to promote cleaner and safer used vehicles ininternational trade, supported by strong mechanisms to enforce compliance.
Enforcement mechanisms could benefit from the international sharing of a common
database and regulations mandating the tracking of vehicles imports and exports.

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Some developing countries see importing electric vehicles as a cost-effective way to begin
the transition from internal combustion engine cars to zero-emission vehicles.
The international trade in used electric vehicles is currently very low; having only begun toemerge in recent years, but some countries are encouraging this trade either by providing
incentives for the import of used EVs, or by exempting EVs from existing bans on the importof used vehicles. Jordan, Ukraine, FYR Macedonia, Turkmenistan, Sri Lanka, Seychelles,
Mauritius, Maldives have introduced fiscal incentives (e.g. favourable duty, registration fee,road tax) to encourage the import of used EVs. Mauritius, for example, provides fiscal
incentives for low- or zero-emission vehicles and therefore the volume of imported used
EVs has increased. Egypt and Bhutan ban the import of other used vehicles but allows theimport of used EVs (UNEP, 2020). The major exporters of electric and hybrid vehicles are
Japan and the EU. Japan contributed the majority and exported around 169 000 electricand hybrid electric used LDVs in 2018, representing 32% growth compared with 2017.
This international trade should be encouraged since it can help developing countries
access zero-emission vehicles at lower cost. The need to ensure quality and safety is as
important for ZEVs as for conventional vehicles, however, and should not be overlooked inimport policies. Importing countries will also need to consider to how address challenges
of battery replacement, and end-of-life management of batteries.
Global trade of electric two- and three-wheelers is growing rapidly. Africa is a growing
market for imports, with Chinese manufacturers dominating the market, and Indian
manufacturers also present. Local manufacturing or assembly of electric two- or threewheelers is also emerging in some countries, such as Kenya, Nigeria, and Rwanda. In
many developing countries, electrification of two- and three-wheelers can contribute
substantially to both emissions reduction and economic development. Promoting the scaleup of electric two- and three-wheeler industries and sales will require attention to
deployment of charging infrastructure, technical and financial assistance, as well as trade.

RECOMMENDATION 6
Vehicle importer and exporter countries should agree on harmonised regulations
on vehicle trade to improve vehicle efficiency and safety in international trade in
used vehicles. These rules should govern trade in zero-emission vehicles as wellas internal combustion engine vehicles, supported by strong mechanisms toenforce compliance. This will help prevent ‘vehicle dumping’, locking developing
countries into higher emitting vehicles.

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https://doi.org/10.18356/9ba5e76c-en
UNECE (2021), Safer and cleaner used vehicles for Africa,
https://unece.org/sites/default/files/2021-03/WP29-183-16e.pdf
UNEP (United Nations Environment Programme) (2020), Global Trade in Used Vehicles
Report, https://www.unep.org/resources/report/global-trade-used-vehicles-report
UNEP (2018), The Global Electric Vehicle Policy Database,https://www.unep.org/resources/publication/global-electric-vehicle-policy-database,(accessed July 2022).
USGS (U.S. Geological Survey) (2021), Mineral Commodity Summaries,
https://pubs.usgs.gov/periodicals/mcs2021/mcs2021-cobalt.pdf

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The Breakthrough Agenda Report

ROAD TRANSPORT

ANNEX
Enabling
condition

Pathway to 2030

Tracking (as of July 2022)

Long-term
vision andaction plans

Target date should be around the early 2030s fortwo- and three-wheelers, 2035 for cars and vans,
and in the 2040s for heavy-duty vehicles.

25 automobile (and components)
company with a science-basedtarget aligned with 1.5°C.

Vehicle manufacturers should commit to thesame timelines for 100% zero-emission
production.

Demandcreation andmanagement

By the mid-2020s, governments and companies
should commit to high shares of zero-emission
vehicle procurement for public transit bus
operators, municipal services and logisticcompanies. Private sector fleet operators should
approach 100% of ZEVs, with a clear timeline forphasing-in.

Infrastructureand supply
chainsAs soon as possible, governments and industry
agree harmonised standards on thesustainability and social responsibility of sourced
minerals and along the entire supply chain ofelectric vehicle batteries, as well as to increase
the recyclability of battery modules.
Regulations on battery product information (suchas the EU's battery passport), including
information on manufacturer, durability/warranty,
material content and origin ofcomponents/materials, and environmental
footprint.
By the early 2020s, governments mandate thatcables that can accommodate EV charging are
included in all newly constructed and renovatedbuildings.
By the mid-2020s, smart charging (e.g. stop/start
charging based on communications from thepower system, facilitated through the e-mobility
service provider or through the charging point) is
becoming the norm in major markets. The UK’s
regulation mandating OCPP compliance from2022, and incentive systems in Belgium andLuxembourg, serves as model policies designed
to achieve this goal
EVs thereby serve as distributed energy storage,
dynamically charging at times when system
availability is the highest, while providing
additional power supply at peak time

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39 national governments and 13
automotive manufacturers signed
the ZEV Declaration, committing towork together towards all sales of
new cars and vans being zero
emission globally by 2040, and by
no later than 2035 in leading
markets.
123 companies have signed theEV100 commitment to eithertransition their fleets to EVs by 2030
or install charging at their facilities.

Key initiatives include: IRENA
Collaborative Framework on Critical
Materials.

The Breakthrough Agenda Report

ROAD TRANSPORT

Enabling
condition

Pathway to 2030

Tracking (as of July 2022)

Finance andinvestment

By the early 2020s, governments of developed
countries will need to provide, replicate, andscale-up technical and financial assistance, bestpractice sharing, and training, from the city andsubnational level to the national and regional
level to their counterparts in developing
countries.

Direct spending on EVs in 2021
reached USD 270 billion.
Government share of spending fell
to 10% in 2021 (from 22% in 2015).

By the mid-2020s, once sufficient project scaleand capacity has been built up, financing frominternational assistance funds can target
country-level investments to further accelerate
the transition to zero-emission vehicles.
Research andinnovation

Countries will need to target public RD&D
budgets and other instruments seeking toleverage private investment flows on specificareas of the EV value chain, including mineralmining, mineral processing, cell chemistry anddesign, vehicle production and battery end-of-life
processes.

Marketstructures

Shift from fossil fuel subsidies to taxing transport
fuels: By the mid-2020s, all countries adopt fueltaxes that reflect the health and other impacts oflocal air pollutants, as well as the climate
impacts of GHG emissions, among others (e.g.
energy security, etc.).
Shift from EV subsidies to feebates: Countries
leading the adoption of ZEVs have recognised
the importance of reducing the purchase pricegap to drive consumer adoption. However, as
the value proposition of EVs improves, and thispurchase price gap closes, countries will need toswitch to revenue neutral (or even net-revenue
generating) policies to continue to accelerate EV
adoption.
City-level policies: measures such as licenceplate lotteries, restrictions on ICEs, lowemissions zones that favour ZEVs,
dedicated/prioritised public parking for ZEVs.
Revise power system regulations to ensure thatdifferent types of distributed flexibility provider(e.g. aggregators, energy communities, peer-topeer trading) have access to markets on a levelplaying field with traditional flexibility providers,such as power plants or large industry. Focus on
key principles of power markets such as right toparticipate, size of products, rules for control andflexibility measurement.

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Four IEA Technology Collaboration
Programmes currently underway:
Advanced Fuel Cells; Advanced
Materials for Transportation;
Advanced Motor Fuels; Hybrid andElectric Vehicle

The Breakthrough Agenda Report

ROAD TRANSPORT

Enabling
condition

Pathway to 2030

Tracking (as of July 2022)

Standards &certification

By the mid-2020s, governments develop
regulations seeking to streamline international
and/or regional charging standards for LDVs and
HDVs.
Adopt policies, such as differentiated pricing (atminimum day/night or peak/off-peak tariffs,
ideally time-of-use tariffs, or even real-timepricing), and technologies (to control charging
time, rate, and duration, based on price signals
and/or power system availability).
Fuel economy standards: promote the adoptionof more efficient vehicles but also benefit therollout of ZEVs.
Tailpipe emissions standards: target reduction ofpollutants emitted from ICE vehicle tailpipes,
while also improving the competitive prospectsof ZEVs.

Trade
conditions

By 2024, major automotive exporting markets
agree on regulations and enforcement protocols
to restrict export of used vehicles (e.g. age
limits).
Major vehicle producing countries adopt ZEVmandate regulations, such as ZEV credits, andrequire manufacturers to put more ZEVs in themarket.

Knowledge,
capability &skillsGovernments and companies to provide
retraining and recertification programmes for ICE
industry workers. This should also include
potential social protection programmes to help
affected ICE industry workers and communities
cope with a potentially lengthy and difficulttransition period.
Public investment strategies to finance training
and social protection, and to support regional
economic development and diversification.

Socialacceptance

By the mid-2020s, dialogues are held with
communities in regions most affected by thetransition to new ZEVs and any changes insupply chains.

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Global Trade in Used Vehicles
ReportUsed vehicles and the environment- Progress and updates 2021

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STEEL

CHAPTER 5. STEEL“Near-zero emission steel is the preferred choice in global markets, with efficient
use and near-zero emission steel production established and growing in every
region by 2030” -- Steel Breakthrough goal

KEY MESSAGESThe steel sector is at an early and critical stage in the transition and, while progressis accelerating, it is significantly behind where it needs to be on a Paris-aligned
pathway. Less than 1 Mt of primary near-zero emission steel is produced per annum
as of today, versus over 100 Mt needed by 2030, requiring deployment to double
every year.

In many parts of the world, the sector is heading in the wrong direction entirely. Asof late 2021, there were approximately 114 Mt of new steelmaking projects currently
underway or in the planning stage. The vast majority of these projects are set to use
conventional, high-emission steelmaking routes, representing significant potential
stranded asset risks.

Given the long lifetimes of steel plants, 2050 is only one investment cycle away. As
such, if near-zero emission steel is to become the default choice in international
markets, large-scale action is required now.

Progress to date has been mostly in Europe, with a recent wave of new
announcements from companies planning to deploy novel technologies over the
2020s. However, urgent action is needed in emerging markets and developing
countries, which are projected to account for around three-quarters of future growthin steel demand by 2050.

Companies face multiple challenges, not least technology availability and coveringthe ‘green premium’. At the same time, these challenges offer a unique opportunity
to leapfrog to clean solutions, allowing a larger number of companies and countries,
particularly in emerging economies, to compete in an international market that will
increasingly demand near-zero emission steel.

There has been a welcome and significant increase in international collaboration on
the steel sector’s transition to low emissions over the past several years, but this is
still at a formative stage.

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

To drive progress at the pace and scale required, international collaborative action
is imperative to generate the ‘enabling conditions’ needed to dramatically accelerate
the transition in the global steel sector, putting it on track for the 2030 Breakthrough
goal.



Five areas stand out as urgent priorities to strengthen international collaboration overthe next 1-2 years that will help put the steel sector on track to meet the 2030
Breakthrough goals. Key priorities include:Governments and companies willing to lead the transition in the steel sector
should collectively agree on common definitions for low emission and near-zeroemission steel, along with a time frame for the adoption of standards by the mid2020s. This is an important market signal and will be vital for unlocking a seriesof subsequent actions, most notably high-quality demand commitments and trade
agreements.



Governments and companies should increase the scale of near-zero emission
steel procurement commitments to cover a significant share of their future
demand. These commitments should be high quality, supported by appropriate
legal and implementation frameworks, such as advance purchase commitments.
Countries and companies should also consider joining public and private sector
initiatives where these commitments are aggregated. This will strengthen the
global demand signal for near-zero emission steel, increasing the incentives forindustry to invest in its production.



Governments should urgently launch a strategic dialogue, including the leading
producer and consumer countries, with the purpose of agreeing ways to ensurenear-zero emission steel can compete in international markets. This is needed toprevent trade acting as a brake on the transition. This may be supported byagreements to cooperate on data, standards, comparability of policies, RD&D,
finance and procurement.



Governments and companies should urgently identify several commercial-scale
pilot projects, in all major steel producing regions, where international
collaboration can support shared technology learning, business casedevelopment and policy support. Collaborative networks should deliver
operational projects in these countries by the late 2020s at the latest. Emerging
markets and developing countries’ participation in key research, development
and demonstration initiatives should be increased in support of this aim. This will
help eliminate technology availability issues, providing multiple case studies for alarge group of countries and companies to further improve upon.



Donor countries and MDBs, led by the priorities of developing countries, should
significantly increase funds supporting industry transition to near-zero emission
technologies in emerging and developing countries. This will provide muchneeded, near-term technology and financial support to unlock additional private
sector capital for the first wave of near-zero emission projects in key steel
producing countries, especially for developing countries.

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SIGNIFICANCE OF THE SECTOR
Steel production accounts for around 7% of global energy-related carbon dioxide emissions(IEA, 2020). The sector is the largest contributor to industrial emissions, which make up
around one quarter of the global total. The energy intensity of steelmaking has shown littlechange in the past few years, and remains reliant on coal, which meets 75% of its energy
demand. Steel demand is projected to steadily increase in the coming decades, especiallyin developing and emerging economies, and will play a vital role in building theinfrastructure and products that will enable the energy transition, including the constructionof electricity and pipeline infrastructure and the manufacture of electric vehicles.
Steel production is at an all-time high at just below 2 billion tonnes per annum. China
produces over half of the world’s steel (53%), with the top five producing countries
accounting for roughly three-quarters of global production. Three out of the five top steel
producing companies include China’s Baowu Group, Ansteel Group, Shagang Group, withthe other two Luxembourg-based ArcelorMittal and Japan’s Nippon Steel (WorldSteel,2022). The top 15 countries produce close to 90%, which underscores the highconcentration of production.
Steel is produced via two routes: primary steelmaking from iron ore, and secondary
steelmaking from scrap steel. Primary steelmaking – or more specifically the ironmaking
step within this process – consumes the most energy and is far more emissions-intensive(on average producing seven times more emissions versus secondary steelmaking). The
blast furnace route (using coking coal) accounts for about 70% of global steel production
and around 90% of primary production (IEA, 2020). The majority of the remaining primary
steel production follows the direct reduced iron (DRI) route, using natural gas or coal.
Secondary steelmaking relies on electric arc furnaces (EAF), which are mainly used toprocess scrap. The decarbonisation of secondary steel is promising, as it will follow thedecarbonisation of the power supply, but its potential is limited by scrap availability.
Therefore, decarbonisation of the steel sector will rely on the deployment of an array of
low-carbon solutions for primary steel production.

SECTOR GOALSThe steel sector is at an early stage in its transition. Paris-aligned pathways make clearthat emissions from steel production need to be drastically reduced by 2050 (IPCC, 2022).
Further improving the energy efficiency and material efficiency of processes, alongside
applying the principles of circular economy throughout the supply chain, will play a vital role
in reducing emissions from steel production. However, these efforts alone cannot deliver
the emission reductions required (IRENA, 2020).
Technologies for near-zero emission 1 production have already been developed, andseveral pilot plants are in operation. However, these are not yet widely deployed at a1
Near-zero emission steel (NZS) refers to production which has achieved greater than 85% reduction in direct and indirectemissions versus conventional technologies, such as a blast furnace-basic oxygen furnace (BF-BOF), equivalent to around
400kgCO2 (IEA, 2022).

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commercial scale. With the exception of a natural gas-based DRI plant using CCUS in Abu
Dhabi, 2 implementation is lagging, particularly for key technologies with the capacity not
only to deliver near-zero emissions steel but also to scale sufficiently to play a significant
role in the decarbonisation of the sector globally.
Alongside deploying new near-zero emission technologies, avoiding the construction ofhigh emission steel production is equally important. In many parts of the world the sector
is heading in the wrong direction entirely. As of late 2021, there were approximately 114 Mtof new steelmaking projects currently underway or in the planning stage. The vast majorityof these projects are set to use conventional, high-emission steelmaking routes,
representing significant potential stranded asset risks (OECD, 2021).
Steel facilities have long lifetimes (approximately 40 years), meaning that 2050 is only one
investment cycle away (IEA, 2022). In the case of integrated steel plants with blast
furnaces, these typically require major investment for relining every 15-20 years (Vogl,
Olsson and Nykvist, 2021). Roughly two-thirds of existing blast furnace capacity is
projected to need relining before 2030 (Agora Industry, Wuppertal Institute and Lund
University, 2021).
This makes near-term action vital, especially given the critical investment window available
this decade. This is an important time frame for developed countries, which have older
facilities that will be ready for reinvestment during the 2020s, as well as for developing
countries, which can benefit from technology leapfrogging and avoid the risk of stranded
assets. Coordinated international action will be critical to driving these changes at the
speed and scale required.
To put the steel sector on a Paris-aligned pathway, countries and companies will need tomeet the Breakthrough goal which 29 countries, representing over 30% of the steel sector(by production), endorsed at COP26:“Near-zero emission steel is the preferred choice in global markets, with efficient
use and near-zero emission steel production established and growing in every
region by 2030.”
This will require the construction of multiple near-zero emission steel plants around theworld, alongside measures to promote its efficient use and greater material circularity. A
number of scenarios have been developed to put the sector on the near-zero emissions
pathway (IEA, 2021; Bataille, Stiebert and Li, 2021; E3G & PNNL, 2021; MPP, 2021; Agora
Industry, 2021). These make the following projections for 2030.
2

Primary near-zero emission steel production should reach more than 100 Mtpa by
2030, with some estimates suggesting as much as 500 Mtpa (5-25% of current steel

The captured carbon is being used for enhanced oil recovery (EOR).

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production). 3 This equates to around 40-200 of typical-sized 4 near-zero-emission steel
plants in operation, or 5-25 plants being built each year between now and 2030.


A reduction in the average direct emissions intensity of steel production - reducing itby around 30%, to below 1 tCO2 per tonne of crude steel (tcs) in 2030.



The cost of near-zero emission steel should approach the cost of high emission steel,in the most favourable locations, by 2030.

