Capital Key readiness question Are returns sufficient to drive investments towards low-emission assets? Key messages –To meet net zero scenarios across the eight sectors by 2050, $30 trillion is needed as cumulative additional investment, with 57% required by the ecosystem and 43% by sectors.67 –Increased capital spending and funding strategies are essential for advancing clean technology development. –Companies can offset decarbonization costs by tapping into new markets, setting premium prices, and lowering energy and material expenses. Capital scores for low-emission assets across sectors (2022-2024) FIGURE 18 Cement Steel Trucking Oil and gas Shipping Primary chemicalsAviation 2022 2023 2024Aluminium12345Capital readiness scores Sectors with readiness score movements in the past year: –Cement: The score increased from 1 to 2 during the last year, as current capital levels increased, leading to an additional 35% of annual CapEx needed, compared to 71% previously. To meet net-zero scenarios, the eight sectors in scope need an estimated additional $30 trillion in investments with more than 68% of this needed for trucking, aviation and primary chemicals. Of the total investments, 57% will be required from the ecosystem for enabling infrastructure, while 43% will be needed within the sectors to retrofit existing assets and develop new technologies.68 In last year’s report, the investment was divided across infrastructure and capital sections, with $13.5 trillion for infrastructure and $11 trillion for industries to retrofit assets. This year, those figures have been combined into the capital section. Challenges –Investments in low-carbon technologies, such as clean hydrogen and CCUS, require significant capital that often exceeds current spending levels. –Most sectors in scope operate with low profit margins (typically between 3% and 10%), except for the oil and gas sector, which has a higher margin of about 15%.69 This makes it hard to cover the additional costs of decarbonization while maintaining profitability. –Increased demand for capital from multiple companies increases competition, making it harder for smaller firms to secure necessary funding. Net-Zero Industry Tracker: 2024 Edition 33

Net Zero Industry Tracker 2024