Scaling the Industrial Transition 2025

Executive summary This past year was a defining moment for the industrial transition – defined by the realities of scaling amid tightening economics and rising energy demand. Across hard-to-abate sectors – aviation, shipping, trucking, steel, cement, aluminium, primary chemicals, and oil and gas – technologies to cut emissions exist, but scaling now depends on bankability, profitability, infrastructure and execution rather than invention. This year’s edition finds that confidence in technology remains high, but progress is constrained by enabling systems. Roughly half of industrial emissions can be abated with mature solutions; the other half depends on deeper innovation, stronger policy support, plus enabling infrastructure. Hydrogen and carbon capture, utilization and storage (CCUS) remain in early stages, progressing through pilots, but fewer than 1 in 10 projects reach the final investment decision. The primary constraint has shifted from technical feasibility to economic and operational viability. Energy costs, policy fragmentation and infrastructure gaps now determine what can scale. Reaching net-zero across these sectors will require around $30 trillion in additional investment, 57% from the broader ecosystem – grids, ports, carbon dioxide (CO2) and hydrogen infrastructure – and 43% from industry itself. While Europe tightens compliance, the US – traditionally incentive-led – faces growing uncertainty following the rollback of several clean-energy measures, including renewable and electric vehicle tax credits. This fragmentation is redefining industrial competitiveness – markets now operate under different environmental standards, and costs and incentives rarely align. The result is a multi-speed transition. Clean energy investment will reach $2.2 trillion in 2025 – twice that of fossil investment – but 90% of this capital since 2021 has gone to advanced economies and China as well as proven technologies, leaving emerging markets and early-stage solutions underfunded. Several structural lessons emerge. Policy fragmentation is reshaping markets: Regions are moving towards compliance and accountability, but through divergent mixes of incentives, carbon pricing and disclosure frameworks. Economic viability defines scale: Rising financing costs, combined with weak demand for low-carbon solutions, constrain investment. Competitiveness depends on reducing emissions while maintaining cost advantage through bankable projects, predictable offtakes and credible policy frameworks. Integration for scale will determine success: The next phase depends on aligning technology, infrastructure, policy and capital so proven solutions can scale profitably and predictably – connecting power grids, CO2 transport and storage networks, hydrogen corridors and integrated industrial clusters. Looking ahead, several priority actions stand out. –Create demand certainty through standardized green-material contracts, public procurement and buyers’ alliances. –Build shared infrastructure – integrated power, hydrogen and CO2 transport and storage networks – that reduces costs and drives cross-sector scaling. –Lower the cost of capital via blended finance, carbon contracts for difference and risk-sharing tools, particularly in emerging markets. –Scale market-ready solutions while nurturing innovation – fast-track electrification, efficiency and storage; support hydrogen and CCUS where viable and enhance energy security and growth. –Balance top-down frameworks with bottom- up innovation by aligning stable policy direction with flexible, locally driven business solutions. The message from 2025 is clear: industrial transformation is advancing, but progress remains incomplete. The next frontier requires governments and industries to work in tandem so that low- carbon technologies become investable, scalable, inclusive and globally competitive.2025 marks a defining moment for industry – where competitiveness and productivity, not technology alone, define sustainable transformation. Scaling the Industrial Transition: Hard-to-Abate Sectors and Net-Zero Progress in 2025 4