Developing and deploying new near-zero emission steel (NZS)technologies are essential
for meeting these goals. Multiple low-emission primary steelmaking technologies, usinghydrogen, carbon capture, utilisation and storage (CCUS), or direct electrification, arebeing developed and plans are underway to demonstrate these technologies over the
2020s. Several pilot plants are already in operation, including the Hybrit Project in Sweden,
which uses hydrogen direct reduction and the 3D project in France, which uses CCUS ona blast furnace, with both operating since 2021.
Change in direct carbon emissions intensity and NZS primary productionneeded to meet climate goals, 2015-2030
NZS primary production

Direct carbon emissions intensity
1.8

tCO2 per tonne of crude steel

Millions of tonnes per annum

600
500
More than
100-foldincrease by
2030

400
300
200
100
0

2015

2020

2025

1.4

1.2
1.2

1.1

1.1
0.6

0.0
2015

2030

1.4

0.9

30%
reduction by
2030

2020

2025

2030

Notes: The change in the direct carbon emissions intensity includes process emissions, and exludes Scope 2 and 3
emissions.
Sources: IEA, 2021; Bataille, Stiebert and Li, 2021; E3G & PNNL, 2021; MPP, 2021; and Agora Industry, 2021.

To begin with, near-zero emission steel will be significantly more expensive to produce
than high emission steel, at a premium of between 15-40% for first-of-a-kind (FOAK) plants
over the 2020s (MPP, 2021). Much will depend on the cost of high emission steel, which
fluctuates significantly (particularly over the past two years, driven by highly variable energy
and raw material costs), as well as on progress in reducing the cost of near-zero emission

The range of primary NZS production varies significantly due to uncertainties in the sequencing and scale of various
emission reduction measures, such as energy efficiency, material efficiency and the introduction of low-emission technologies
versus near-zero emission technologies. The scenarios that inform this range also use different assumptions aroundtechnology availability, the steel sector’s share of a 1.5˚C emission budget, the availability of scrap, among other factors.
4
Typical-sized plant assumed to be 2.5 Mtpa.
3

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steel production processes and their inputs. This has been confirmed by currently planned
projects, such as H2 Green Steel’s plant in Sweden, which is targeting a 25% premium
when it begins production in 2025 (Reuters, 2022). Overcoming this cost barrier is a criticalchallenge for the early phase of the transition. With the right policy support and coordinatedinternational action to channel and mobilise investment and innovation, near-zero emission
steel could start to approach cost parity with high emission steel by 2030 in the mostfavourable regions.

Production costs ($/tcs)

Global average steel production costs for BF-BOF (2015-2021)
800+15-40%

700
600
500
400

FOAK production
costs of primarynear-zero emission
steel production will
cost around 15-40%
more versus
conventional routes

300
200
100
0

2015

2016

2017

2018

2019

2020

2021

2025

2030

Notes: Global average production costs are calculated from country-level blast furnace – basic oxygen furnace (BF-BOF)
production costs for 13 countries representing close to 90% of global steelmaking capacity. Line represents average
historical costs for 2015-2020, before recent price shocks.The 15-40% range of future costs of NZS production is from MPP
analysis.
Sources: TransitionZero, 2022; MPP, 2021.

Achieving the Steel Breakthrough goal would produce a radical and enormously beneficialtransformation for the sector globally. By 2030, the steel sector should be firmly on track toreach net zero emissions by the mid-century, illustrating that near-zero emission
technologies are technically viable at commercial-scale in all regions. Collective action in
the sector, reinforced by successes over the 2020s, could create a race to the top, with themost progressive companies being rewarded. Equally, local communities benefit fromsecure and clean jobs and significantly reduced air pollution.

HOW DO WE GET THERE?
Action across multiple enabling conditions is required to accelerate the transition in thesteel sector. To achieve the 2030 vision, a multi-pronged approach – adapted to thedifferent economic and social realities in developed and developing countries – is neededin the coming years.
Urgent action is required to create demand for low and near-zero emission steel,overcoming the barrier created by their cost premium. Assured demand can mobilise
investment in low and near-zero emission steel production, and set in train the processes

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of innovation and improvement that will bring down costs over time. Steel buyers, in boththe public and private sectors, can create this demand through measures such as
procurement and advance-purchase commitments.
Definitions for low and near-zero emission steel will need to be agreed among major
steel producing countries, with a timeline for adoption by the mid-2020s, which will help
enable demand creation. These definitions should be supported by robust processes for
substantiating these standards, including agreed approaches to the monitoring, reportingand verification of emissions data. This will provide certainty for those companies andgovernments looking to purchase low and near-zero emissions steel through key
procurement initiatives.
In parallel, countries and companies should scale-up RD&D investments to ensurethat commercial-scale technology is ready to deploy by the mid-2020s in multiple regions.
Beyond investments in near-zero emission steel production technologies, this should also
include projects along the value chain, including iron ore processing and finishingprocesses. Once exploratory RD&D projects have de-risked key deep decarbonisation
technologies, governments can support the first wave of commercial-scale plants in themid- to late-2020s through policy and regulation. As an example of such support, in May
2022, Germany launched an expression of interest for Carbon Contracts for Difference forheavy industry sectors, including steel (BMWK, 2022a).
Governments will need to cooperate towards creating a level playing field for low andnear-zero emission steel products, alongside the support for early deployment. This should
include coordination on carbon intensity standards and benchmarks, which should be
agreed by a significant share of the market by the mid-2020s, to ensure that near-zeroemission steel producers have confidence that they will not be undercut by high emission
competitors. International cooperation could extend to policy coordination aiming for
progressive convergence on carbon intensity regulations or carbon pricing in the steel
sector across jurisdictions.
Governments and companies should communicate medium- and long-term
strategies and set milestones for deep decarbonisation, as technology and policy
pathways become clearer, providing greater certainty on the direction of travel. These
strategies should detail the important interactions with other sectors, such as hydrogen andpower, which will have a significant impact on the pace of the transition in the steel sector.
Alongside policies to boost the deployment of key supply-side technologies, such strategies
should also set out policies to encourage material efficiency and circularity, in close
consultation with supply chains. This in turn can provide certainty for public and private
investors around the technologies and approaches being favoured by the sector.
Governments will need to work closely together to develop effective technology
partnerships underpinned by technical and financial assistance, ensuring involvementfrom all major steel producing regions. As can be observed with already-announced
projects, it is likely that companies in Europe and Asia will lead in early deployment of

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innovative, near-zero emission technologies over the mid-2020s. Beyond these first few
projects, additional projects should be taken forward, supported by learning from earlyexamples in the mid-2020s, enabling operation later in the decade.
By the late 2020s, commercial-scale projects will need to ramp up across multiple
regions, requiring a proactive approach for deploying vital enabling infrastructure,including electricity transmission, and CO2 and hydrogen storage and transportation. Thishas the potential to lead to a decoupling of iron and steel production, as countries with
abundant land, low-cost renewables and iron ore reserves are able to produce
competitively priced near-zero emission iron, 5 which can be exported for processing(Gielen et al. 2020; Trollip, McCall and Bataille, 2022). To support these projects, asignificant increase in the availability of skilled professionals will be required, including
engineers, metallurgists and renewable energy experts, capable of supporting the
deployment of new near-zero emission technologies. This will require both retraining
programmes for existing employees, as well an increase in appropriate graduate and earlycareer training and qualifications.
Governments and companies will need to share early learning on rapid
infrastructure deployment, including creative and risk-based approaches to regulations,accelerated permitting, plant operation and renewable energy systems, supply of lowcarbon intensity hydrogen and bio-based fuels and feedstock, and/or CO2 infrastructure
integration with the iron and steelmaking process. It is important that such approaches arestill inclusive of local communities’ concerns and priorities. Rapid feedback loops,
supported by international initiatives, can help ensure that near-zero emission plants arebuilt in a series of ‘fast follower’ countries within a couple of years of the first plants being
built in the mid-2020s.
For these actions to be realised, there is a need to focus and coordinate international efforts
in the steel sector as well as with other industry sectors. Only with effective international
collaboration will it be possible to ensure that the transition can occur at the pace and scalerequired, and that near-zero emission solutions are affordable and accessible to all.

5
Near-zero emission iron can be produced from iron ore in DRI facilities supplied with low-carbon or renewable hydrogenand or fitted with CCUS.

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Critical path to 2030 for the steel sector

RECOMMENDED REPORTS
We recommend the following reports for more detailed descriptions of the technologies forsteel sector decarbonisation and of the actions that countries and businesses can takeindividually.


Iron and Steel Technology Roadmap (IEA, 2020)



Reaching Zero with Renewables: Eliminating CO2 emissions from industry andtransport in line with the 1.5⁰C climate goal (IRENA, 2020)

Net Zero Steel Sector Transition Strategy (MPP, 2021)



Net Zero Steel project (IDDRI, 2021)



1.5C Steel: decarbonising the steel sector in Paris-compatible pathways (E3G &PNNL, 2021)



Achieving Net Zero Heavy Industry Sectors in G7 Members (IEA, 2022)Global Steel at a Crossroads (Agora, 2021)

CURRENT STATE OF INTERNATIONALCOLLABORATIONInternational collaboration in the steel sector is relatively limited, although there has beena significant increase in activity over the past several years. Through the SteelBreakthrough process, there is an opportunity to ensure that the international collaborative

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architecture is established in an organised, focused and efficient way from an early stage,
avoiding some of the challenges facing other sectors with a very crowded bottom-up
landscape.
Until recently, international collaboration in the steel sector has largely focused on issues
other than decarbonisation. Trade discussions, such as those in the OECD Steel
Committee and the Global Forum on Steel Excess Capacity, have been primarily devoted
to production (over-) capacity and anti-dumping. There has also been cooperation onenergy efficiency (including through the World Steel Association’s Benchmarking Systems,
and bilateral partnerships, such as between Japan and India), but this has largely
contributed to making fossil-fuel-based steel more efficient, and has not focused on starting
the necessary transition to near-zero-emission steel production.
However, there are a number of important collaborative initiatives that have been launchedin recent years that focus on near-zero emission steel, including innovation (Mission
Innovation’s Net Zero Industries Mission), data, harmonisation of standards and public andprivate procurement (Clean Energy Ministerial’s Industrial Deep Decarbonisation Initiative,
the First Movers Coalition, SteelZero). Other collaborative initiatives cover product and sitelevel standards (ResponsibleSteel), finance (Climate Bonds Initiative, Centre for Climate
Aligned Finance, Glasgow Financial Alliance for Net Zero) trade (the upcoming ‘Climate
Club’, EU-US Global Arrangement on Steel and Aluminium), and more cross-cutting issues(the Mission Possible Partnership, the Leadership Group for Industry Transition and the G7
Industrial Decarbonisation Agenda). There are also growing interactions with several
established forums in technology areas, such as hydrogen and CCUS. The rapid growth ofthese new initiatives, while encouraging, represents a challenge. Steel stakeholders risk
being overwhelmed with the wide-ranging, overlapping asks. At the same time,governments’ participation in these initiatives does not yet have the strength and depth
necessary to enable a rapid global transition.
Despite the growing number of initiatives in the steel sector, there exists no single,
authoritative forum in which countries representing the majority of global steel production
coordinate on key elements of the transition. The government forum with the highest shareof steel production is the OECD Steel Committee, whose members and participants cover
45% of global steel production and 75% of steel exports (including several non-OECD
members), is increasingly focusing on the transition to near-zero emission steel (OECD,
2022a). Beyond the steel sector alone, LeadIT has a remit covering industry more broadly,
including both governments and companies, with a membership of 16 countries covering
24% of global steel production (LeadIT, 2022a).
In short, there is an opportunity to reinforce this international landscape of collaboration on
the steel sector’s transition to low emissions. This can be done by facilitating ongoingstrategic discussions to coordinate international activity across this agenda (including
through the Steel Breakthrough Dialogues), by crowding-in more countries and companies
to the most critical initiatives, by strengthening join-up between public and private initiatives
and by plugging key gaps in the landscape where they exist.

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Landscape map of key international steel sector decarbonisation initiatives

Note: The diagram summarises the roles of many public and private sector initiatives in this sector. Initiatives have been
included if they have a global scope, with active members from multiple regions of the world, and have at least one
significant work programme specifically focused on accelerating emissions reduction in this sector. The list is not
exhaustive and will be updated over time.

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PRIORITY AREAS FOR INTERNATIONALCOLLABORATIONInternational collaborative action is vital to jumpstart the nascent transition in the steel
sector. There are five actionable areas that stand out as immediate priorities forstrengthening international collaboration: standards and certification; demand creation;
trade conditions; research and innovation; and finance and investment. These represent
priorities that need to be addressed within the next 1-2 years, which can then unlock further
actions and faster progress later in the decade.

URGENTLY AGREEING COMMON STANDARDS FOR NEAR-ZERO

EMISSION STEELStandards are a vital tool for aligning expectations as to the pace and trajectory of the net
zero transition in the steel sector. A common definition of low emission and near-zeroemission steel production is an important first step, allowing buyers to differentiate between
higher and lower emission products, and make it possible for producers to charge a
premium in return for their investments.
Measurement standards for evaluating the emissions intensity already exist or are underdevelopment, such as ISO 14404, ISO 20915 and the Worldsteel Benchmarking Systems,
however, these measurement standards generally do not specify the necessary normative
thresholds or target levels for emissions intensities. When defining these thresholds, it will
be important to agree complementary definitions for low emission steel, as well as nearzero emission steel, recognising the important interim steps that can be taken to reduce
emissions intensity.
Collaboration between countries on this issue is important since steel is part of a highlyinternational market. Most of the largest steel producers and many large consumers, suchas automotive firms, sell and buy internationally. Differences by country exist of course, butthere is a risk that if countries and companies choose to define their standards differently,
this would slow down the pace and scale at which a global, premium market is established.
Similarly, it will be difficult for governments to agree coordinated measures on market
creation and trade unless they have first agreed how to differentiate between high and low
emissions steel.
At present, there is not a widely recognised, common definition of low emission and nearzero emission steel production that has been adopted by a significant share of the market.
However, there are several definitions, either already public or currently being developed,
which countries could look to adopt over similar time frames to stimulate investments andmitigate carbon leakage. These include definitions from ResponsibleSteel (due forpublication later in 2022), ArcelorMittal, the First Movers Coalition and the IEA’s definitions
proposed in the “Achieving Net Zero Heavy Industry Sectors in G7 Members” report (IEA,
2022). The emissions intensity thresholds proposed by each of these efforts are broadly
similar, although further work is required to understand the differences in methodology andanalytical scope.

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Early adopters are already preparing to commit to these standards, with 51 companies fromacross the supply chain signed up as members of ResponsibleSteel (ResponsibleSteel,2022). Clear government policy can also pave the way to increase and accelerate the rateof adoption. The most prominent example of international coordination on this front is theG7 Climate, Energy and Environment Ministers’ Communiqué of 2022, which includes
countries that represent 18% of global steel production. The Communiqué “recognised thedefinitions proposed in the IEA report as a robust starting point” enroute to agreeing “stable,
absolute and ambitious thresholds for near-zero emissions material production” (BMWK,
2022b).
There is growing support to collaborate on the definition and adoption of standards from a
broad set of countries, including major emitters. Since this step is an enabler of other,
deeper forms of collaboration needed in the steel sector, it is essential for these efforts to
be fast-tracked. Countries leading the effort to reach an agreement on standards anddefinitions, should also include actions to increase data availability and improve themonitoring, reporting and verification of emissions data to support these standards. For thegreatest effect, this agreement should include countries that collectively account for the
majority of global steel production and consumption. The group could be continuallybroadened, and the details of the standards adopted could be refined as necessary overtime.

RECOMMENDATION 1
Governments and companies willing to lead the transition in the steel sector should
agree on common definitions for low-emission and near-zero emission steel, alongwith a time frame for the adoption of standards by the mid-2020s. This is an
important market signal and will be vital for unlocking a series of subsequentactions, most notably high-quality demand commitments and trade agreements.

RAPID SCALE-UP OF HIGH-QUALITY COMMITMENTS TO PURCHASE
NEAR-ZERO EMISSION STEEL
Significant capital investments are needed for new near-zero emission steel production,either in the construction of new plants, or in the substantial retrofitting of existing facilities.
A first-of-a-kind (FOAK) commercial-scale (2.5 Mtpa) hydrogen direct reduction with an
EAF plant can be expected to cost around USD 2 billion (SEI, 2020). Steel companies areunlikely to make such large investments, on the necessary scale, unless they have highconfidence that there is sufficient demand for the near-zero emission product. Since nearzero emission steel is expected to cost more than high-emission products (+15-40% per
tonne for FOAK plants), confidence in its demand is closely related to the question of how
this additional cost will be met.

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There are a number of options for creating demand for NZS products, including direct
offtake agreements, quotas, tax incentives, labelling or Contracts for Difference (CFDs).
There is a clear opportunity for international collaboration in this area: the more public andprivate sector steel consumers align their actions, jointly creating a stronger demand signal
than they could individually, the greater the incentives for industry to invest. This isparticularly vital given the high levels of international trade in the steel sector, meaning thatit may require demand commitments in multiple consumer markets to send a sufficiently
strong signal to support production in any one location.
Since 2021, commitments from public and private steel buyers have started to gain
momentum. In the private sector, these include arrangements between some steel
producers and a range of buyers from across the automotive, construction and appliancesectors. Steel often represents a minor share of the final value of its main end-use products,
such as vehicles, buildings and appliances, so a relatively large cost increase in each tonneof production translates into a very small cost increase at the final product level, often lessthan 1% (MPP, 2021b). The companies taking advantage of this opportunity include steel
producers such as SSAB, Salzgitter, Nucor, and H2 Green Steel, and buyers such as
General Motors, Mercedes Benz, Volvo, Ørsted, Miele and Lindab. H2 Green Steel isnotable in the extent to which their business model is reliant on such commitments,
receiving no direct government support to establish a 1.5 Mtpa plant from 2025 (H2 Green
Steel, 2022).
Key private sector initiatives to create demand include SteelZero, which focuses on scaling
commitments for the mass market, and the First Movers Coalition (FMC), which
concentrates on bringing forward the deployment of innovative or breakthroughtechnologies. Collectively, these initiatives cover over 40 companies, representing asignificant share of steel demand from a range of sectors (FMC, 2022).
In the public sector, the principal international collaborative initiative is the Clean Energy
Ministerial (CEM) Industrial Deep Decarbonisation Initiative (IDDI), which focuses on
construction and infrastructure, and is supported by the UK, India, Germany and Canada.
Public procurement typically covers 20-30% of a country’s steel demand (UNIDO & LeadIT,2021); as such IDDI member governments have direct influence over approximately 2-3%
of global steel demand. 1 Members have committed to a Green Public Procurement Pledge,
where they can choose from three different areas of commitment, including carbon
disclosure on major public construction projects by 2025, achieve procurement of net zero
construction materials by 2050, and put in place an interim low-carbon target by 2022, tobe met in 2030. As well as directly creating demand for near-zero emission steel, it canalso influence industry expectations and investment by clearly signalling the direction of
government policy. There is strong momentum building in this area, where G7 members‘welcomed the work’ of the IDDI in May 2022 (BMWK, 2022c). If all G7 members joined,
this would then cover 4-5% of global steel demand.
These are important first steps in the right direction. However, there is an opportunity forthese efforts to be greatly strengthened in terms of both quality and quantity ofcommitments. The quality of demand commitments refers to how specific they are. Whilethe initiatives mentioned above are proving effective in establishing communities of
Total steel demand from IDDI members is around 9% of global steel demand (WSA, 2022), though this covers both public
and private buyers. Data on public procurement of steel is incomplete but typically ranges between 20-30%, suggesting
current IDDI member governments have direct influence over approximately 2-3% of global steel demand.

