What are deep decarbonization technologies? BOX 1 Deep decarbonization technologies are those needed to address hard-to-abate sectors, such as heavy industry (steel, cement and concrete, aluminium, chemicals and refining) and long- distance transport (aviation, shipping, trucking), which represent 25-30% of global GHG emissions. These technologies enable massive emissions reduction (or even permanent removal). This section of the report focuses on low-carbon hydrogen, CCUS and biofuels, as examples of deep decarbonization, because this triad covers the key levers needed by hard-to-abate sectors, including new molecules, alternative heat, alternative transportation fuels and carbon management infrastructure. Low-carbon hydrogen is needed to decarbonize process industries and as a medium for long-duration energy storage. CCUS is essential for capturing emissions from cement, chemicals and other process-intensive industries. Advanced biofuels are needed to displace fossil fuels in hard-to-abate transportation. These regions do exist, especially in Europe, where recent policies and regulations indicate a willingness to address the costliest parts of the climate transition. As a result, the European Union (EU) currently aspires to lead the world in “hard-to-abate” decarbonization regulation, with some of the most ambitious policy and financial support frameworks globally. The bloc has implemented quotas for low-carbon hydrogen, power-to-X and advanced biofuels; it offers structured subsidy instruments through EU-wide programmes and a number of national contract for difference (CfD) schemes and more advanced infrastructure support. Meanwhile, the European Clean Industrial Deal presents measures to boost every stage of production, with a focus on energy-intensive industries such as steel, metals and chemicals.27 In addition, programmes such as Horizon Europe, NextGenerationEU and the Innovation Fund have provided a cumulative €40 billion of funding for scaling-up low-carbon hydrogen, CCUS and electrification between 2020 and 2030.28 Support in other countries is mixed (see Figure 7). In the US, strong incentives are accelerating CCUS and the scaling-up of mature biofuels. Brazil continues to benefit from robust national support for biofuels – particularly first-generation ones – underpinned by decades of pro-biofuel policies, blending mandates and investment in flex-fuel infrastructure. Until now, Chinese efforts have focused on technologies that are closer to economic breakeven – although the country is making strong efforts to build a domestic electrolyser industry and policy signals could suggest broader improvements across the board. China’s push on low-carbon hydrogen has had a positive ripple effect across other Asian economies such as India, Japan and Korea. European Union programmes have provided a cumulative €40 billion of funding for scaling- up low-carbon hydrogen, CCUS and electrification between 2022 and 2030. Deep decarbonization markets – global demand forecasts (2025-2035) FIGURE 7 ROW Central/South America North America Europe ChinaGlobal deep decarbonization markets will multiply, but unevenly across geographies Total global demand on estimated trajectory, medium scenario (Mtpa, 2025-2030) Low-carbon hydrogen1CCUS Biofuels2 51 Mtpa 102 Mtpa 34 Mtpa 15 Mtpa 3 Mtpa 390 Mtpa 160 Mtpa 179 Mtpa 263 Mtpa 2025 2030 2035 2025 2030 2035 2025 2030 203514%22%23%13%28% 19%30%26%10%15% 21%37%22%12% 28%49%14% 33%14%19%32% 40%26%8%3%6% 10%47%10%11%22%2% 18%14% 2% 15%49%1%16%19% 6%51%21%8%14% Sources and further notes: IEA and BCG.29 Already a Multi-Trillion-Dollar Market: CEO Guide to Growth in the Green Economy 16

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