Scaling the Industrial Transition 2025

projects still struggle to reach investment stage. Technology is largely proven, but bankability is constrained by rising input costs, higher financing rates and uncertain demand signals. Within companies, low-carbon projects compete directly with higher-margin, established products; when decarbonized options raise costs or compress returns, capital often flows towards legacy operations. Early projects have underperformed not because of technical limitations, but due to policy gaps, incomplete planning and fragile offtake or permitting frameworks.20 Energy-intensive industries now face a structural cost squeeze. Power and feedstock prices remain volatile, while grid bottlenecks and permitting delays drive up development timelines and capital costs. Investors, confronted with unclear demand and fragmented policy environments, demand higher risk premiums – pushing the cost of capital beyond what most low-carbon projects can sustain. The economics of industrial transition is now inseparable from industrial performance: the goal is not only to cut emissions but to deploy technologies that lower costs, stabilize energy access and drive innovation-led growth. At the same time, market structures still fail to accurately reflect the true cost of carbon, leaving low-carbon solutions at a disadvantage compared to incumbent systems. Weak demand signals and limited willingness to pay a green premium further constrain investment confidence. The combination of price volatility, uncertain offtake and uneven cost internalization is reshaping capital allocation – favouring regions with cheaper, more predictable energy and stronger policy frameworks. Ultimately, project competitiveness, both in markets and within corporate portfolios, now depends as much on demand certainty and policy coherence as on cost efficiency. Integration for scale will determine success The transition is not constrained by invention alone – technological progress continues, but the primary bottleneck has shifted to integration and execution. The next phase depends on aligning innovation, infrastructure, demand and capital so that proven and emerging technologies can scale profitably and predictably. Even as low-carbon solutions advance – from hydrogen-based steelmaking to next-generation biofuels and carbon capture – market demand remains shallow and uneven. Producers face a widening gap between the cost of cleaner production and what buyers can absorb, a gap that policy incentives and voluntary offtakes only partly bridge. Corporate net-zero commitments continue to expand globally, often featuring interim 2030 targets that establish clear trajectories for emissions reduction. According to Accenture’s Destination Net Zero 2025 report, 41% of the world’s 2,000 largest companies (G2000) now have comprehensive net-zero targets covering their entire value chain (Scope 1, 2 and 3), while 73% have set targets covering at least their own operations (Scope 1 and 2). However, despite this growing ambition, pledges have yet to translate into sufficient near-term, large-volume procurement of low-carbon materials, leaving many industrial producers without reliable demand signals.21 At the same time, capital remains abundant but increasingly concentrated. Clean energy investment reached $2.2 trillion in 2025 – nearly twice that of fossil investment22 – yet the vast majority of this capital has been flowing to advanced economies and China,23 leaving emerging markets underfunded. Investment increasingly flows to projects that can demonstrate deliverability, transparency and credible offtakes – where grids, infrastructure and regulation are aligned. Elsewhere, projects stall because financing, permitting and demand cycles fail to move in sync. Innovation remains vital – but its focus must evolve. The challenge is no longer just to invent cleaner technologies, but to innovate in how systems connect and operate: integrating renewables into grids, building CO2 transport networks, enabling hydrogen logistics, securing feedstock supply, and coordinating permitting and financing frameworks. Equally important is innovation in immaterial infrastructure – such as credible emissions measurement and verification systems, and trusted book-and-claim frameworks that allow buyers to support low-carbon production even when they are geographically or sectorally distant. These forms of system-level innovation, both physical and immaterial, will determine whether proven technologies can achieve commercial scale and attract the demand-side premiums needed to sustain them. Ultimately, progress will depend on synchronization – matching technology advancement with the policy, capital and infrastructure systems that can deliver it at scale. Technology is not the main barrier – alignment is. Scaling now depends on synchronizing policy, capital, demand and infrastructure to deliver proven solutions at scale. Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 12