1

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practice, as of July 2022 they have yet to result in specific agreements to purchase nearzero emission primary steel. High-level procurement targets reinforce expectations about
the sector’s direction of travel, but to be effective in incentivising the first investments incommercial-scale near-zero emission steel plants, they will need to be translated into
forward purchase agreements with specific producers, covering pre-agreed time frames.
Otherwise, industry may perceive the necessary investments as simply too high-risk.
In terms of quantity, giving steel companies the confidence to invest in the scale-up of nearzero emission steel production needed to meet the 2030 goal is likely to require high-qualitycommitments from across multiple end-use sectors, assuring demand for the first tens ofplants, not just the first few. Expanding the country and company membership of demand
creation initiatives would be one way to achieve this goal.
To put the sector on track to meet international targets, countries and companies withinthese initiatives should set standards for procurement in line with a clear ‘near-zeroemission steel’ benchmark. Commitments should require a substantial share of steel
purchases to meet that standard before or by 2030, covering both primary and secondary
production. The partnership between SteelZero and ResponsibleSteel, with the former
mobilising demand commitments based on the standard defined by the latter, is a good
example of this – which could be replicated across other public and private sector initiatives.
Putting strong targets in place quickly, accompanied by advanced purchase agreements,
will be crucial to ensure new steel plants built in the next investment cycle are designed to
produce steel with near-zero emissions.
To support the growth in NZS production that is required, countries and companies should
rapidly increase the scale of their procurement commitments. Demand commitments fromacross public and private sector buyers may be enough on their own to support the
deployment of the first few near-zero emission steel production plants in each region,
allowing producers to quickly deploy several first-of-a-kind plants in the absence of wider
policy. However, achieving the pace and scale of transition that can meet the 2030 goals
will also require supportive supply-side polices.

RECOMMENDATION 2
Governments and companies should increase the scale of near-zero emission steel
procurement commitments to cover a significant share of their future steel demand.
These commitments should be high quality, supported by appropriate legal andimplementation frameworks, such as advance purchase commitments.
Governments and companies should also consider joining public and private sector
initiatives where these commitments are aggregated. This will strengthen the global
demand signal for near-zero emission steel, increasing the incentives for industry
to invest in its production.

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AGREEING AN APPROACH TO ENABLE THE TRADE OF NEAR-ZERO

EMISSION STEEL

Trade is of critical importance for the global net zero transition in the steel sector. Over the
past few decades, between 20-30% of steel has been traded internationally (WorldSteel,2022). While the steel sector is very cyclical, net profit margins are often low, averaging
around 4.5% between 1998 and 2020 (OECD, 2022b). Without an agreement that createsa level playing field for near-zero emission steel, first movers will continue to be undercut
by producers using cheaper, high-emission alternatives. Short of a collaborative solution,
countries are more likely to adopt unilateral and inconsistent approaches, which have thepotential to lead to trade disputes and slow the pace of transition.
If countries representing a substantial proportion of the global steel market agree to acommon approach to requiring low or near-zero emissions in steel production and imports,
this would strengthen the incentive for investments in low or near-zero emission steel
production in all countries and mitigate the risks of carbon leakage in any individual country.
International competition in the sector would then become an accelerator of the transition,
instead of a brake, as it would be focused on improving the quality and reducing the costof near-zero emission steel.
There are several international fora that could be used to discuss approaches to creating
a level playing field for decarbonised steel, but none yet have the necessary focus andparticipation. In the World Trade Organisation’s Trade and Environmental Sustainability
Structure Discussions (TESSD), member countries are working towards potential solutions
around trade-related climate measures that can avoid challenge under the WTO. This is
an important step towards establishing legal clarity on what is permissible, but it is not anattempt to reach an agreement (on steel or any other sector).
The OECD Steel Committee has historically had a focus on issues of market structure,
demand and capacity but is increasingly focusing on the various aspects ofdecarbonisation. Participation in the Steel Committee goes beyond OECD members andincludes other countries such as Brazil, India, Egypt, Malaysia and South Africa (OECD,
2022a). The OECD Steel Committee provides some of the highest quality data and analysisof the steel sector, so is well-placed to provide valuable support to international discussions
on steel decarbonisation and trade.
Outside international organisations, some countries are looking to accelerate activity in thisarea through new bilateral initiatives or agreements. The Global Arrangement on Steel andAluminium, agreed by the United States and European Union on 31 October 2021, toestablish a “carbon-based sectoral arrangement that will drive investment in green steel
production in the United States, Europe and around the world”. However, the European
Union and United States together represent only 12% of global steel production. Japan andthe United Kingdom have also reached bilateral agreements with the United States on steel
trade, although with less of a focus on decarbonisation. The US-Japan Proclamationagreed to “…cooperate on addressing…carbon intensity in these sectors” and the US-UK
joint statement agreed that both parties “will confer on entering into discussions on…carbon

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intensity of the steel and aluminium industries” (DIT, 2022; The White House, 2022). The
inclusion of other major steel producing countries in ambitious agreements on steel
decarbonisation and trade will be necessary for an agreement to be reached that is capableof shifting the global market.
The proposed EU Carbon Border Adjustment Mechanism (CBAM) could also contribute toprogress in this area. The aim of the CBAM is to provide protection against the risk ofcarbon leakage, as free allocations of emissions permits are removed from the EU
Emission Trading System (ETS). It is due to come into force in 2026 after a three-year pilot
starting in 2023, which will cover five sectors, including iron and steel. At current carbon
prices of around EUR 80/tCO2 (USD 84/tCO2), this could be sufficient to drive investmentsin the more advanced deep decarbonisation solutions, such as certain hydrogen or CCUS
applications, assuming confidence in this price is maintained and Free Allocation is phased
out. Additional supporting policies, such as procurement or CfDs, could increase the paceand scale of deployment.
In 2022, the G7 committed to establish a “Climate Club”, which would focus on accelerated
climate action in industrial sectors, while mitigating risks of carbon leakage and complying
with international rules. The club covers three pillars of activity, including advancing climate
mitigation policies, jointly transforming industries, and boosting international ambition indeveloping countries. While the club is yet to be established, it could provide an influential
intergovernmental forum to accelerate effective collaboration in the sector. Its effectivenessin driving the global transition is likely to depend significantly on the extent to which it
includes, or establishes constructive collaboration with, the major emerging economy steel
producers.
Timeline of existing trade-related commitments

This is a highly challenging area for countries to collaborate on given the potentiallysignificant impacts on domestic industry. Nevertheless, there are significant benefits tocollectively agreeing the conditions for a level playing field for steel, avoiding a series ofcompeting unilateral measures that run the risk of triggering trade disputes, fragmenting
the market, and ultimately slowing the pace of transition.
Countries can build mutual confidence by collaborating openly on the key enabling
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definitions and standards, comparability of climate policies, research and innovation
programmes, financial support for emerging economies and demand creation policies fornear-zero emission steel (see Annex). Collaboration in all these forms will help to build
countries’ understanding and confidence in near-zero emission steel solutions, increasing
the potential for an agreement that successfully harnesses the power of international tradein support of a rapid transition.

RECOMMENDATION 3
Governments should urgently launch a strategic dialogue, including the leading
producer and consumer countries, with the purpose of agreeing ways to ensurenear-zero emission steel can compete in international markets. This is needed toprevent trade acting as a brake on the transition. This may be supported byagreements to cooperate on data, standards, comparability of policies, RD&D,
finance and procurement.

IMMEDIATELY INCREASING PUBLIC AND PRIVATE FUNDING FORRESEARCH AND INNOVATION, SUPPORTED BY EFFECTIVE
COLLABORATIVE NETWORKS

Most of the key technologies required for near-zero emission steel production have not yet
been deployed commercially at scale. These are principally technologies for the near-zeroemission reduction of iron ore, the most emissions-intensive part of the steel production
process. These include hydrogen direct reduction, and CCUS on the blast furnace or direct
reduction furnace. CCUS has reached the commercial operation stage for direct reduction
furnaces technology readiness level 9 (TRL 9) but is still at pre-commercial stage for highrates of CO2 capture from the blast furnace (TRL 5). Hydrogen direct reduction, using close
to 100% hydrogen, is at an earlier stage, with only large prototypes having been deployedso far (TRL 6). Additional direct electrification technologies, such as iron ore electrolysis(IOE), are at an earlier stage of prototype (TRL 4) but could play a vital role in the future(IRENA, 2021; IEA, 2021a).
It is also important to note the vital role of research and innovation in other parts of the
supply chain, beyond steelmaking. This is particularly true for the direct reduction route,which currently requires a high grade of iron ore, when paired with an electric arc furnace(EAF). These grades are currently limited in their availability and so further work will be
required to better understand processes to upgrade iron ores (beneficiation) to support an
expansion in low emission and near-zero emission production via the direct reduction route.
Projects in Austria and Australia show early signs of success but the scale of productionneeds to increase rapidly to support the 2030 goals (Primetals, 2021).

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There has been a wave of recent announcements of projects using various innovativetechnologies, especially hydrogen direct reduction. In addition to the one DRI-EAF plantwith carbon capture operating at commercial scale in the United Arab Emirates today (witha capture rate of 0.8 MtCO2 per year), announcements for future capacity additions ofconventional scrap-based EAF and natural gas- and or hydrogen-based DRI technology
add up to 124 Mt (Agora Industry, 2021). Both of these technologies have the potential toachieve near-zero emission production over time if sufficient low-emissions electricity orhydrogen is made available. LeadIT's Green Steel tracker has identified a range ofinnovative technology developments in more than 60 steel projects around the world,
although many of these are at the pilot or demonstration phase and not due to be
operational for several years (LeadIT, 2021). While these developments are positive, thefirst few commercial-scale plants are urgently needed, to facilitate learning by doing withthese as-yet untested technologies. There is a clear opportunity for international
collaboration if countries and companies work together to increase the number of plants inwhich these technologies are deployed and tested, and share findings from theseexperiences, the learning process can be accelerated across multiple regions in parallel.
The steel sector already has a large number of research and innovation forums that havebeen operating for a number of years, although few with an explicit focus on
decarbonisation. Most major steel producing countries have established national researchand technology institutes, focused on steel and metallurgy, in close partnership withnational companies. Alongside these national efforts, a number of multinational initiatives
have been established, including the European Steel Technology Platform (ESTEP), theHydrogen Iron and Steelmaking Forum (HyIS) and the Global Low Carbon MetallurgicalInnovation Alliance. The latter being set-up by Baowu Steel with 60 partners from15 countries. This Alliance’s aim is to combine R&D resources of major steelmakers,
promote technical cooperation and accelerate the formation of a low carbon steel value
chain. This initiative could play a valuable role in increasing the pace of technology sharing
between different markets.
At the COP26 climate change conference in November 2021, Mission Innovation members
stated their intention to launch a new Net Zero Industries Mission in 2022, co-led by Austria
and Australia, with the support of China, Germany, the UK and the European Commission(in total representing over 60% of global steel production). This initiative is currently
developing a joint roadmap of focus sectors and processes, and considering a focus on (a)improving connections between national and multinational RD&D efforts; (b) facilitatingnovel technology transfer, particularly in developing countries; and (c) joining forces withexisting networks and platforms. These priorities are well aligned with what is needed in
the steel sector, in particular for faster sharing of practical technology outcomes from earlypilots and demonstration projects with developing countries. To fulfil this potential, it will bevital for member countries to launch the Mission without delay in 2022, and to follow thiswith a rapid series of well-targeted sector or process-specific technology sharing projects.
International efforts should seek to facilitate faster deployment of commercial-scale plants
using the leading near-zero emission steel technologies in a larger number of regions, sothat lessons can be learned from the deployment of each of them within the context of

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different regional circumstances. These include the proximity to, and quality of, iron ore
reserves, availability of carbon storage and transport infrastructure, the price andavailability of scrap, and the variability of local renewable electricity resources. This would
be similar to existing forums, such as Metnet which socialise learning across a network ofpilot projects in Europe, but with an explicit focus on near-zero emission technologies.

RECOMMENDATION 4
Governments and companies should identify several commercial-scale pilot
projects, in all major steel producing regions, where international collaboration can
support shared technology learning, business case development and policy
support. Collaborative networks should deliver operational projects in thesecountries by the late 2020s at the latest. Emerging markets and developing
countries’ participation in key R&D and demonstration initiatives should be
increased in support of this aim. This will help eliminate technology availability
issues, providing multiple case studies for a large group of countries and companies
to further improve upon.

INCREASING INTERNATIONAL ASSISTANCE TO CATALYSE PRIVATESECTOR INVESTMENT IN PILOT, DEMONSTRATION AND
COMMERCIAL-SCALE PLANTS
The transition in the steel sector will need strong support from policy, and as in othersectors, international assistance, finance, and the sharing of best practice can help toenable the necessary policy measures.
Half of the world’s current top 20 steel-producing countries are emerging economies(WorldSteel, 2022), making deployment of near-zero emission technologies in theseregions a priority for the global transition. Emerging markets and developing countries arealso projected to account for around three quarters of the growth in global steel demand in
the coming decades (IEA, 2022), meaning that their policy choices will have a significant
influence on the global market.
At present, there is an extremely low level of financial support being provided to emerging
and developing economies to aid the transition from conventional steelmaking technologies
to low emission alternatives. Between 2000 and 2021, a total of USD 3.5 billion wasprovided by international financial institutions, mainly in Europe and Central Asia. This is
miniscule in a market worth over USD 1 trillion, with a single plant requiring investment
close to USD 2 billion (SEI, 2020). Moreover, most of these projects were focused on
business-as-usual upgrades, not the deployment of deep decarbonisation technologies
required (LeadIT, 2022b). The total amount of international financial support provided for

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industry-related climate programmes in 2020 under the OECD’s Development AssistanceCommittee (DAC) was around USD 300 million, or less than 0.5% of total climate financefrom the DAC members (OECD, 2022c). These programmes include relevant parts of theWorld Bank’s Energy Sector Management Assistance Program (ESMAP). Again, this isvery low; especially when compared to industry’s contribution of around a quarter of all
global greenhouse gas emissions. More funds are available in various dedicated hydrogenand CCUS programmes under the World Bank and the Asian Development Bank, althoughthese are not specifically focused on the use of those technologies in industry, and are stillat the USD 10 million-scale, not the USD multi-billion scale that is required.
There is a clear need for stronger international efforts in this area. Emerging markets anddeveloping economies are expected to deploy 85% of the new production capacity coming
online within heavy industry sectors by 2030. This implies that a large portion of the
USD 60 billion per year of investment needed to enable the global transition to near-zeroemission steel production would take place in those geographies (IEA, 2021b). The
majority of this will come from private sources, as is the case for most conventional steel
facilities today. However, for the first wave of plants, including large-scale demonstrations
and first-of-a-kind facilities, international climate finance will be a vital enabler.
Concessional loans and blended finance, typically provided by MDBs, can help accelerate
the pace of deployment in a larger number of countries.
The role of public funds here is primarily to de-risk investments, helping to mobilise largerscale private finance, and is not to cover the entire cost of a new plant. To ensure private
sector finance is likewise targeted at near-zero emission steel projects, measurement anddisclosure frameworks and climate-aligned standards for bonds and or loans, will be vitalin supporting banks, export credit agencies and capital markets as they assess alignmentof their portfolios against 1.5ºC-compatible pathways. Existing initiatives are increasing
work in this area, with the RMI Centre for Climate Aligned Finance recently launching a setof ‘Steel Principles’ (RMI, 2022) for investors and the Climate Bonds Initiative is planningto launch a steel standard for bonds and loans.
Donor countries should collectively recognise the importance of steel (and wider industry)
decarbonisation within their portfolios, working closely with recipient countries. The
provision of funds needs to be accelerated and scaled-up, supported by dialogue to identify
specific needs in recipient countries and mitigate risks of anti-competition concerns. To
enhance the effectiveness of funds, a model pioneered by the Energy Transition Council(ETC) could be usefully applied to steel (BEIS, 2021). The ETC brings political dialogue
together with practical and financial assistance, supported by a ‘Rapid Response Facility’to support short-term projects and help build the case for larger investments. One
immediate opportunity to increase the scale of funds is presented by the Climate
Investment Funds (CIFs) Industry Transition programme, which is the largest new fund tosupport industrial decarbonisation currently being developed. Several other industry
transition funds are likely to be required, building on the respective expertise of different
multilateral development banks and other partners.

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RECOMMENDATION 5
Donor countries and MDBs, led by the priorities of developing countries, should
significantly increase funds supporting industry transition to near-zero emission
technologies in emerging and developing countries. This will provide much needed,near-term technology and financial support to unlock additional private sector
capital to support the first wave of near-zero emission projects in key steel
producing countries, especially for developing countries.

