United for Net Zero Public Private Collaboration to Accelerate Industry Decarbonization 2025

Opportunity 1: Understand and leverage public financial mechanisms for net zero Business investment is critical to delivering the net-zero transition, and government has a crucial role in incentivizing this transformation. Businesses will choose low-carbon alternatives (e.g. materials, products or assets) as they become increasingly cost-competitive and if they are provided with funding opportunities. Appropriate and tailored incentives from the public sector are expected to ensure decarbonization projects have a sound business case. Typical public support types include: –Subsidies: Direct funding, early replacement, retirement, repurposing incentives, carbon contracts for difference –Carbon pricing: Carbon tax, emissions trading systems –Tax mechanisms: Accelerated depreciation, material pricing (virgin material levy, price stabilizers), capital allowances, corporation tax reduction, business rate and VAT reliefs Although the level and scale of support varies across the world, collaborating effectively with governments can improve the use of financial incentives and increase confidence and buy-in in decarbonization projects. This approach has been adopted by Edilians in collaboration with Capgemini, which has de-risked its kilns replacement projects through an effective collaboration with the public sector, as depicted in case study 1. CASE STUDY 1 Edilians and Capgemini efficiently collaborating with the public sector to drive decarbonization Challenge Edilians, a European tile manufacturer, identified tunnel kilns as the main source of CO2 emissions after conducting a carbon assessment. Edilians has outlined a decarbonization roadmap across all its sites to cut Scope 1 CO2 emissions by 30% by 2030. On top of performance optimization and improvement of its industrial equipment, Edilians identified the development of a new kiln as a critical lever to reach its decarbonization target. Partnering with an original equipment manufacturer (OEM) that had an early-stage kiln concept promising 30% energy savings, they needed to prove this technology’s industrial viability. This required an upfront investment of €10 million with high associated risks and unclear returns on investment and would financially commit the company over 15-20 years. Solution To mitigate project risks and unlock external investment, Edilians sought public funding from European and French governments and consulted the French Environment and Energy Management Agency (ADEME), a public industrial and commercial establishment, on its decarbonization funding possibilities.Edilians and the OEM selected DEMIBaC, a call-for-projects supporting demonstrators of low-carbon production technologies, which provides funding for projects led by partnerships between low-carbon solution providers and demand-side manufacturers. Edilians and the OEM submitted their grant application in 2022, aiming to secure 40% of the investment. In 2023, Edilians and the OEM secured the grant, receiving €3.6 million to develop the kiln. Edilians then paused its operations for three months and gradually resumed production while performing tests to maintain product quality, which led to lower productivity for that quarter. Impact Since then, the company has reduced gas consumption (and, therefore, Scope 1 CO2 emissions) of its kiln by 33%. Despite the high costs, Edilians plans to annually convert one production line to meet its decarbonization goals. Eventually, Edilians and the OEM aim to share the technology through patent licenses to help decarbonize the sector. In partnership with Capgemini, the tiles manufacturer has deployed its decarbonization plan and has already identified funding opportunities in all its operating countries to de-risk its investments. Source: Consultation with Edilians and Capgemini; Batiweb. (2024). -33% CO2 emissions in an Edilians factory. https://www.batiweb.com/ actualites/developpement-durable/33-d-emissions-de-co2-dans-une- usine-edilians-44963. United for Net Zero: Public-Private Collaboration to Accelerate Industry Decarbonization 14