Beyond pricing, it is important to quantify the broader economic benefits that transition technologies – especially those at an early stage – bring to society, in terms of jobs created, improved public health, security of strategic supplies and enhanced industrial competitiveness. These benefits must be factored into policy incentives to kickstart scaling-up. As these technologies mature, reliance on government pricing support mechanisms will gradually decrease as they move down the cost curve. Coordination across the value chain – from production to end-use – is key, along with targeted policies aimed at correcting market distortions and stabilizing pricing models. While governments can internalize the true costs of pollution through carbon pricing and other instruments, businesses can focus on developing cost-effective solutions that absorb green premiums and maintain competitiveness, particularly in sectors vulnerable to price volatility. Confidence in demand Predictable demand signals are crucial for companies to confidently invest in scaling- up technologies, even if they are proven and commercially ready. While sectors such as EVs, solar and wind have reached commercial maturity and large-scale deployment due to clear demand signals and strong policy support, other technologies such as green hydrogen and low-carbon steel remain niche markets. Despite a robust market outlook, private sector confidence in the potential to create both industrial and household demand remains low. For example, green hydrogen, although promising for decarbonizing heavy industries such as steel, has yet to reach a point where its business case is strong enough for large-scale investment. Some commercial-scale projects to produce low-carbon steel using green hydrogen for direct reduced iron (H2-DRI) have emerged in Europe and Asia. However, challenges such as high energy demand, infrastructure barriers and a lack of clear global standards for hydrogen production, handling and storage hinder cost-effective scaling-up.11 Additionally, in order to provide upfront financing, banks often require projects to secure offtake agreements covering at least 75-80% of production capacity, with sufficient revenue to support costs throughout the financing period – factors that further complicate project viability.12 This underscores the need for demand-side policies that encourage the use of clean electrons and molecules to provide more market certainty. Policy- makers and businesses can leverage strategies such as government procurement, corporate sustainability commitments and disclosures, financial support mechanisms, advance purchase and offtake agreements to create strong demand signals, giving suppliers confidence to invest in infrastructure and production facilities. Offtake agreements further support the roll-out of cutting-edge technologies by easing capital burdens for developers, while providing guaranteed future clean energy supply for investors. The World Economic Forum’s First Movers Coalition is an example of this approach, so far securing over 120 corporate commitments across six hard-to-abate sectors and carbon dioxide removal to purchase low- carbon solutions. By 2030, these commitments will represent $16 billion in annual demand for emerging technologies and 31 million tonnes of carbon dioxide- equivalent (CO2e) in annual emission reductions.13 Cost of capital Access to affordable capital is critical to scaling- up clean energy technologies. The cost of capital directly impacts investment decisions and whether a project can be profitably deployed or considered financially viable. Clean energy projects, which tend to be capital-intensive upfront with lower operational costs, are particularly sensitive to borrowing costs compared to fossil fuel alternatives. In advanced economies, well-established clean technologies such as solar photovoltaics (PV) continue to attract investment due to their low risk, Banks often require projects to secure offtake agreements covering at least 75-80% of production capacity, with sufficient revenue to support costs throughout the financing period.Governments and businesses on both the supply and demand sides must work together to implement mechanisms that offset the green premium.For example, Norway’s Northern Lights project for carbon capture and storage (CCS) demonstrates what can be achieved when governments and industry work towards the same goal and co-invest to reduce risks, making it viable to capture and store CO2 at commercial scale.10 Accelerating the Energy Transition: Unpacking the Business and Economic Cases 10

Accelerating the Energy Transition 2025