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MPP (Mission Possible Partnership) (2021a), Net-Zero Steel Sector Transition Strategy,
https://missionpossiblepartnership.org/wp-content/uploads/2021/10/MPPSteel_Transition-Strategy-Oct19-2021.pdf
MPP (2021b), Steeling Demand: Mobilising buyers to bring net-zero steel to market before
2030, https://www.energy-transitions.org/publications/steeling-demand/
OECD (Organisation for Economic Cooperation and Development) (2022a), OECD Steel
Committee, https://www.oecd.org/industry/ind/steel-committee.htm
OECD (2022b), Steel Market Developments: Q4 2021,
https://one.oecd.org/document/DSTI/SC(2021)9/FINAL/en/pdf

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OECD (2022c), Development Assistance Committee, https://www.oecd.org/dac/developmentassistance-committee/
OECD (2021), Latest developments in steelmaking capacity 2021,
https://www.oecd.org/industry/ind/latest-developments-in-steelmaking-capacity2021.pdf
Primetals (2021), Hydrogen-Based Ironmaking: MHI Australia and Primetals Technologies
Join Heavy Industry Low-Carbon Transition Cooperative Research Centre,
https://www.primetals.com/press-media/news/hydrogen-based-ironmaking-mhiaustralia-and-primetals-technologies-join-heavy-industry-low-carbon-transitioncooperative-research-centre
UNIDO (United Nations Industrial Development Organisation) and LeadIT (2021), Fostering
industry transition through green public procurement: A how to guide in the cement &steel sectors, https://www.industrytransition.org/insights/industry-transition-throughgreen-public-procurement-how-to-guide-cement-steel-sectors/
Reuters (2022), Sweden leads the charge in green steel projects,
https://www.reutersevents.com/renewables/renewables/sweden-leads-charge-greensteel-projects
ResponsibleSteel (2022), Members and Associates,
https://www.responsiblesteel.org/about/members-and-associates/
RMI (2022), The Sustainable STEEL Principles, https://climatealignment.org/wpcontent/uploads/2022/06/sustainable_steel_principles_framework.pdf
SEI (Stockholm Environment Institute) (2020), Bigger is sometimes better: demonstratinghydrogen steelmaking at scale, https://www.sei.org/publications/bigger-is-sometimesbetter-demonstrating-hydrogen-steelmaking-at-scale/TransitionZero (2022), Global Steel Production Costs,
https://www.transitionzero.org/reports/global-steel-production-costs
Trollip, H., B.McCall and C. Bataille (2022), How green primary iron production in South Africa
could help global decarbonisation, https://doi.org/10.1080/14693062.2021.2024123
Vogl, V., O. Olsson and B. Nykvist (2021), Phasing out the blast furnace to meet global
climate targets, https://doi.org/10.1016/j.joule.2021.09.007
The White House (2022), A Proclamation on Adjusting Imports of Steel into the United States,
https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/31/aproclamation-on-adjusting-imports-of-steel-into-the-united-states-2/
WorldSteel Association (2022), World Steel Figures, https://worldsteel.org/steeltopics/statistics/world-steel-in-figures/

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ANNEX
Enabling
condition

Pathway to 2030

Long-term
vision andaction plans

By the early 2020s, governments should have in place astrategy for incorporating near-zero emissions technologies
into the next series of capacity additions and replacements forsteel plants, including decisions about a combination ofhydrogen, CCUS, and direct electrification.

34 roadmaps covering 15
countries/regions on the
deep decarbonisation of
the steel sector.

Demandcreation andmanagement

By the early 2020s, commitments to purchase near-zeroemission steel from both public and private sector actors havescaled significantly, covering greater than 5% of total steel
production by 2030.

SteelZero includes 23
companies
FMC for steel includes 18
companies
CEM IDDI includes four
member countries,
covering approximately 23% of global steel demand

Tracking(as of July 2022)

These commitments are high quality, supported by adequate
legal frameworks or policy support where necessary. This
includes advanced market commitments or Carbon Contracts
for Difference, to create certainty for leading producers.

Infrastructureand supply
chainsBy the mid-2020s, governments should have in place firmplans for developing and financing infrastructure for hydrogen,
CCUS and clean power in support of near-zero emission
plants. The construction of the required infrastructure should
begin as soon as possible given the long lead‐times involved.

Global investment in low
carbon fuels and CCUS at
USD 16 billion, a 60%
increase on the previous
three years.

Governments should also require that any new capacity shouldincorporate retrofit‐ready designs so that unabated capacity
added in the next few years has the technical capacity andspace requirement to integrate near‐zero emissions
technologies over the 2020s and early 2030s.
Governments and companies should collaborate to agree adecoupling of iron and steel production, where this can be ofmutual benefit. This would include establishing new production
hubs in those regions with abundant land, low-cost renewables
and iron ore reserves, enabling the production of competitively
priced near-zero emissions iron.
By the mid-2020s, governments should revise product design
regulations, adopt incentives to promote longer product andbuilding lifetimes, and improve systems for collecting andsorting scrap for recycling seeking to stimulate a more efficient
use along the value chains. They should also reduce
impurities such as copper in scrap to enable increased
circularity.
Finance andinvestment

By the early 2020s, significant new funds are made available
via multilateral development banks to support the deploymentof pilot and demonstration projects in key developing countries.
A particular focus should be made on those countries
expecting high rates of steel demand growth in the coming
years.
By the mid to late 2020s, developing countries have access toadequate low interest and concessional loans and blended
finance.

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In 2020, climate financesupporting industry
transition projects wasaround USD 300 million
from DAC member
countries.

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STEEL

Enabling
condition

Pathway to 2030

Tracking

Researchandinnovation

As soon as possible, governments in advanced economies
take decisions to scale-up R&D funding for critical near-zeroemissions technologies and for mitigating the investment risks
associated with demonstrating them at scale. Learning andknowledge to be shared more effectively across major
projects, supported by key initiatives such as Mission
Innovation.

Marketstructures

By the mid-2020s, a long-term emissions reduction policy
framework is in place to provide certainty that the next wave ofinvestment in capacity additions will focus on near‐zeroemissions technologies. Alongside initial demand-side
measures such as carbon contracts for difference andprocurement, this should also include mass market carbon
pricing and/or emissions performance standards that will limit
the production of high emission steel.

Standards
andcertification

As soon as possible, an agreement is reached by countries
and companies on the definition for near-zero emission steel
production and on concrete steps to harmonise standards for
product labelling and procurement based on such definition.
Standards are adopted from the mid-2020s at the latest.

(as of July 2022)
TRLs for key technologies
Hydrogen direct reduction– TRL 6Natural gas based direct
reduction with CCUS –TRL 9
BF BOF with CCUS (veryhigh rates of capture) –TRL 5Iron ore electrolysis – TRL
4

51 companies signed up to
ResponsibleSteel0 countries agreed a nearzero emission standard

By 2030, definitions for near-zero emission steel production
are well established across all regions and commonly used byany type of near-zero emission procurement standards andsteel-containing product labelling (including adaptation of datacollection systems, which make the data public).
Trade
conditions

A strategic dialogue focused on the trade of near‐zeroemissions steel is reached by the mid‐2020s, so as to support
the establishment of a level playing field.
Alternatively, countries may need to resort to measures toshield domestic near‐zero emissions production fromcompetition from high emission products by the late 2020s.
Any such policy would need to be designed to respect theregulatory frameworks governing international trade, such as
those of the World Trade Organization.

Knowledge,
capability
and skills

By the mid-2020s, governments have a strategy in place incollaboration with the private sector for training and retraining
programmes in line with their strategies for incorporating nearzero emissions technologies into the next series of capacity
additions and replacements for steel plants. This build on
existing successful efforts, such as ‘steeluniversity’ from theWorld Steel Association.

Socialacceptance

By the mid-2020s, dialogues are held with communities inregions most affected by the transition to new near-zeroemission technologies and any changes in supply chains.

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0% of global trade of steel
covered by a near-zeroaligned agreement

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CHAPTER 6. AGRICULTURE“Climate-resilient, sustainable agriculture is the most attractive and widely adopted
option for farmers everywhere by 2030.” -- Agriculture Breakthrough goal

KEY MESSAGESSupply chain disruptions, climate change and the war in Ukraine have contributed todriving the global food crisis to famine levels in some countries. Achieving theAgriculture Breakthrough goal will not only enable an accelerated pathway toreaching lower emission levels, but it will also help deliver a more resilient agriculture
sector, which is essential to global food security.



Agriculture is highly vulnerable to climate change and the sector will need to
implement dramatic changes if it is to rapidly decrease emissions and produce
nutritious food in ways that are sustainable and climate resilient. The sector uses
more land and water than any other human activity and is the leading driver of
deforestation and biodiversity loss.

The agriculture sector is one of the leading sources of greenhouse gas emissions.
Agriculture and land use change are currently responsible for 20% of global GHG
emissions. Under a Paris-aligned pathway, agricultural emissions need to be
reduced 39% by 2050.



The connections between climate change and agriculture have only recently gainedinternational attention and the transition toward a climate-resilient, sustainable sector
is fragmented and in its early stages. At the same time, the agriculture sector must
increase production to feed the world’s growing populationPublic finance, which represents the vast majority of investment in the sector, needs
to shift urgently towards supporting innovations that promote climate resilience andpreserving the natural resources on which the sector depends. International
collaboration on research and development and strategic dialogues among
governments are also needed for knowledge sharing.



Five areas stand out as priorities for strengthening international collaboration overthe next 1-2 years, where we recommend the following actions:

Governments and companies should work together to deliver higher levels ofinvestment in agricultural research, development, and demonstration (RD&D), tobe maintained over the course of this decade. The scale and diversity ofcollaborative international RD&D initiatives and programmes should also be
increased. Priority should be given to innovations that can reduce food waste,
limit emissions from livestock and fertilisers, improve alternative proteins, develop

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climate-resilient crops and livestock, and protect soil and water resources. This
will accelerate the development and eventual cost-effective deployment oftechnologies and solutions that can reduce emissions across multiple regions.


The level of international climate finance directed at agriculture should be greatly
increased, in line with its importance to global emissions, adaptation andresilience and food security. Governments, MDBs and private sector investors
should work together to make finance available to small- to medium-sizedenterprises (SMEs) and smallholder farmers in developing countries on a farlarger scale than has been achieved so far. Finance should be accompanied byassistance with the adoption of practices that increase productivity and resilience
while reducing emissions and protecting natural ecosystems. This will support
economic development, resilience, and food security, as well as reducing
emissions.



Governments, research institutions, international organisations, and the private
sector should commit to a long-term process to test, develop evidence and sharelearning on approaches to redirecting policies and support for agriculture towards
sustainability and climate resilience. This should involve all of the world’s largest
agricultural producer countries, whose policies heavily influence global markets,
as well as countries representing a diverse range of environmental and economic
conditions. This will help countries identify the most effective and feasible ways
to incentivise the transition to sustainable agriculture.

Governments should begin a strategic dialogue on how to ensure international
trade facilitates, and does not obstruct, the transition to sustainable agriculture.
International organisations can advise on options to ensure a level playing fieldso that policy measures essential to drive the transition do not put a country’s
agricultural sector at a competitive disadvantage in international trade. Earlypriority should be given to agreeing sustainability standards for the agriculturalcommodities that contribute disproportionately to deforestation. A level playing
field in international trade will give countries and companies greater confidence
and ability to move ahead in the transition.

Countries and international organisations should develop internationally agreed
standards for monitoring and reporting on the state of natural resources on which
agriculture depends, including soil carbon content and health, and pollinator
health, as well as on the geographical extent of agriculture. International
measurement standards will help support high-quality knowledge sharing on
policy effectiveness and enable international trade to play a positive role insupporting the transition.

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SIGNIFICANCE OF THE SECTOR
The agriculture sector is the source of the world’s food, feed and fibre, while generating
income and supporting billions of people in rural areas around the world. At the same time,
the sector is particularly vulnerable to climate change and is one of the leading sources ofgreenhouse gas emissions.
Recent food, fuel, and fertiliser prices spikes have been exacerbated further by the war in
Ukraine, driving more people into extreme poverty and malnourishment (WFP, 2022). Thisis on top of the climate-related stresses already reducing crop yields and hindering efforts
to meet human needs (IPCC, 2022).
Agriculture and land use change are responsible for 20% of global GHG emissions (FAO,
2022a). After considering emissions across food supply chains and food waste in landfills,
total food system emissions account for about one-third of global GHG emissions (Crippa
et al., 2021). Agriculture is the leading driver of land use change and biodiversity loss
(Benton et al., 2021). Halting agricultural expansion into carbon-rich natural ecosystems isa necessary step to achieve the goals set out in the Glasgow Leaders’ Declaration on
Forests and Land Use, and to align with IPCC pathways for limiting global warming to 1.5ºC
and even 2ºC. Agriculture is also responsible for broader environmental degradation, suchas freshwater depletion, soil erosion, and the ecological impacts of fertiliser and manure
run-off.
Agriculture, when combined with forestry and other land use, is the only sector that has thepotential to be a carbon sink through natural climate solutions (also known as nature-based
solutions 1), although implementing these actions at scale will only be possible if humanneeds for food, feed, and fibre are sufficiently met while halting and reducing agriculture’s
large land footprint.

SECTOR GOALS
The agriculture sector is at an early stage of its transition to sustainability. Paris-aligned
pathways make clear that agricultural production emissions need to be reduced 39% by
2050 and land use change needs to halt, while at the same time the sector must increase
production to provide food for a global population estimated to reach 9.8 billion(Searchinger et al., 2019). Approaches to reduce emissions and improve productivity arebeing implemented in a number of countries and alternative proteins are being developedthat could shift consumption patterns and drastically reduce emissions from the sector.
Notwithstanding the positive efforts and initiatives that are under way, emissions fromglobal agriculture continue to increase, as demand for food and land has grown. The
agriculture sector will need to change profoundly if humanity is to produce healthy foodsustainably without expanding into natural ecosystems and in ways that are resilient toclimate change.
According to IUCN, Nature-based Solutions are actions to protect, sustainably manage, and restore natural and modified
ecosystems that address societal challenges effectively and adaptively, simultaneously benefiting people and nature.
1

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Meeting climate and development goals requires urgent action on many fronts, including
scaling up efforts to reshape the agriculture sector to better support farmers, improve theproductivity of farms, tackle food insecurity, promote healthy diets, avoid agricultural land
expansion, build resilience, and reduce emissions.
There is no one technology or practice that can transform the agriculture sector. The sector
produces a diversity of products in heterogeneous agroecological and social environments.
Innovations in practices, technologies, policies, and financing will be needed across supply
and demand to transform incentives for farmers everywhere so that they adopt climateresilient and sustainable agriculture. Many solutions to improve crop yields, such as better
seed varieties for example, can be delivered today at low costs. However, a scarcity of
reliable information, lack of land tenure, and inadequate access to capital prevent their
uptake (Kelsey, 2013). With the right policy support, governments can incentivise
investment in climate-resilient, sustainable agriculture to make solutions accessible for all.
To put the agriculture sector on a Paris-aligned pathway will require the world to meet the
Breakthrough goal which a number of countries have endorsed:“Climate-resilient, sustainable agriculture is the most attractive and widely adopted
option for farmers everywhere by 2030.”
Achieving this will require action across four guiding principles of climate-resilient,sustainable agriculture: 2
Sustainably increases agricultural productivity and incomes;

Reduces greenhouse gas emissions;

Safeguards soil, water resources, and natural ecosystems;



Adapts and builds resilience to climate change.

It is essential to ensure that efforts to mitigate emissions do not undercut initiatives to adapt
and improve resilience. In line with these principles, the primary metrics of the
Breakthrough goal is broken down into targets for tracking the progress in the sector to2030 (see Figure 6.1).

Three of the four principles of climate-resilient, sustainable agriculture are from the United Nations Food and Agriculture
Organization’s (FAO) definition of climate-smart agriculture. The fourth principle, ‘Safeguards soil, water resources, andnatural ecosystems’ was added to emphasise the importance of protecting natural resources and ecosystems.

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Figure 6.1. Metrics covering the agriculture sector

Sources: Data on crop yields, ruminant productivity, farm-gate emissions, and the GHG intensity of protein are from
FAOSTAT. Crop yields are a global weighted average over all crop groups in FAOSTAT. The geographical extent ofcropland is from Potapov et al., 2022 and pasture extent is from FAOSTAT. Targets were adopted from Searchinger et al.,2019. Seven of our identified metrics either lack regularly updated data or 2030 targets.

SUSTAINABLY INCREASES AGRICULTURAL PRODUCTIVITY AND
INCOMES
Productivity improvements (crop, ruminant meat, and milk yields) (Valin et al., 2013),
particularly in lower- and middle-income countries (LMICs), are critical to the sustainabilityof agriculture because they can improve farm worker livelihoods and reduce incentives for
agricultural expansion. Average cereal crop yields in Africa are about one-third of cereal
yields in Europe and one-quarter of the Americas (Boehm et al., 2021). In sub-SaharanAfrica in particular, increasing yields is a key lever to improve livelihoods while reducing
poverty and hunger (IFPRI, 2022). By 2030, modelling suggests average yields of all crops
must improve from 6.6 tonnes per hectare (t/ha) to 7.7 t/ha of cropland, 3 to allow broader
climate mitigation targets to be met. Average yields of meat from ruminants (cattle, sheep,goats, and buffalo) must improve from 27.4 kilogrammes per hectare (kg/ha) to 33.4 kg/haof pastureland (Boehm et al., 2021).

FAO crop yields are expressed in terms of fresh weight, unless otherwise specified within the database. Yields trends may
be distorted by crops with high moisture content.

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Farmers increase crop yields in part by using higher quality seeds or through better
management practices such as adding more water, using fertilisers or legumes, usingagronomic information, or introducing basic machinery. Small additions of inputs tonutrient-starved soils can result in high productivity improvements. For example, shifting
nitrogen fertiliser inputs from fields that apply too much to those that apply too little could
increase cereal production by about 30% globally, while reducing nitrous oxide emissions(Mueller et al., 2014; Gerber et al., 2016).
However, some practices used to improve yields come with environmental trade-offs. For
example, introducing machinery to smallholder farms to boost yields, which can be used toreduce emissions from deforestation and other land use change, increases emissions fromon-farm energy use. And raising yields could make farming more economical and spur
deforestation and draining of peatlands. There is therefore a need to link incentives toimprove yields with government policies to protect forests and other natural resources. In
terms of livestock production systems, there is a need to avoid increased use of
antimicrobials to protect against the global health risk of antimicrobial resistance (AMR).
In addition to yield improvements, demand-side drivers such as decreasing ruminant meat
consumption in high-income countries and reducing food loss and waste in all countries
will be key to meeting food demands sustainably.
Policies and finance mechanisms aimed at increasing yields on existing farms and pastures
must be tied to social and environmental outcomes, especially the protection of carbon-richnatural ecosystems. Sustainable intensification could free up land for reforestation,
restoration of peatlands and mangroves. Land-based carbon mitigation and nature-based
solutions have the potential to be a major carbon sink, provided that the world can halt andreduce agriculture’s large land footprint, which currently stands at nearly 5 billion hectares(IPCC, 2022; Roe et al., 2021; Griscom et al., 2017).

