Policy Key readiness question Are the supporting policies to enable the growth of low-emission industry in place? Key messages –Effective policies are essential for creating an enabling environment to achieve the 2050 net-zero target. –Decarbonization policies face challenges including increased costs, uneven global commitment, opposition from fossil fuel sectors and risks of carbon leakage. –GHG emissions reduction policies can be classified into three main types: market-based, mandate-based and incentive-based. Policies scores supporting the growth of low-emission industry across sectors (2022-2024) FIGURE 20 Cement Steel Trucking Oil and gas Shipping Primary chemicalsAviation 2022 2023 2024Aluminium12345Policy readiness scores Sectors with readiness score movements in the past year: The policy scores for all the sectors have remained stagnant since last year, due to no major developments in terms of sector-specific policies and regulations. To achieve the global 2050 net-zero target, policies can help create an enabling environment for decarbonization and adoption of clean energy across industries. Challenges Decarbonization policies face several significant challenges, which vary depending on the region, industry and the specifics of the policy: –Clean energy policies can, in some instances, raise costs for businesses and consumers, leading to social resistance and implementation difficulties. –Uneven commitment to decarbonization across countries complicates coordinated efforts across global product value chains and can undermine national progress. –Distributional effects on suppliers and workers in emissions-intensive industries can weaken policies aimed at reducing emissions. –Regulatory arbitrage may drive businesses to relocate to less regulated regions, diminishing overall emission reduction efforts.Note: Aviation, shipping and trucking sectors were not included in the 2022 report, and the primary chemicals sector has been added this year. Net-Zero Industry Tracker: 2024 Edition 36

Net Zero Industry Tracker 2024