Way forward Currently, the different policies on GHG emissions reduction are of three key types: –Market-based: This type of policy involves the construction of systems that make the polluting entity incur a cost for their emissions. These systems can be carbon taxes, emissions limits or cap-and-trade programmes. The European Union’s (EU) Emission Trading Scheme (ETS)81 is an example of a market-based GHG emission reduction policy. This type of policy can be classified as a “push” policy because it pushes the industry to move away from emission- intensive practices. The EU ETS policy covers the steel, cement, chemicals, aviation and shipping sectors. –Mandate-based: This type of policy involves the introduction of direct regulations or setting up of government targets for decarbonization initiatives such as installed capacity of specific types of clean energy. The EU’s Net Zero Industry Act (NZIA),82 China’s 14th Five Year Plan83 and India’s National Action Plan on Climate Change84 are examples of a mandate- based GHG emission reduction policy. This type of policy can also be classified as a “push” policy, since it pushes the industry to move away from emission-intensive practices. –Incentive-based: This type of policy involves direct funding, tax credits or subsidies from the government to support decarbonization initiatives like increasing the production of clean energy or the development of low-emission technologies. The US Inflation Reduction Act (US IRA)85 and Japan’s Green Transformation (GX) Policy86 are examples of an incentive-based GHG emission reduction policy. This type of policy can be classified as a “pull” policy, as it pulls the industry towards low-emission practices. Each policy type has specific objectives and covers key sectors and technologies. A balanced approach, combining push and pull strategies, can encourage long-term industry participation, providing pathways for sectors like transport and industrial sectors to decarbonize effectively. Policy summary TABLE 3 Policy namePolicy typePolicy objectivesKey pointsSector/technology coverage US IRA (2022) Incentive- based (pull) –A 40% reduction in US GHG emissions by 2030, relative to 2005 levels –Uses tax incentives to encourage private sector investment in clean energy projects –$369 billion in federal funding towards clean energy –This funding includes $100 billion to solar energy, $53 billion to enhance energy storage solutions, $78 billion for advancing battery manufacturing, $23 billion for developing hydrogen technologies, $27 billion to support wind energy, and $20 billion allocated to carbon capture and other emerging technologies. –Energy (low-carbon power) –Transport (low-carbon fuels e.g. hydrogen and EV adoption) –CCUS technology for manufacturing (steel, cement, chemicals) EU NZIA (2024) Mandate- based (pull) –At least 40% of the annual deployment needs for strategic net- zero technologies to be met through EU-based manufacturing by 2030 –Target to achieve an annual CO2 storage capacity of at least 50 million tonnes by 2030 –Focused on dismantling legislative gridlocks –Emphasizes reducing dependency on non-EU countries for critical technologies and resources –Net-Zero Technologies Manufacturing Projects (“NZT Manufacturing Projects”) will benefit from streamlined permitting procedures. –NZT Manufacturing Projects that are deemed “strategic” will benefit from expedited permitting timelines. –Energy (low-carbon power, energy storage, nuclear power) –Transport (low-carbon fuels e.g. hydrogen, biofuels, sustainable fuels) –CCUS technology –Heat technology Net-Zero Industry Tracker: 2024 Edition 37

Net Zero Industry Tracker 2024