REDUCES GREENHOUSE GAS EMISSIONS
Agriculture and land use change contribute about 10.7 billion tonnes of carbon dioxide
equivalent (CO2e) emissions annually (FAO, 2022a; Tubiello et al., 2021), 4 20% of allanthropogenic emissions. About 7.2 billion tonnes CO2e occur on farms and pastures(known as farm-gate emissions) and 3.5 billion tonnes CO2e are from land use change
through deforestation (Figure 6.1). 5 Halting expansion of cropland and pastureland isnecessary to end deforestation and associated emissions by 2030.

CO2 equivalents in FAO (2022a) use IPCC AR5 100-year global warming potentials (e.g. CH4 = 28, N2O = 265).
Both on-farm emissions and land use change emissions are from FAOSTAT. Emissions from peatland drainage (or drainedorganic soils) are included in farm-date emissions. Potapov et al., 2022 estimates higher levels of cropland expansion (andtherefore higher land use change emissions) than FAOSTAT.
4
5

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Figure 6.2. Emissions from agriculture

Gigatonnes CO2e

12
Burning - Crop residues
Manure applied to Soils

10

Crop Residues
Savanna fires

8

Manure Management
On-farm energy use

6Synthetic Fertilizers
Rice Cultivation

4

Manure left on Pasture
Land
cover
change2

Drained organic soils
Enteric Fermentation0
Source: FAO, 2022a

There are four major components of emissions from agriculture and related land usechange, which collectively make up 90% of the sector’s emissions: agricultural expansion
and drained peatlands (4.3 billion tonnes), livestock enteric fermentation (2.8 billion
tonnes), manure and fertilisers (2 billion tonnes), and rice cultivation (0.7 billion tonnes)(FAO, 2022a) 6
Global farm-gate emissions (which includes livestock enteric fermentation, manure andfertilisers, and rice cultivation) have roughly doubled since 1961 (FAO, 2022a), and undera business-as-usual scenario are projected to grow by another 27% between 2017 and2050 (Searchinger et al., 2021). Scenarios indicate that farm-gate emissions will constitutea larger share of total anthropogenic emissions in the future, as other sectors are projected
to reduce their emissions to a greater extent by 2030 (Wollenberg et al., 2016). However,to limit the global temperature rise to 1.5°C, emissions in 2030 would need to move in theother direction, instead falling by 22% relative to 2017. Current farm-gate emissions
therefore must be reduced to 5.7 billion tonnes CO2e by 2030 (Searchinger et al., 2019).

SAFEGUARDS SOIL, WATER, AND NATURAL ECOSYSTEMS
Agriculture’s environmental impacts extend beyond the climate, and innovations to reduce
emissions should also safeguard the soil, water, and biodiversity resources on which thesector depends. A portfolio of context-specific soil and water management techniques—
including agroforestry, silvopastoralism, water harvesting, alternative wetting and drying ofWhen looking across the food system as a whole, other important contributors to emissions include energy used in all foodsystem supply chains (4.3 billion tonnes) and food waste disposal (1 billion tonnes) (Tubiello et al., 2021b).

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rice paddies, precision application of fertilisers, crop rotations, no-till or minimal tillage, andother agroecological approaches—provide opportunities to reduce the emissions intensityof the food system.
Halting agricultural expansion is necessary to protect the carbon stored in natural
ecosystems and is critical to pathways to limit warming to 1.5°C.
In addition, several key environmental indicators will be important to track soil, water,
biodiversity, and antimicrobial use. Water stress is measured in the amount of renewablefreshwater used as a proportion of what is available. In 2019, 19% of renewable freshwater
was used globally. The agriculture sector accounts for about 71% of these freshwater
withdrawals (FAOSTAT, 2022b). Many countries use more water than is available fromrenewable freshwater resources and rely on non-renewable sources that will eventually dryup (UN Water, 2021). More progress will be needed to improve water use efficiency within
the agriculture sector to achieve Sustainable Development Goal 6.4, which is: “By 2030,
substantially increase water-use efficiency across all sectors and ensure sustainable
withdrawals and supply of freshwater to address water scarcity and substantially reduce
the number of people suffering from water scarcity.”
Biodiversity is important to food security and makes agricultural systems and livelihoods
more resilient to shocks and stresses, including to the effects of climate change. Yet
agricultural expansion is the world’s greatest threat to biodiversity and many species that
contribute to agriculture, including pollinators, are in decline (Benton et al., 2021; FAO,2019). Similarly, healthy soils are essential to all food production, but soil erosion anddegradation continue to threaten the availability and productivity of land for producing food.
At the time of writing, there are significant gaps in internationally comparable data and 2030
targets for soil health and biodiversity indicators, despite the fact that tracking their progressover time will be important for monitoring the sustainability and climate resilience of thesector.

ADAPTS AND BUILDS RESILIENCE TO CLIMATE CHANGE

Adaptation to the impacts of climate change needs to happen alongside emissions
reduction. More than half of the populations in low- and middle-income countries (LMICs)
are employed in small-scale agriculture. These smaller food producers are especiallyvulnerable to climate change and many lack access to finance services. A recent analysis
found that smallholder farming households in South and Southeast Asia, sub-SaharanAfrica, and Latin America collectively require around USD 240 billion in finance a year, but
only about USD 70 billion is currently being provided (ISF Advisors, 2019). Access to thiscapital would allow smallholders to invest in high-quality agricultural inputs, increased
mechanisation, and agroecological and other innovative approaches, which are essential
to boosting yields (Committee on World Food Security, 2021).
A necessary component of adaptation and resilience is the integration of local perspectives
in research and innovation agendas. To ensure that farmers, ranchers, and farm workers
do not have to bear the brunt of climate change, it will be essential that they are able to

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meaningfully participate in design, implementation, and governance of adaptation
strategies, especially smallholders, women, and other vulnerable groups.
Securing land and resource rights for vulnerable groups is an important component of theirclimate resilience and participation in decision-making. For example, ensuring women haveequal rights to seeds, land ownership, and market access is also a key lever to increasing
crop yields on small farms (IFPRI, 2022; Searchinger et al., 2019).
As part of adapting and building resilience to climate change, countries should build thecapacity for food producers to generate, absorb, and process new information andknowledge. Investment in innovative digital technologies can support food producers’
adaptation to climate change in the most at-risk places. One such example is digital
climate-informed advisory services (delivered via mobile apps, radio, online platforms),
which can integrate climate information into agricultural decision-making and help smallscale farmers better adapt to a more variable climate (Ferdinand et al., 2021). Digitaltechnologies can also inform farmers about technologies and practices that could be usedin mitigation and adaptation.
Climate change enhances the importance of continuously improving crop and livestock
varieties to withstand variability in temperature and precipitation. Improvements to crop andlivestock varieties – which can be achieved through breeding, including new genomic tools
such as gene editing – for higher yields or heat- and drought-tolerance will be an importantcomponent of climate change adaptation, and should be a key focus area for RD&D.

HOW DO WE GET THERE?
A wide range of policy interventions, investments, and innovations will be needed toaccelerate a breakthrough in agriculture—as well as in the food system and land use more
broadly—enabling the sector to play its full role in addressing global climate change.
Innovations will be needed both in terms of practices, technology development, and scaleof and access to finance in particular for smallholder farmers and small- to medium-sizedenterprises (SMEs) (FOLU, 2021).
Meeting the Agriculture Breakthrough goal will be necessary to simultaneously achieve
broader objectives of food security, protecting and restoring carbon-rich ecosystems, andstrengthening rural livelihoods. These interventions map across the entirety of the
agriculture sector and encompass issues of supply and demand. Action at both national
and international levels is needed.
Early in the 2020s, countries and businesses should set targets to halve the shareof food production lost, and halve per capita food waste, in line with Sustainable
Development Goal Target 12.3. According to the latest IPCC report, reduced food loss andwaste has the technical potential to mitigate 2.1 billion tonnes CO2e emissions per year
(IPCC, 2022). Food waste is doubly harmful to the climate as it wastes all of the inputs fromproducing the food and it generates methane when it is disposed of. By the mid-2020s,

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governments and businesses should have in place a process to measure their food loss
and waste to identify areas needing action and track progress over time (Boehm etal., 2021).
Governments should redirect subsidies currently being provided to ineffective or
harmful products and production systems. Agricultural support policies transfer about
USD 620 billion per year to the sector worldwide (IFPRI, 2022). But this support has been
moving the sector in the wrong direction and has been harmful to eradicating hunger andtransforming the food system. Emission-intensive commodities (e.g. beef, milk and rice)
and unhealthy products like sugar receive the most support. And these policies often
benefit wealthier farmers at the expense of poorer ones (FAO, UNDP and UNEP, 2021).
Agricultural support needs to be redirected as soon as possible to promote technologicaland financial innovations for climate-resilient, sustainable agriculture. Countries should
also link support to food producers with social and environmental outcomes.
Governments and businesses need to use their purchasing power to promotehealthy, sustainable diets. They should also identify policies and regulations (within
agencies that deal with health, agriculture, water, and environmental policies) that influence
diet choices and recommend changes to ensure they are aligned with promoting thesediets.
Governments should build inclusive consultation processes with communities
affected by the transition toward sustainable livelihoods, while also ensuring that thebenefits of the zero-carbon and resilient economy are shared fairly. Countries should also
identify regressive subsidies in the sector and redirect them to help vulnerable communities
shift to climate-resilient practices. Long-term climate strategies must plan for the social
protections required to complement mitigation efforts.
Governments should secure land tenure rights for women and indigenous peoples.
Indigenous peoples and local communities are among the most effective groups at
protecting and sustainably managing the land and forests that they live in and depend on.
Yet less than half of the lands and territories claimed by them are formally recognised bygovernments (World Bank, 2021). Lack of land tenure rights also impacts farmers’ ability
to implement practices to improve climate resilience. For example, lack of land tenure in
Ghana created bureaucratic and legal hurdles to register trees on cocoa farms impeding
farmers’ ability to realise the benefits of agroforestry. Land, resource, and property rights
should be secured for indigenous peoples, women, and local communities as a path topoverty reduction, sustainable development, and environmental management.
Companies, with support from governments, will need to develop inexpensive,
alternatives proteins that mimic the taste and texture of consuming meat, dairy or eggs.
This will be key to reducing emissions and land demands for ruminants and other livestock.
Many plant-based substitutes are currently more expensive than their animal-based
counterparts, but more research and development could help them achieve price parity andconsumer acceptance (GFI, 2021). By 2030, ruminant meat consumption in highconsuming regions (Americas, Europe, Oceania) should be reduced from 90 kilocalories
per capita per day to 80 kilocalories.

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Figure 6.2 shows the critical path to 2030 for the agriculture sector, which includes actions
at the national scale and priority areas for international collaboration.
Figure 6.3. Critical path to 2030 for agriculture

By 2030, strengthened international collaboration in these areas will help enable thewidespread adoption of sustainable, climate-resilient technologies and practices.
Coordinated action on these fronts will bring forward a pipeline of investable businesses
that improve yields, reduce emissions, enable smallholder farmers to fully participate in the
global marketplace, and improve the climate resilience of the sector.

RECOMMENDED REPORTS
We recommend the following reports for more detailed illustration of the broader set ofinterventions required in the global food system.
Climate Change 2022: Mitigation of Climate Change (IPCC, 2022)

Actions to Transform Food Systems Under Climate Change (CGIAR Research
Program on Climate Change, Agriculture and Food Security (CCAFS), 2020)Creating a Sustainable Food Future (World Resources Institute, 2019)

Global food policy report: Climate change and food systems (International Food Policy
Research Institute, 2022)

Accelerating the 10 Critical Transitions: Positive Tipping Points for Food and Land Use
Systems Transformation (Food and Land Use Coalition, 2021)

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State of Climate Action (World Resources Institute, UN High-Level Climate
Champions, Climate Action Tracker, ClimateWorks Foundation, Bezos Earth Fund,
2021)

CURRENT STATE OF INTERNATIONALCOLLABORATION

The agriculture sector is diverse and highly interconnected, with traded commodities
representing a higher proportion of our food supply every year (IFPRI, 2022). National
policies have spillover effects and influence global markets. For these reasons andothers, international collaboration will be essential to the sector’s transformation.
Much of the world’s existing international collaboration on the issue of sustainableagriculture and food systems takes place at the Food and Agriculture Organization of theUnited Nations (FAO), including its various regional structures and committees, the UN
World Food Programme (WFP), and the International Fund for Agricultural Development(IFAD), all of which are based in Rome. Each agency has a unique strength – technicalexpertise, food aid, and international financial assistance, respectively. These three
Rome-based agencies are mostly focused on advancing food security and nutrition: theywork together within countries as food security issues arise such as when weather-related
disasters impact food production and livelihoods. All three organisations also promotesustainable agriculture and rural transformation, with a particular focus on smallholder
farmers.
The FAO also plays an important role in compiling and analysing agricultural data and in
brokering and establishing global standards, including the food safety standard forinternational trade, Codex Alimentarius, which is co-managed with the World HealthOrganization (WHO).
There is also significant international collaboration on sustainable agriculture research,
including through the CGIAR (formerly known as the Consultative Group on International
Agricultural Research), the Global Research Alliance on Agricultural Greenhouse Gases(GRA) and the Global Forum for Agricultural Research, as well as regional research ofnational and regional research institutions.
There is rather less international collaboration focused on the deployment of climateresilient, sustainable agriculture solutions. In September 2021, the UN held its first-everFood Systems Summit (UNFSS), with the focus of how national food systems could makethe greatest possible contribution to the 2030 Agenda for Sustainable Development. At
the summit, several strategies were discussed on financial issues and more than
100 countries signed up to develop national pathways for transforming food systems. In
the run-up to COP26, over thirty countries participated in a Policy Dialogue on
Accelerating Transition to Sustainable Agriculture, supported by the World Bank. These

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are valuable efforts; however, they have not yet been institutionalised in a way that
supports strong and effective practical collaboration between countries, sustained overthe long term.
Agriculture has long been the subject of international trade negotiations. The World Trade
Organization (WTO) has a dedicated Committee on Agriculture, in which tradenegotiations take place. But sustainability is not the focus of these discussions, and there
is currently no international process dedicated to ensuring that trade supports, and does
not obstruct, the transition to climate-resilient, sustainable agriculture.
More narrowly, the issue of sustainable production and trade in agricultural commodities
that contribute to forest loss is under discussion by 28 countries in the Forest, Agriculture
and Commodity Trade (FACT) Dialogue. In addition, at COP26 some of the world’s
largest agricultural companies and traders jointly committed to develop a roadmap on
reducing deforestation within agricultural supply chains in time for COP27.
COP26 also saw more than 100 countries sign each of the Glasgow Leaders’ Declaration
on Forests and Land Use and the Global Methane Pledge. Agriculture lies at the centreof these important pledges: the sector is the leading cause of deforestation and generates
almost half of anthropogenic methane emissions (FAO, 2021a).
International assistance for climate-resilient, sustainable agriculture is scarce andfragmented. The sector receives a small share of international climate finance compared
to its importance as a source and a potential sink of emissions.
There is considerable scope for stronger international collaboration to accelerate thetransition to sustainable agriculture. The initiatives shown in Figure 6.2, which support
collaboration between governments, the private sector and civil society, can makeimportant contributions in this regard.

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Figure 6.4. Landscape map of key international agriculture initiatives

Note: The diagram summarises the roles of many public and private sector initiatives in this sector. Initiatives have been
included if they have a global scope, with active members from multiple regions of the world, and have at least one
significant work programme specifically focused on accelerating emissions reduction in this sector. The list is not
exhaustive and will be updated over time.

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PRIORITY AREAS FOR INTERNATIONALCOLLABORATIONInternational collaboration will be essential to addressing the challenges faced in this
sector. We identify particular opportunities in five areas: rapidly accelerate collaborative
research, development, and deployment of mitigation and adaptation technologies andpractices; leverage development aid to increase private investment in the sector; redirect
harmful policy support; begin a strategic dialogue on how to ensure international tradefacilitates the transition to sustainable agriculture; and monitor natural resources
underpinning the agricultural sector.

COORDINATE RESEARCH, DEVELOPMENT AND DEMONSTRATIONTO ACCELERATE INNOVATION

Many technologies critical for the transition to climate-resilient, sustainable agriculture are
not yet fully developed or commercialised. A 2016 study found that existing emissions
reductions strategies (such as better management of livestock and rice paddies) wereinsufficient to reduce emissions by the amount needed by 2030 (Wollenberg, 2016),
meaning that rapid innovation is needed even to meet near-term goals. More far-reachingchanges in technologies, practices, and policies will be needed to drastically reduce
agricultural emissions by mid-century.
The significant time lag between the discovery of viable and scalable solutions and theirwidespread deployment means a concerted research and development effort cannot wait.
There is a pressing need to accelerate innovation in this sector, both to achieve global foodsecurity in the face of climate change, and to reduce emissions in line with the goals of theParis Agreement. The coordination of international effort can play an important role inaccelerating progress to the pace that is required.
Innovation is needed to address each of the main sources of agricultural emissions, as wellas to increase crop productivity and yields, improve climate resilience, and minimise
agriculture’s impacts on the natural resources that sustain it.
The priority areas for innovation and emerging solutions listed below were chosen basedon their potential to reduce emissions (according to the IPCC’s Sixth Assessment Report)
and promote climate resilience. Priorities include:a) Reducing methane emissions from livestock
Other than land use change, methane from ruminant livestock is the largest source ofagricultural emissions. Additives to livestock feed that reduce methane emissions are apromising near-term innovation, with potential to achieve emissions reductions of 16-70%,
according to a range of studies. Some of these feed additives may be close tocommercialisation. However, productivity outcomes for livestock have been mixed, andmore research is needed to be confident that any of these feed additives will deliver a cobenefit of increased production (Hegarty et al., 2021; Searchinger et al., 2021). Improving

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feed quality, by incorporating legumes for example, can improve ruminant weight gain andreduce emissions (Eugène et al., 2021; Project Drawdown, 2022).
In addition, research is underway to identify breeds of ruminants that emit fewer methane
emissions (as well as varieties of wheat and maize that inhibit the production of nitrous
oxide). In New Zealand, for example, researchers have bred low-methane sheep that emit
about 12% percent less methane than their high-emitting counterparts (Rowe et al., 2019).
Developing breeds of livestock or crop varieties that produce fewer greenhouse gas
emissions has the advantage of not requiring farmers or ranchers to change their
behaviour.
The combination of livestock breeding and feed additives has the technical potential toreduce emissions by 0.8 GtCO2e per year, according to the IPCC (IPCC, 2022). The
feasibility of these innovations will depend on the type of production system, localised social
acceptance, and making the new breeds and additives available widely. Agriculturalextension services in developing countries will need to be supported to help farmers
determine solutions that meet their needs.
b) Alternative proteins
Livestock and their feed are responsible for about 57% of all food system emissions andrequire more land than plant-based foods (Xu et al., 2021; Foley et al., 2011). Alternative
proteins – to replace or reduce meat, dairy, and eggs from ruminants and other livestockin the human diet – could be a particularly high leverage way to reduce emissions. These
would not only avoid methane emissions from livestock; they could also greatly reducepressure on land, allowing for the production of more crops while halting or reversing the
expansion of agricultural land that is a major driver of deforestation.
Many efforts to develop alternative proteins are under way. Alternative proteins can besourced from plants, insects, fungi, or through tissue culture, to replace conventional
animal-based sources. Plant-based meat, milk, and eggs have been on the market in highincome countries for several years, although their market share is still small. Cultivatedmeat, which is produced by in vitro cultures of animal cells, is still being developed andseveral leading companies are transitioning to pilot-scale facilities that will manufacture thefirst wave of commercialised products following regulatory approval. In a recent review of
75 disruptive agricultural technologies to improve food security and reduce emissions, fourof the top ten – ranked in terms of their ability to contribute to achievement of the
Sustainable Development Goals – related to alternative proteins, for use either in food oras feed for livestock (Herrero et al., 2020).
Currently, most plant-based proteins are more expensive than their animal-based
counterparts. Accelerating research and development of these options so that some reachprice parity with meat from animals, as well as equivalence in quality and consumer
acceptance, is therefore an important priority (FOLU, 2021).

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The move towards alternative proteins can be part of a broader shift to healthy andsustainable diets, which according to a 2019 IPCC assessment has the technical potential
to avoid 0.8 to 7.8 billion tonnes of CO2e emissions per year (IPCC, 2019). 7c) Reduce food loss and waste
About one-third of food is lost or wasted between the farm and the fork. Food loss occurs
before food gets to market, during harvest or storage; whereas food waste typically occurs
at retail markets, restaurants, or in homes. According to the latest IPCC report, reduced
food loss and waste could avoid up to about 2 billion tonnes of CO2e emissions a year
(IPCC, 2022a).
Improved harvesting techniques, through mechanisation, can help prevent food loss onfields. Limited refrigeration and food processing in developing countries leads to large
storage losses, yet innovative storage systems, such as evaporative coolers or solarpowered cold storage, provide technical options to reduce handling and storage losses.
Evaporative coolers can be constructed from locally available materials and do not requireelaborate training, but agricultural extension services will be needed to help spreadawareness of their potential to preserve food and the availability of water may prevent their
uptake. Solar-powered cold storage can also reduce food spoilage in countries with limited
electricity and refrigeration. Access to capital for the upfront costs is a key barrier to uptake(Shell Foundation, 2022).
Fruits and vegetables are a common food item wasted in more developed markets. One
technology to address this is the emergence of inexpensive methods that slow the ripeningof produce. Companies are already investigating a variety of natural compounds to do so.
Thin spray-on films that inhibit bacterial growth and retain water in fruit can prevent
spoilage.
d) Reducing emissions from fertilisers
The most widely used fertilisers cause carbon dioxide emissions in their production, and of
nitrous oxide in their use. There is potential to reduce the CO2 emissions by replacing
natural gas with low-carbon or renewable hydrogen in the production process. As
discussed in the hydrogen chapter of this report, the fertiliser sector represents animportant early opportunity to expand the use of low-carbon and renewable hydrogen,helping to bring down its costs and enable its use in a broader range of sectors.
Nitrogen and phosphorous can be recovered from human wastewater which does not rely
on fossil fuels as a feedstock. In the United States, over one million dry tonnes of biosolids
from wastewater treatment was applied to farms in 2019 (EPA, 2022). Manure is also filledwith the carbon and nutrients absorbed originally by plants and eaten by animals, and it isalready used as fertiliser in many places. However, the right management practices areneeded. When manure is stored in lagoons (as is the case for concentrated pig farms), forexample, it can emit noxious pollutants into the air. Separating wet and solid manure canhelp reduce emissions and exporting manure to places that need it can help avoid over7
This large range of emissions-reduction potential includes the mitigation potential for avoided on-farm emissions, avoided
land conversion, and additional effects of carbon sequestration from land-sparing.

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application. Manure management measures have the technical potential to avoid
0.3 billion tonnes of CO2e emissions per year, according to IPCC (IPCC, 2022b).
Nitrous oxide emissions can be significantly reduced by avoiding excessive use offertilisers. At present, fertilisers are used at high levels in many countries, leading to waterpollution and high costs, as well as emissions. Innovations to address this include precisionapplication of fertilisers using field productivity data from drones or satellites. Controlledrelease fertilisers, which slowly release nutrients over time, have been commercialised but
currently only represent a small share of synthetic fertiliser sales. (Uncertainty among
farmers about their benefits, and lack of research into scaling them up, may be contributing
factors) (Searchinger et al., 2019). According to IPCC, crop nutrient management has thetechnical potential to avoid 0.3 billion tonnes of CO2e emissions per year (IPCC, 2022b).
e) Crop and livestock breeding
Crop and livestock breeding has the potential to improve yields and increase resilience toclimate change (Acevedo et al., 2020). Crop breeding has driven much of the world’s
previous yield gains; however, in the past, breeding efforts have focused on certain crops(maize, barley, rice, for example). It will be important for breeding research to expand into
crops that are often ignored in breeding efforts (sweet potato, sorghum, millet, potatoes,
peas, cassava, and beans), which are key crops in sub-Saharan Africa. Innovations inbreeding and biotechnology including gene editing show potential to deliver crop varietiesthat provide more resilience to climate extremes, as well as higher yields and in some cases(such as rice) lower emissions (IFPRI, 2022).
f) Agroecological approaches
According to the IPCC, agroecological approaches can improve climate resilience andbring multiple co-benefits. These practices include but are not limited to: agroforestry,silvopastoralism, crop and livestock diversification, cover cropping, crop rotations, andimproved grazing practices. Well-managed agroforestry systems can enhance crop yields,
contribute to climate adaptation and emissions reduction, while reducing soil erosion andimproving soil carbon content (IPCC, 2022a). In Niger and Zambia, incorporating the tree
species Faidherbia albida into row-cropping improved grain yields several years in a row.
Trees can also provide shade, nuts, medicines, and fibre—all important for direct humanuse (Searchinger et al., 2019).
However, as noted in the latest IPCC report, “[agroecology] that incorporates management
practices used in organic farming, may result in reduced yields, driving compensatory
agricultural production elsewhere” (2022b). A number of studies explore the potential tosequester additional carbon in soils and vegetation in working agricultural lands (e.g.,
croplands and grasslands) and thereby reduce net agricultural emissions, but more
research is needed into approaches that could improve land-based carbon stocks over the
long-term, while also maintaining or boosting yields (Bossio et al., 2020). Other innovative
approaches that could reduce emissions or improve soil and water management include
water harvesting, alternative wetting and drying of rice paddies, and precision applicationof fertilisers (FAO, 2018).

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AGRICULTUREg) Digital services
In addition to the priorities above, there are a number of innovations in digital services that
can help farmers adapt and improve resilience to climate change. Digitalisation is a
powerful emerging instrument, whose proper use can support small scale producers(Ferdinand et al., 2021). Improved climate forecasts and pest/disease early warning
systems can give farmers and ranchers vital information to support productivity. The
number of digital services, such as advisory services, early warning systems, digitalfinance, and smart farming services, has increased rapidly in lower- and middle-income
countries in the past decade, although in some countries their uptake is limited by accessto electricity and wireless networks.
As of 2018, 33 million farms in Africa had registered for digital climate-informed advisory
services (DCAS) — around 13% of all Sub-Saharan African smallholders (Tsan et al.,2019). An estimated 300 million small-scale agricultural producers globally still lack access.
The Global Commission on Adaptation finds that expanding the reach and quality of these
digital services will require governments and the private sector to invest approximately
USD 7 billion over the next decade. Given that approximately USD 1 billion has been
invested in DCAS in the last five years, this means an exponential push in investment fromboth public and private sector actors is needed (Ferdinand et al., 2021). According to IPCC,“The most effective early warning systems are not simply technical systems of information
dissemination, but utilise and develop community capacities, create local ownership of thesystem, and are based on a shared understanding of needs and purpose” (IPCC, 2019).

THE ROLE OF INTERNATIONAL COLLABORATIONInternational collaboration can accelerate innovation by developing a wider range ofoptions and testing them in a wider range of contexts. Most agricultural RD&D is funded
domestically, so institutions are important for the sharing of learning internationally.
The experience of the CGIAR shows how valuable such collaboration can be. CGIAR was
established in 1971 as a global research partnership, focusing on enhancing food andnutrition security, poverty reduction and improving natural resources. Its international
research centres work with national agricultural research systems in low- and middleincome countries to conduct joint RD&D programmes and share learning. Studies show
this collaborative work has had a large impact. For example, better maize and beanvarieties developed through CGIAR partnerships have benefited millions of rural
households in sub-Saharan Africa, with the benefit to-cost-ratio of this investment
estimated at 10:1 (Adenle et al., 2019; Katungi et al., 2008; Alston et al., 2021a).
Despite the need to accelerate agricultural innovation to meet climate change and foodsecurity objectives, the level of funding for agricultural research has actually fallen in recent
years, especially from higher income countries. This reduction in funding is weakening
collaborative international efforts. For example, spending by CGIAR on agricultural R&D
was USD 805 million in 2019, 30% below its inflation-adjusted 2014 level (Alston et al.,2021b). These activities are stretched thinly as a result, in some places lacking the fundingor local capacity and personnel to coordinate research (Adenle et al., 2019).

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A recent report by the Commission on Sustainable Agriculture Intensification estimated thatan investment level of USD 15 billion per year in climate smart agricultural research anddevelopment in the Global South is needed to end hunger and reduce emissions by 2030
in line with the Paris Agreement goals (IFPRI, 2021). This compares to the roughly
USD 4.1 billion of current annual investment in agricultural research and development in
the Global South that has specific environmental aims, from Global South governments,
international development assistance, and the private sector (Dalberg Asia, 2021). A scaleup of investment to around four times the current level is needed.
At COP26, the United States and the United Arab Emirates governments launched theAgriculture Innovation Mission for Climate (AIM for Climate), a growing coalition of over
200 government and non-government partners focused on accelerating agricultural
innovation in line with climate change goals. It is still too early to evaluate the outcome of
AIM for Climate but its members announced USD 4 billion of investment in climate-smart
agriculture and food systems innovation at COP26, and in February 2022 announced thegoal of doubling this to USD 8 billion by COP27.
These are positive announcements, but they should not be isolated one-off investments.
We recommend that countries commit to maintain higher levels of investment in agricultural
RD&D over the course of this decade. We also recommend an increase in funding for the
institutions that support international collaboration in this area, since this will enable fasterinnovation and dissemination of solutions.

RECOMMENDATION 1
Governments and companies should work together to deliver higher levels ofinvestment in agricultural research, development, and demonstration (RD&D), tobe maintained over the course of this decade. The scale and diversity ofcollaborative international RD&D initiatives and programmes should also be
increased. Priority should be given to innovations that can reduce food waste, limit
emissions from livestock and fertilisers, improve alternative proteins, develop
climate-resilient crops and livestock, and protect soil and water resources. This will
accelerate the development and eventual cost-effective deployment of technologies
and solutions that can reduce emissions across multiple regions.

INTERNATIONAL ASSISTANCE TO MOBILISE INVESTMENT
Across many of the difficult policy problems involved in the transition to sustainableagriculture, international assistance and finance can play a catalytic role. At present,
agriculture is under-prioritised in international climate finance, compared to its importanceto global emissions. The OECD has found that agriculture received about 9% of climaterelated official development aid in 2020. The Climate Policy Initiative’s analysis of all
climate-related financial flows in 2019/2020 found that agriculture, forestry, and land use

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received only about 2% (USD 14 billion) of the total, although the sector is responsible for
20% of global greenhouse gas emissions (including almost half of anthropogenic methane
emissions) (CPI, 2021). There is a strong case for increasing this share, given the risks
posed by climate change to food security, as well as agriculture’s contribution to global
emissions.
A particular priority for international assistance should be increasing access to finance forsmallholder farmers, and for SMEs. Smallholder farmers (cultivating less than two
hectares) produce about 30% of global food production on roughly 24% of agricultural land
(Ricciardi et al., 2018). Often, smallholder farmers are unable to adopt technologies andpractices that would increase productivity and reduce emissions, because they do not haveaccess to finance. (Lack of information or land tenure are other common barriers).
Agricultural SMEs — including producer organisations, input providers, storage andtransportation facilities, traders, processors, and distribution services — can aggregate theresources of otherwise dispersed smallholder farmers. By providing training, credit, andaccess to markets, SMEs can play a critical role in supporting the transition to climateresilient, sustainable agriculture. But in many countries, SMEs themselves face challenges
in accessing appropriate financial services (AGRA, 2019).
International finance in the form of grants, concessional lending or innovative blended
finance can play an important role by helping to mobilise private investment in the sector.
Examples of international initiatives in this space include:

The Smallholder and Agri-SME Finance and Investment Network (SAFIN), housed
within the International Fund for Agricultural Development, which is an inclusive
partnership of actors operating in different parts of the ecosystem for agri-food andrural SME investment, with a focus on access to finance and complementary services.



An initiative by ResponsAbility and CGIAR that aims to provide long-term lending toinnovative businesses operating in the food value chain in Asia Pacific, Latin Americaand Africa, with the goals of reducing emissions, reducing food loss, and promoting
the climate change resilience of smallholder farmers.



The ClimateShot for Impact Investment initiative, which aims to build understanding ofopportunities for investment in climate-resilient agriculture among development
finance institutes, institutional investors, banks, and other funders.

A significant expansion and strengthening of these efforts is needed. Estimates of thefinancial resources needed to transform the food system by 2030 to meet food security andclimate goals range from an additional USD 15 billion to USD 350 billion a year (IFPRI,
2022). Governments will need to use public funding and policy in a way that creates theright incentives, to mobilise private finance on this scale.
Private sources of funding into sustainable agriculture, from banking systems, capital
markets, and corporations have been miniscule in the past. At the same time banks andinvestors continue to finance activities linked with fossil-fuels and deforestation. Private
sector finance into climate-resilient sustainable agriculture should greatly increase,especially in the context of proposed policies to require companies to disclose emissions

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from their investments and their climate risks (IFPRI, 2022). Less than one in five meat anddairy producers, for example, track even some of their methane emissions (FAIRR, 2021).
We recommend that governments, MDBs and private sector investors work together to put
in place the necessary architecture by which to make finance available to agricultural SMEs
and smallholder farmers on a far larger scale than has been achieved so far. Concessional
finance should be accompanied by technical assistance that supports the adoption ofpractices that increase productivity and resilience while reducing emissions and protecting
natural ecosystems.

RECOMMENDATION 2
The level of international climate finance directed at agriculture should be greatly
increased, in line with its importance to global emissions, adaptation and resilienceand food security. Governments, MDBs and private sector investors should work
together to make finance available to agricultural SMEs and smallholder farmers indeveloping countries on a far larger scale than has been achieved so far. Financeshould be accompanied by assistance with the adoption of practices that increase
productivity and resilience while reducing emissions and protecting natural
ecosystems. This will support economic development, resilience, and food security,
as well as reducing emissions.

ACCELERATE THE EXCHANGE OF BEST PRACTICES ON

REDIRECTING PUBLIC SUPPORT TO INCENTIVISE CLIMATERESILIENT, SUSTAINABLE AGRICULTURE
Governments’ agricultural support policies transfer about USD 620 billion per year to thesector worldwide (IFPRI, 2022). But this support has been moving the sector in the wrong
direction – away from sustainability – and at the same time has worked against theobjectives of eradicating hunger and increasing climate resilience.
Many existing agricultural subsidies and policies encourage farmers to use excessive
amounts of fertilisers, one of the main sources of emissions, as well as water. Emissionintensive commodities (such as beef, milk and rice) are among those that receive the most
support. As well as being detrimental to the climate, current policies disproportionately
support unhealthy products, like sugar, and often benefit wealthier farmers at the expenseof poorer farmers (FAO, UNDP and UNEP, 2021). According to analysis by the World Bank,
only 5% of direct public support for agriculture explicitly targets conservation, sustainability
and other public goods, and only 6% supports research and practical assistance (of whichsome portion is also relevant to sustainability) (Gautam et al., 2022). The transition tosustainable agriculture cannot proceed without a fundamental redirection of this policy
support, so that it promotes the efficient use of land and other natural resources whilebuilding resilience and reducing emissions.

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The World Bank and the International Food Policy Research Institute (IFPRI) have advisedthat ‘Simply eliminating agricultural support could reduce agricultural output and increaseprices. Making agricultural support conditional on environmentally beneficial but lower
yielding production methods could also increase poverty and food prices and lead toagricultural expansion. Therefore, the most effective repurposing requires policy incentives
and public investment in technologies that both reduce emissions and enhance productivity
to meet growing demand for food and ensure food security.’ Examples of thesetechnologies ‘include feed supplements that reduce livestock emissions while increasing
productivity, and rice production systems that use less water and produce less methane,
without compromising farmers’ incomes and yields’ (Gautam et al., 2022).
This represents a significant policy challenge. While the reallocation of resources towards
climate-resilient, sustainable agriculture could have major societal gains, for most countries
it will be both technically and politically difficult. Consequently, there can be high value ininternational processes to quickly develop evidence and share knowledge on effective
policies in different contexts.
A step in this direction was taken by the 34 countries that participated in the Policy Dialogue
on Accelerating the Transition to Sustainable Agriculture, supported by the World Bank in
the run-up to COP26. Participating countries shared evidence and experiences ondesigning and implementing policies and redirecting subsidies to re-shape agricultural
practices and investments. It was notable from these discussions that while there arediverse examples of countries taking positive steps forward, there is relatively little
collective international understanding of how to achieve the rapid and fundamental
reorienting of policy support that is necessary for a transition to sustainable agriculture inline with the Paris Agreement goals.
There is an urgent need to develop a deeper understanding of the policy approaches thatwill be effective, and to share this widely among countries. We recommend thatgovernments, research institutions, international organisations, and the private sector
commit to a long-term process to test, analyse, and share learning on approaches toredirecting policy support for agriculture towards sustainability. This should involve all of
the world’s largest agricultural producer countries, whose policies disproportionately
influence global markets, as well as countries representing a diverse range ofenvironmental and economic conditions.

RECOMMENDATION 3
Governments, research institutions, international organisations, and the private
sector should commit to a long-term process to test, develop evidence and sharelearning on approaches to redirecting policies and support for agriculture towards
sustainability and climate resilience. This should involve all of the world’s largest
agricultural producer countries, whose policies heavily influence global markets, aswell as countries representing a diverse range of environmental and economic
conditions. This will help countries identify the most effective and feasible ways to
incentivise the transition to sustainable agriculture.

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DEVELOP SUSTAINABILITY STANDARDS FOR TRADEDAGRICULTURAL COMMODITIESThe global food system is highly interconnected: 27% of all agriculture and related landuse emissions can be attributed to agricultural products consumed in a different country
from where they were produced (Hong et al., 2022). Consequently, the standards requiredby international markets can strongly influence production practices.
Without appropriate international coordination, there is a risk that international trade willhold back the transition to sustainable agriculture. This risk is not as obvious as in, forexample, the steel sector. The diversity of products in the agriculture sector, of theagroecological contexts in which they are produced, and of approaches to achieving
sustainability, is far greater, meaning that a cost differential between sustainable andunsustainable approaches is extremely difficult to measure. Nevertheless, early research
into this issue suggests the risk is real: environmental standards that support climateresilient, sustainable agriculture could put producers in countries implementing them at acompetitive disadvantage compared to those not subject to comparable standards (TULIP
and IEEP).
At present, there are no international trade rules in place that are designed to reduce theemissions and other environmental impacts of agricultural commodities. This is a gap thatneeds urgent attention.
A precedent exists in the form of the Codex Alimentarius created by the FAO in 1961 toestablish safety and quality standards for food traded internationally. This provides
governments, food producers, consumers, and other stakeholders with a uniform set ofprinciples and practices for the safety and quality of internationally traded food. It is
maintained by the Codex Alimentarius Commission, jointly managed by the FAO and theWorld Health Organisation and composed of 188 countries representing 99% of the world’s
population. Although the Codex is not a legally binding agreement, it has become thedefault standard for food safety.
A similar code that sets minimum environmental standards for food traded internationallycould be important to creating the right conditions in global markets, so that producers inall countries are able to make the transition to sustainability without being disadvantaged
in competition (WWF, 2016). It would be important for the development and implementationof such a code to take into account countries’ differing economic circumstances.
An alternative to developing internationally agreed rules is for countries to individually set
standards for imports that match those governing domestic production. An example of thisis the import provision set in 2017 by the United States, which aims to reduce marine
mammal bycatch from fish imports by ensuring they are held to the same standards as UScommercial fish operations (NOAA Fisheries, 2021). Such measures could make positive
contributions, but may be of insufficient coverage to create the necessary conditions
throughout global markets. There are likely to be advantages of both effectiveness andefficiency in a coordinated international approach.

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There is little international discussion dedicated to agreeing an approach to trade that
supports the transition to sustainable agriculture. Discussions within the World Trade
Organisation have so far been broader in scope. The Trade and Environmental
Sustainability Structured Discussions (TESSD), launched in November 2020, have begun
to address general issues of trade and environment. In December 2021, 71 countries cosponsored a TESSD Ministerial Statement proposing further work on issues where trade,
environmental and climate policies intersect, including on sustainable agriculture.
A move towards more dedicated discussions on sustainable agriculture and trade is likely
to be needed, to enable the rapid transition in the sector that has to take place. We
recommend that agricultural trading nations should begin a strategic dialogue on how thisissue should be addressed. The WTO, FAO and other relevant international organisations
could inform such discussions by investigating in detail the risks that policy measuresessential to drive a transition to climate-resilient, sustainable agriculture could put acountry’s agricultural sector temporarily at a competitive disadvantage in international
trade, and potential solutions, including the practical options that could be taken to establish
a level playing field.
Bilateral, regional or plurilateral trade agreements could be valuable as first steps, andcould act as building blocks towards multilateral agreements. These could set
environmental standards based on delivery of outcomes related to climate-resilient,sustainable agriculture (considering issues discussed in the opening section of this chapter,such as habitat protection, reduced greenhouse gas emissions, improved soil carbon, or
water use efficiency).
Given the breadth of agriculture as a sector, there are also likely to be advantages incoordinating efforts on sustainable production and trade more narrowly around specificcommodities. A subset of agricultural commodities that needs urgent attention are thosethat contribute disproportionately to the loss of tropical forests and peatlands, some of the
Earth’s most carbon rich ecosystems. Soy, beef, palm oil, and cocoa are particularly
important in this respect. Coordination of standards internationally – those governing
production, and those governing market access – is likely to be necessary to protect forests
while promoting development and trade. To decisively shift global markets towards
sustainability, the agreement and implementation of such arrangements will need to involve
countries covering a majority of global consumption and production of these commodities.
Trade measures will need to be accompanied by financial and technical assistance forsmallholder farmers, to support sustainable intensification and ensure they are able to meetsustainability standards.
A collaborative international initiative in this area is the Forest, Agriculture and Commodity
Trade (FACT) Dialogue, begun in the lead up to COP26. The 28 countries involved haveagreed to work together to promote sustainable development and trade in agriculturalcommodities while protecting forests and other critical ecosystems. These countries
include most of the largest producers and consumers of forest-risk commodities. Theircommitment to work together, outlined in a ‘Roadmap’ released at COP26, is a promising
start. Governments should now invest seriously in the detail of implementation. The highest
priority should be given to agreeing to the means by which producer country laws and

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consumer country market access can be aligned with mutually agreed standards ofsustainability. This should be accompanied by specific plans to expand access to financefor smallholder farmers to support climate-resilient, sustainable agriculture and protect
natural habitats.

RECOMMENDATION 4
Governments should begin a strategic dialogue on how to ensure international tradefacilitates, and does not obstruct, the transition to sustainable agriculture.
International organisations can advise on options to ensure a level playing field sothat policy measures essential to drive a transition to climate-resilient, sustainableagriculture do not put a country’s agricultural sector at a competitive disadvantage
in international trade. Early priority should be given to agreeing sustainability
standards for the agricultural commodities that contribute disproportionately to
deforestation. A level playing field in international trade will give countries andcompanies greater confidence and ability to move ahead in the transition.

AGREE INTERNATIONAL STANDARDS FOR MONITORING ANDREPORTING ON THE STATE OF NATURAL RESOURCES ON WHICH
AGRICULTURE DEPENDS
There are major data gaps in the international monitoring and reporting of the state ofnatural resources critical for climate-resilient, sustainable agriculture. Specifically, three ofthe metrics for tracking natural resource health in the sector in Figure 6.1 (agriculturalextent, soil carbon, and biodiversity and pollinator health) lack regularly updated,internationally comparable data.
Countries should monitor the status of carbon-rich ecosystems such as forests, peatlands,
and coastal wetlands to ensure that agricultural expansion is not threatening critical carbon
sinks. However, differing interpretations of remote sensing data and varying definitions ofland use types creates uncertainty around the geographical extent of cropland andpastures (Potapov et al., 2022; Tubiello et al., 2022). International monitoring of agriculturalextent is critical to understanding its climate impact and should incorporate findings fromboth national agricultural research institutions and remote sensing.
Internationally comparable metrics on soil health, soil carbon content, and pollinator healthare lacking. Such metrics are essential to support an understanding the extent to which
agricultural practices intended to be sustainable actually are. For biodiversity, a 2021 reportfrom the FAO includes national-level Gini-Simpson crop and livestock diversification
indices, which can help measure on-farm biodiversity (FAO, 2021b). For pollinator health,a global assessment of pollinators, pollination and food production was published in 2016

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by the International Panel on Biodiversity and Ecosystem Services (IPBES) which was thelatest major assessment conducted on the topic (FAO, 2019).
On soil health and soil carbon content, the FAO developed a global map of soil carbon in2018 but this dataset will not be updated regularly. Tracking soil carbon in detail on anannual basis on a global scale may be impractical, but a measurement, monitoring,
reporting and verification platform has been proposed by academic experts to track soilorganic carbon at benchmark sites over many years to help inform modelling of changes
to soil carbon stocks over time (Smith et al., 2019). Combining soil carbon monitoring andverification with the monitoring of agroecological approaches would accelerate research
into whether these approaches improve soil health in specific environmental contexts.
Relatedly, antimicrobial use in livestock production contributes to the spread of drugresistant pathogens in both livestock and humans, posing a significant public health threat.
The use of these drugs should be monitored and reduced to preserve their medical
effectiveness in humans (Boeckel et al., 2015).
International comparability in these measurements is important to support high quality
knowledge sharing on policy effectiveness, and to enable trade to play a positive role insupporting the transition. (This is similar to the need for harmonised standards for themeasurement of emissions from steel or hydrogen production, as discussed in otherchapters of this report). We recommend that countries work together to develop agreed
standards and processes for the monitoring and international reporting of these critical
metrics. This could be facilitated by an international organisation such as the UN Food andAgriculture Organisation 8, making use of existing relationships with national agriculture
research institutes.

RECOMMENDATION 5Countries and international organisations should develop internationally agreed
standards for monitoring and reporting on the state of natural resources on which
agriculture depends, including soil carbon content and health, and pollinator health,as well as on the geographical extent of agriculture. International measurement
standards will help support high-quality knowledge sharing on policy effectivenessand enable international trade to play a positive role in supporting the transition.

8
This work could build upon FAO’s Adaptation, Biodiversity and Carbon Mapping Tool (ABC-Map), which assesses theenvironmental impact of national policies, plans, and investments in the AFOLU sector: https://abc-map.org/.

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ANNEX
Enabling
condition

Pathway to 2030

Long-term
vision &action plans

By the mid-2020s, countries with significant agriculturalemissions should have in place climate plans (e.g.
nationally determined contributions (NDCs), national
adaptation plans (NAPs), long-term strategies) that
include commitments and/or targets for climateresilient, sustainable agriculture.

Demandcreation &management

By 2030, halve the share of food production lost(relative to 2016), and halve per capita food waste(relative to 2019), in line with Sustainable Development
Goal Target 12.3.

Tracking(as of July 2022)

By 2030, reduce ruminant meat consumption in highconsuming regions (Americas, Europe, Oceania) to 80
kilocalories per capita per day.
By 2030, increase market share for low-carbon protein
alternatives in high-income regions.

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14% of food production is lost
(before retail), according to FAO’s
Food Loss Index.
17% of food at the retail level iswasted, according to UNEP’s
Food Waste Index.
Countries and regions
representing about half of theworld’s population
have set targets in line with the
SDG target 12.3, according toChampions 12.3.

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Enabling
condition

AGRICULTURE

Pathway to 2030

Tracking(as of July 2022)
Ruminant meat consumption in
high-income countries in 2019averaged 91 calories per person
per day, according to FAOSTAT.
Alternative proteins represented
roughly 1% of the total protein
market in 2020, according to
FAIRR.

Infrastructure& supplychainsIncrease the market share for sustainably produced
commodities, through enhanced trading possibilities
and improved access of small-holder producers tointernational markets.

99 companies have establisheddeforestation commitments for all
their commodities exposed toforest risks. (Forest 500: Burley &Thomson, 2021).

By the mid-2020s, 150 companies have Science Based
Targets initiative, Food, Land, and Agriculture sector(SBTi FLAG), zero-deforestation targets. By 2030,
these companies should be on track to hit targets.
Finance &investment

By the mid-2020s, double quantum of investment andaction (public and private) in agricultural research,development, and demonstration (RD&D) focused on
climate-resilient and sustainable agricultural
technologies and practices. Areas of focus could
include crop breeding, green fertilisers, agroforestry,methane and nitrogen management, food loss andwaste, and alternative proteins.
By 2030, develop methods and metrics to measure theperformance of climate-resilient and sustainableagricultural technologies and practices.

Research &innovation

By 2030, increase share % of US$600 billion per year
in agricultural subsidies to align with climate-oriented
support, with the guiding principles of increasing theefficient use of land and other natural resources whilebuilding resilience and reducing emissions.
By the end of 2023, double investment in all forms offinance for sustainable agriculture, and create pipelineof investable projects, with a particular focus on
smallholders.
By 2030, increase number of countries linking farmer
access to credit with conservation or environmental
performance.
Develop weather-based insurance programs for cropand livestock systems.

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7% of agricultural research andinnovation investments (roughly
USD 4 billion) in developing
countries were focused on
developing or improving climateresilient and sustainableagricultural technologies andpractices (average between 20102019, according to Dalberg Asia,
2021).

~5% of financial support went toconservation-related measures in
2016, Gautam et al., 2022.
According to the Climate Policy
Initiative’s analysis of all climaterelated financial flows in
2019/2020, agriculture, forestry,and land use received only about
2% (USD 14 billion) of total
climate finance.

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Enabling
condition

Pathway to 2030

Tracking

Marketstructures

By 2030, increase number of farmers globally withaccess to high-quality storage facilities, markets,
affordable energy, and infrastructure that enables trade.

(as of July 2022)

Improve coordination and capacity of all actors in the
supply chain around sustainable, climate-resilient
agriculture, with particular attention to power relations
within value chains to ensure fairness, equity andtransparency.
Standards &certification

By the mid-2020s, agree on production andsustainability standards within the Forest, Agriculture
and Commodity Trade (FACT) Dialogue, and begin
process of socialising these within the Committee on
Agriculture at the WTO.
By the mid-2020s, increase number of the world’s
financial institutions with strong anti-deforestation
policies (aligned with established standards andincludes measurable targets for achieving net zerodeforestation) by 25% (2020 baseline).

33 financial institutions
representing about
USD 8.7 trillion in assets
committed to create plans,milestones and incentives to fulfil
the proposed timeline forcommitments on deforestationfree forest-risk agriculturalcommodity portfolios, aligned witha Paris Agreement-compliant
1.5°C pathway, UN High-Level
Champions, 2021.

By 2030, increase number of the world’s largest banks
that publicly disclose procurement standards andsupply chain footprints on deforestation.
Trade
conditions

Develop widely accepted international standards
around sustainable climate-resilient agriculture,
matched with metrics and measurement.
Secure land and resource rights for indigenous andlocal communities.

Strong, secure, and clear land
management rights, as measured
through the Physical Property
Rights component of theInternational Property Rights
Index was 6.5 in 2021, a 10%
improvement from 2016.

Reform laws that discourage farmers from investing inprotecting or regenerating trees.
Knowledge,
capability &skillsBy 2030, increase percent of farmers with access tocommunication technologies.
By 2030, establish early warning systems and advisory
networks in countries to monitor weather, pests, animal
health, and global markets.
By 2030, develop infrastructure to create and share toknowledge about sustainable climate-resilient
agriculture, which is interdisciplinary, involving multiple
stakeholders, integrating different forms of knowledge
in close collaboration with local communities, including
among marginalised groups, so it is suited for endusers.

SocialacceptanceDesign inclusive consultation processes on policies andstrategies designed to shift investment to sustainableagriculture, to ensure an equitable and just transition.

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33 million farms registered
for agricultural climate services —around 13% of all Sub-SaharanAfrican smallholders in 2018
(The Technical Centre for
Agricultural and Rural
Cooperation, (CTA), Tsan et al.,2019).

The Breakthrough Agenda Report

CONCLUSIONCHAPTER 7. PUTTING THE WORLD ON
TRACK TO MEET THE PARIS GOALS
Meeting the goals of the Paris Agreement – in particular, limiting the increase in global
temperatures to 1.5°C – requires much faster progress in decarbonisation throughout the
global economy. The Breakthrough Agenda agreed at COP26 provides a framework forcountries to collaborate internationally to accelerate transitions in each of the emitting
sectors. It will also be important to take advantage of cross-cutting opportunities to support
progress simultaneously in all sectors.

COLLABORATION ACROSS ALL OF THE MAJOR

EMITTING SECTORS IS ESSENTIAL

The Breakthrough Agenda will need to address all major emitting sectors to put the world
on track to meet the Paris Agreement goals
The five sectors included in this report cover over 50% of global GHG emissions. To reachnet zero global emissions by around mid-century, countries will need to implement theircommitments in the Breakthrough Agenda to collaborate internationally throughout thecourse of this decade in each major emitting sector of the global economy (COP26, 2021).
Decisions on which additional sectors would benefit from prioritisation within the frameworkof the Agenda should be informed by their impact on emissions, the political commitment
to lead activity in this area from countries, businesses and international initiatives, and thesector’s dependence on international collaboration to advance in its transition.
Four sectors stand out for consideration: shipping, aviation, cement and buildings.
Combined these would encompass an additional 20% of emissions, bringing total coverage
to over 70%.
1) Shipping
Shipping accounts for around 2% of global energy-related CO2 emissions (IEA, 2021a),roughly the same as the entire nation of Germany. On its current growth trajectory, shipping
emissions could potentially increase by half by 2050 (IMO, 2020). The sector’s transition
to net zero has barely begun: while governments and industry are taking important steps
forward, at present there are no long-distance zero-emission ships in operation. Since
ships typically have a lifespan of over 25 years, turnover in the global fleet is slow.
Investments in zero-emission ships and their supporting infrastructure need to be madenow to enable the path to a low-carbon fleet in later years.

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Higher capital and operating costs of zero-emission shipping, compared to fossil-fuelledshipping, and the globally interconnected nature of the sector, make international
collaboration essential to the transition.
International collaboration on the shipping sector has expanded in recent years, however
there remains much to be done. Many pilot projects for zero-emission shipping are being
taken forward, but countries could do more to share knowledge learned from these efforts.
The International Maritime Organisation (IMO), Mission Innovation, the First Movers
Coalition, the Green Shipping Challenge, the OECD Council Working Party on Shipbuilding
and the Getting to Zero Coalition all offer platforms to facilitate the exchange of knowledge.
At COP26, 14 countries signed the Declaration on Zero Emission Shipping by 2050,
pledging to work for the adoption by the IMO of a goal of full decarbonisation of international
shipping by 2050.
Additionally, at COP26 a group of 24 countries committed in the Clydebank Declaration tobring at least three deep-sea green shipping corridors into operation, supported by anequivalent number of regional or near-shore corridors, by the middle of this decade. To
date, industry consortia have also announced plans to create eight green shipping
corridors, ranging across Atlantic, European, Southeast Asian and Pacific routes.
Industry coalitions are also forming to create clear demand signals for zero-emission
shipping, notably the Cargo Owners for Zero Emission Vessels (coZEV) initiative, which isa cargo owner-led platform that enables maritime customers to work together to accelerateshipping decarbonisation. The group has committed to using only zero-carbon ocean
freight from 2040 onwards.
2) Aviation
Aviation is responsible for around 2.5% of global energy-related CO2 emissions (IEA,
2021b). With its emissions growing at around 2.2% per year from 1990 to 2019, and withpassenger air travel projected to triple by mid-century (ICAO, 2019), aviation’s share ofemissions is expected to increase over the coming decade. Strong action needs to be taken
now to put the sector on course for a transition aligned with international climate change
goals.
Similar to the shipping sector, international collaboration is important in aviation becauseof its interconnected nature, the early stage of development of its clean fuels andtechnologies, and the need to establish a level playing field to prevent competition being abarrier to the transition.
International collaboration in the aviation sector has most prominently taken place within
the International Civil Aviation Organisation (ICAO), and has resulted in the agreement of
the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), in which
over 100 countries have agreed to participate. While this is a positive step forward, its aimof offsetting the growth in aviation emissions after 2020 is not yet consistent with targets toachieve net zero global emissions by around mid-century. Moreover, stronger and more

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direct policy measures that focus on in-sector emissions reductions are needed to enable
the deployment of low-carbon aviation fuels and technologies.
Industry coalitions such as the Clean Skies for Tomorrow Coalition and the First Movers
Coalition are pointing the way forward, with plans to aggregate demand for zero-emission
aviation, and to coordinate investment. In 2021, IATA (International Air Transport
Association) member airlines, covering 290 airlines and 82% of global air traffic, made acommitment to achieve net zero CO2 emissions from aviation by 2050. Stronger
intergovernmental collaboration could help to make this a reality, by ensuring routes exist
where zero-emission aviation is not at a competitive disadvantage.
3) Cement
Cement, the key binding ingredient in concrete production, is one of the largest contributors
to industrial emissions, accounting for 7% of global CO2 (IEA, 2021c). Concrete is the mostused man-made material in the world, and is expected to remain central to meeting theworld’s construction needs for the foreseeable future. An estimated three quarters of theinfrastructure that the world will need by 2050 (including buildings, transport, water
systems, and other infrastructure), has yet to be built. Consequently, a transition to the
production of near-zero emissions cement is essential for the achievement of international
climate change goals.
Opportunities for international collaboration to accelerate the transition in the cement sector
are likely to include knowledge-sharing on decarbonisation technologies and processes,
aggregated demand creation, and measures to establish a level playing field ininternational markets.
Industry-led coalitions have recently begun taking collaborative action on cement
decarbonisation. For example, the Global Cement and Concrete Association (GCCA), an
industry group (representing 80% of global cement production outside China, as well assome of the largest Chinese manufacturers), and the Mission Possible Partnership (a civilsociety initiative working with industry leaders), have launched the ‘Concrete Action for
Climate’ initiative, bringing actors across the supply chain together to collaborate on issues
including standard-setting and demand creation. The GCCA is also supporting thedevelopment of national cement decarbonisation roadmaps in some countries.
Governments of five countries, plus the European Commission, have agreed to collaborate
on research and development in Mission Innovation’s Net Zero Industries Mission, anddiscussions on the pathway to cement decarbonisation have been held by the 18-member
countries of the Leadership Group for Industry Transition. In the Clean Energy Ministerial’sIndustrial Deep Decarbonisation Initiative (IDDI), four countries have agreed to work
together to use public procurement to create an initial market for low-carbon cement, as
well as steel.
4) Buildings
Buildings are the largest emitting sector not currently addressed by the BreakthroughAgenda. While the emissions that occur directly from activity in buildings such as heating,cooling, and cooking account for around 9% of global energy-related CO2 emissions, those

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that occur indirectly – from the steel, cement, and other materials used in buildings’
construction, and from the generation of the electricity they use – account for an additional
28% of global energy-related CO2 emissions (IEA, 2021d). More than half of the buildings
expected to exist by 2050 have not yet been built, meaning that choices made now will
have substantial and long-lasting effects on material use and emissions.
There are likely to be significant opportunities for international collaboration in this sector,
despite the widely varied needs and opportunities for resilient zero-emission buildings indifferent regions of the world. These may include collaboration on research anddevelopment of zero-emission heating and cooling technologies; sharing learning in thedesign and construction of high-energy performance buildings with low embodied
emissions; and coordination on building codes, standards, and the measurement of lifecycle emissions.
Important collaborative initiatives in the sector include the Global Alliance for Buildings andConstruction, which shares knowledge and policy best practice among its 36-member
countries, and the World Green Building Council, which brings business and civil society
actors together in a large number of countries. Relevant research and development
initiatives include work on affordable heating and cooling of buildings within Mission
Innovation, the IEA’s Technology Collaboration Programme (TCP), and innovationcompetitions such as the Global Cooling Prize and the Million Cool Roofs Challenge.

THE ADDITIONAL GAINS FROM ADVANCING ON ALL
SECTORS AT ONCE

While most of this report focuses on the collaboration opportunities in individual sectors, it
is clear that action in each sector can support progress in others. For example, scaling up
the deployment of batteries in road transport can help to bring down the costs of energy
storage in the power sector, supporting the integration of larger shares of renewable power.
Enabling a more rapid build-out of low-cost renewable electricity generation will in turnfacilitate faster deployment of low-carbon and renewable hydrogen, which could lead to amore rapid shift in the steel industry to the use of hydrogen in direct reduction furnaces.
Similarly, demand for hydrogen from agricultural fertilisers can drive up the pace and scaleat which key clean hydrogen-producing technologies are deployed (such as electrolysers),
resulting in faster cost reductions, to the benefit of steel producers, and other sectors (suchas road transport, chemicals, aviation and shipping), which may also use hydrogen. In thisway, the crossing of a tipping point in one sector – where clean technologies or sustainable
solutions become the most affordable, accessible and attractive option – can increase thechances of crossing similar tipping points in other sectors. Figure 7.1 illustrates some ofthese interconnections between sectors.

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Figure 7.1. How actions in each sector can contribute to progress in others

To fully realise this potential for accelerated global progress, countries and industries
should:

Establish strong international collaboration to accelerate progress in each of theemitting sectors, taking these forward simultaneously.



Identify and act on specific opportunities for action in one sector that can also enable
faster progress in others. Several such opportunities are identified in the sectorspecific chapters of this report. For example, collaboration on strengthening electricity
grids in the power sector can support the road transport transition by enabling wider
deployment of electric vehicle charging infrastructure. It is important to recognise,establish and strengthen these cross-sectoral linkages and feedback loops throughinitiatives and actors that work across technology families and sectors, as well as within
them.



Take advantage of cross-cutting opportunities to accelerate progress in all sectors,
using the full range of levers available in international development, trade, diplomacy
and governance.

Ensure that progress is indeed global, with the necessary support and access totechnology and finance for developing countries.

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The Breakthrough Agenda Report

CONCLUSIONLEVERAGING CROSS-CUTTING OPPORTUNITIESThere are a number of cross-cutting opportunities, which are common across the current
and potential Breakthrough Agenda sectors. International action in these areas can help to
support progress in all sectors simultaneously.

ESTABLISH A CLEAR STRUCTURE FOR INTERNATIONALCOLLABORATION WITHIN EACH SECTOR

Each sector stands to benefit from having at least one forum in which actors with strong
influence and interests in the sector collaborate to accelerate the global transition. Havingsuch a clearly identified, well-resourced body can enable all actors to engage effectively
with areas where they have most to contribute. The activities to be prioritised are thosethrough which international collaboration can most effectively accelerate the transition,such as financial and technical assistance, trade conditions, definitions and standards, andprocurement commitments.
The complexity of low-carbon transitions means that a diverse range of international efforts
in each sector will be helpful. Rigid centralising of activities should not be the aim. At thesame time, it can be useful to have an agreed focal point for collaboration for specificpriority areas of collaboration. This can benefit all by making the best use of limited
resources, limiting duplication of efforts and reducing barriers to engagement for newparticipants. This is important for sectors with relatively well-established international
collaboration, such as power, where the proliferation of initiatives has made it challenging
for stakeholders to engage effectively, as well as for those with a rapidly expanding
landscape of initiatives, such as steel, where it will be vital to get ahead of potential
overlaps.
In this report we have focused our recommendations on the international collaboration
efforts that could have the greatest impact on low-carbon transitions, without taking a viewon the channels through which it should be taken forward. Nevertheless, it is clear from ourassessment that in each sector there are opportunities to strengthen the underpinnings forcollaboration. Countries can strengthen international initiatives by participating in them, byinvesting in them politically and financially, by requesting them to focus on issues critical to
the global transition, and by ensuring the collaborative initiatives they support are sustained
long enough to achieve their objectives.
Beyond international fora to support collaboration within individual sectors, institutions witha cross-sectoral remit are also needed to help maintain a consistent quality and focus ofcollaboration across all sectors. The Breakthrough Agenda can serve some of this function
by systematically and regularly taking stock of the state of collaboration in each of its focus
sectors. Countries must also work together through established international fora such as
UN organisations, the G7 and G20, the Clean Energy Ministerial, Mission Innovation, IEA,IRENA, and regional international organisations to agree activities to strengtheninternational collaboration in each sector.

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The Breakthrough Agenda Report

CONCLUSIONRECOMMENDATION 1
Countries should work to agree the international fora and institutions through which
they will take forward each of the recommendations for collaborative action
contained in this report, and should then invest in those fora both politically andfinancially. Existing institutional frameworks should be used wherever these areappropriate to the task. This can help to establish the institutional underpinnings
needed for strong and sustained international collaboration over the course of thisdecade.

STRENGTHEN THE PROVISION OF TECHNICAL ASSISTANCE AND
FINANCE, TO ENSURE IT IS SUFFICIENT, COHERENT, ACCESSIBLE

AND EFFECTIVE ACROSS ALL SECTORSThe level of finance and technical assistance being provided by donor countries andassociated organisations has increased significantly over the past decade, particularly inthe power sector. However, a step change in the scale and delivery of funds and technicalassistance will be required to accelerate the transition across all sectors. Funding should
be made accessible and responsive, so that assistance can be rapidly mobilised to meetcountries’ needs.
To improve the effectiveness of implementation, governments, philanthropies, financial
institutions and delivery partners should better coordinate programmes, driven by theneeds, priorities and leadership of developing countries. In each sector, strategicinternational dialogues about the priorities for accelerating the transition globally can also
help to inform choices regarding the most effective use of technical and financial
assistance.

RECOMMENDATION 2
Governments, philanthropies, financial institutions and delivery partners, should
together review the state of international assistance in each major emitting sector,
identify the gaps in assistance that are most important to address, and coordinate
efforts to provide responsive and accessible support in these areas, led by theneeds of developing countries. This will ensure that assistance is appropriately
targeted and available to support countries in relation to each of the major low
carbon transitions.

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The Breakthrough Agenda Report

CONCLUSIONAGREE NET ZERO-ALIGNED TRADING ARRANGEMENTS THAT CAN

ENABLE A FASTER TRANSITION ACROSS SECTORS AND REGIONS

Several sectors, particularly heavy industries, are highly trade exposed and operate withrelatively narrow profit margins. This makes manufacturing products with a low-emission
premium challenging unless policy measures (such as regulations or carbon pricing) are
put in place to support first movers and increase the speed of the transition in the wider
market. While there are measures that countries can put in place individually to help
domestic industries to decarbonise while limiting the risks from international competition,
there is a risk that unilateral approaches may cause trade disputes, while at the same time
being insufficient to bring about a global transition at the pace required. Similar issues arelikely to affect some agricultural commodities, as discussed in Chapter 6.
A range of measures can support the development of a level playing field for near-zero or
low-emissions materials, commodities, products and fuels in international markets. These
include a common approach to data monitoring, reporting and verification (MRV),
definitions for low-emission materials, products, fuels, and energy and agriculturalcommodities, public and private procurement guidelines, and financial and technicalassistance. Collaboration on these issues could help to build the confidence and trust thatwill be needed for strategic dialogue and eventual agreement on coordination aroundstandards or carbon pricing.
In each sector, the success of these efforts will depend on the inclusion of not only thecountries willing to take a leading role in the transition, but also those with a large
contribution to global production or consumption, and others whose interests are moststrongly affected. It will also depend critically on ensuring that the international measures
support, and do not obstruct, the economic development objectives of developing countries
and marginalised communities.
Such an approach can support first movers, while also encouraging all countries toparticipate in the transition. Ultimately, most trade-related measures are likely to be
temporary, and should be able to be phased out as the “differentiated” market grows inscale within the overall market, and technology costs for near-zero or low-emissioncommodities decrease.

RECOMMENDATION 3
Governments, companies and relevant international organisations should establish
high-level, strategic dialogues in each sector that is highly exposed internationallyand where competition risks being a barrier to the transition, to develop a common
approach to reaching a level playing field. This should include, where relevant,actions on data, standards, procurement, technology collaboration and technicaland financial assistance, as well as trade. This will help to focus dialogue on areas
where collaboration is most urgent, and ensure that competition accelerates
transitions, and does not hold them back.

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The Breakthrough Agenda Report

CONCLUSIONURGENTLY SCALE UP DEMONSTRATION PROJECTS FOR CLEANTECHNOLOGIES IN AREAS OF GREATEST NEED

The world needs to rapidly increase the number of demonstration projects of clean energy
technologies and sustainable agriculture solutions, across multiple regions and sectors inparallel. International collaboration will be important in determining the priority gaps toaddress, and in ensuring deep, systematic and widespread sharing of learning between
countries. International fora can also provide a ‘matchmaking’ function: enabling financiers,
policy makers and consumers to understand the supply chain implications and businesscase for deploying new technologies, and to launch new demonstration projects. This willneed to be supported by large-scale public investment, such as the USD 90 billion
proposed at the Major Economies Forum (MEF) in June 2022 (The White House, 2022),
including investment in institutions to support ongoing sharing of learning – particularly withcountries that have limited resources for research, development and demonstration
projects of their own.

RECOMMENDATION 4
Governments and companies should greatly increase spending on clean
technology demonstration projects, working together to bring new technologies tocommercial-scale deployment as soon as possible. Early deployment projects
should be supported by matchmaking forums and ensuing commitments andprocesses in all regions. This will help ensure deep and sustained sharing ofexperiences gathered with these projects between countries, including those withlimited resources.

ACCELERATE THE BUILD-OUT OF INTERNATIONAL ENABLINGINFRASTRUCTURE TO SUPPORT THE TRANSITION IN MULTIPLE
SECTORS
Early experience from multiple major new energy projects points to a lack of enabling
infrastructure – such as electricity, hydrogen and CO2 networks – acting as a brakeon the pace of deployment. It is clear that transitions in many sectors would benefit
from strengthened international collaboration to share best practices in infrastructure
planning, regulation, market design and investment, as well as in the technology
solutions that can make best use of existing infrastructure and resources.
Furthermore, in several sectors, a coordinated international approach to infrastructure
deployment will be important for the pace of the transition. Cross-border infrastructure,such as interconnectors and pipelines, can enable the international trade of clean
power, and low-carbon and renewable hydrogen, respectively. Harmonised standards

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for vehicle charging or refuelling can facilitate zero-emission international road freight.
Coordinated investment in zero-emission refuelling infrastructure will be essential forthe decarbonisation of long-distance aviation and shipping.
Collaboration in this area should include the development of platforms andmechanisms to help crowd-in public support and private investment, helping to ensure
wider lessons learned are rapidly shared globally.

RECOMMENDATION 5
Wherever not already agreed, governments in each region of the world should
agree the top priority common infrastructure projects that can support near-term
growth in the deployment of clean solutions, such as interconnectors and hydrogenpipelines. In each of the land, sea and air transport sectors, countries andcompanies should identify specific international routes to be prioritised for thecoordinated first deployment of zero emission charging or refuelling infrastructure.
This will support earlier deployment of infrastructure that unlocks accelerated
deployment of clean technologies and solutions in multiple countries and regions.

REFERENCESICAO (International Civil Aviation Organization) (2019), Environmental Trends in Aviation to2050, https://www.icao.int/environmentalprotection/Documents/EnvironmentalReports/2019/ENVReport2019_pg17-23.pdf
IEA (2021a), International Shipping, https://www.iea.org/reports/international-shipping
IEA (2021b), Aviation, https://www.iea.org/reports/aviation
IEA (2021c), Cement, https://www.iea.org/reports/cement
IEA (2021d), Tracking Buildings 2021, https://www.iea.org/reports/tracking-buildings-2021
IMO (International Maritime Organization) (2020), Fourth Greenhouse Gas Study,
https://www.imo.org/en/OurWork/Environment/Pages/Fourth-IMO-GreenhouseGas-Study-2020.aspx
UN Climate Change Conference UK 2021 (COP26) (2021), COP26 World Leaders Summit Statement on The Breakthrough Agenda, https://ukcop26.org/cop26-world-leaderssummit-statement-on-the-breakthrough-agenda/
The White House (2022), Chair’s Summary of the Major Economies Forum on Energy andClimate Held by President Joe Biden, https://www.whitehouse.gov/briefingroom/statements-releases/2022/06/18/chairs-summary-of-the-major-economies-forumon-energy-and-climate-held-by-president-joe-biden/

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