Fast-tracking the Green Industrial Revolution: new toolbox for G20 governments

Fast-tracking the Green Industrial Revolution: new report reveals toolbox for G20 governments to unlock boom in low-carbon fertilisers, fuels, and essential commodities within 10 years

24 September 2024, New York: Mission Possible Partnership (MPP), in collaboration with the Bezos Earth Fund (the Earth Fund), today publishes its report, Unleashing Market Forces to Scale Green Industry: The Role of Green Market Makers. It reveals the most effective ways to unlock global uptake of low-carbon fertilisers, fuels, and materials—and the opportunity to bring them to exponential growth within a decade. Among the different mechanisms available, Green Market Makers (GMMs)—innovative intermediaries between sellers and buyers—are revealed as one of the most efficient ways to deploy public funds for scaling up industry transition.

Pointing to green ammonia, sustainable aviation fuels (SAF), green steel, and low-carbon cement, GMMs are deemed a ‘game-changer,’ capable of fast-tracking low-carbon commodity markets—comprising products that are essential building blocks of a decarbonised economy, on which agriculture, green buildings, green manufacturing, and other industries will rely.

An innovative model for buying and selling low-carbon commodities, the GMM acts as an intermediary between producers and purchasers. Its effectiveness lies in how it absorbs multiple risks and covers the difference between the higher costs of green products and the price that the buyer is willing to pay—obstacles that commonly hold back new clean technologies and block their initial growth. Applying concessional capital is fundamental to a GMM, but for certain commodities in certain jurisdictions, a mixed-capital structure could be applied, infusing market capital (equity and debt) to achieve greater leverage from the concessional capital invested.

The report—which provides a toolbox for policymakers, industrial companies, and financial institutions and was developed by a working group comprising MPP and the Earth Fund alongside RMI, Systemiq, Bain & Company, Center for Green Market Activation, H2Global, J.P. Morgan, and Morrison Foerster—urges deployment of GMMs with government-backed funds as a critical way to catapult early markets for low-CO2 solutions to enable them to scale rapidly and reduce their costs, making them more affordable versus their fossil-fuel-based equivalents.

Prioritising GMMs in industrial strategies enables governments to secure early-mover competitive advantages for green industrial products domestically, whilst pushing global green commodity markets toward their positive tipping points.

H2Global is pioneering the GMM. In July it successfully contracted Fertiglobe to supply 397,000t of green ammonia to Europe from Egypt starting in 2027. Over USD 6 billion in public funds from the Australian, Canadian, Dutch, and German governments is dedicated entirely to H2Global tenders.

Harnessing the growing momentum and rapidly deploying GMMs across large economies and those with high demand for industrial products—countries such as the US, India, Indonesia, Japan, South Korea, and Canada, as well as the European Union—can unleash the exponential growth of green industry worldwide. A series of tipping points are possible within a decade if key economies apply a GMM model, allowing them to transition between one-seventh to one-third of their demand for low-carbon commodities by 2030.

Acceleration of the green ammonia market is a key priority amongst low-carbon commodities. Reaching economies of scale through a global tipping point would unlock cost declines cascading through multiple industrial sectors. Green ammonia production can drive the growth of green hydrogen markets, bringing down costs as they scale, eventually creating a domino effect in other areas reliant on green hydrogen, such as green shipping fuel, green steel, and SAF.

The report urges prompt commitments from governments and sets out practical steps for their implementation alongside other green market interventions for maximum effect. The US alone, for example, could tip the scales for the entire SAF market since around one-quarter of all global aviation demand comes from the US, six of the largest US airlines have SAF commitments of 5-10% by 2030, and there is advanced regulatory support. A world-first mixed-capital GMM in US-SAF is possible. In the steel sector, leadership from Japan, Korea, the US, and India can unlock the green steel market.

Faustine Delasalle, Mission Possible Partnership CEO, said: “We are on the edge of one of the most significant economic transitions in history, and governments hold the keys to unlock it. Green Market Makers have emerged as a gamechanger that can accelerate early market growth and precipitate cost reductions for green commodities. Getting green products to as little as a 5% global market share can get us to a tipping point where economies of scale will be unlocked, traditional market forces will be unleashed, and growth in low-carbon commodities will be unstoppable.

Paul Bodnar, Director of Sustainable Finance, Industry, and Diplomacy, Bezos Earth Fund added: “Overcoming the climate challenge will require looking beyond strictly government-led solutions to embrace market forces. Unfortunately, we don’t have 30 years to wait for the market to go it alone. This flagship report identifies real-world, tangible solutions capable of bringing forward the S-curve of market adoption. Supporting market accelerators that can connect buyers and sellers, bridge the green premium, absorb risk, and overcome inherent market failures is now imperative to reach the tipping point whereby green fuels and commodities can compete.”

“H2Global remains the only Green Market Maker (GMM) that has achieved proof of concept, demonstrated by the successful outcomes of its pilot auction. It has attracted over USD 6 billion in concessionary capital from Australia, Canada, and the Netherlands, with Germany making the largest contribution. As more governments pool resources in H2Global tenders, the impact on clean fuel market creation grows, significantly accelerating the transition to a more sustainable future,” says Markus Exenberger, Executive Director, H2Global.

“A well-capitalized Green Market Maker will unlock pathways to profitability for green commodities, enabling rapid scaling of emerging climate technologies. Introducing market capital into the Green Market Maker to work alongside concessional capital will significantly increase the efficiency and reach of the concessional capital and accelerate the transition to a low-carbon economy,” said Rama Variankaval, Global Head of Corporate Advisory & Sustainable Solutions, J.P. Morgan.

Unleashing market forces to scale green industry: the role of Green Market Makers will be featured at the Climate Week NYC Green Market Day, on Tuesday 24th September. Hosted by the Earth Fund, it is the first time the city-wide event will host a dedicated industrial decarbonisation day.

The lineup includes a keynote address from John Podesta, US Senior Advisor on International Climate Policy, and many other notable speakers including Earth Fund President & CEO Sir Andrew Steer, Faustine Delasalle, CEO Mission Possible Partnership, and David M. Turk, Deputy Secretary, US Department of Energy. Discussions will examine how market-making intermediaries such as GMMs can harness the power of markets, the application of GMMs to ammonia and how best to use other green market tools such as book-and-claim and demand-aggregating buyers alliances.

-ENDS- 

NOTES TO EDITORS 

Media enquiries: Clara.Eldridge@missionpossiblepartnership.org

VIEW | GREEN MARKET MAKERS interactive report

About | Unleashing market forces to scale green industry: the role of Green Market Makers

This report was created is a culmination of analysis and work by Mission Possible Partnership and its partners between April and September 2024.

It was prepared by the Mission Possible Partnership with the support and collaboration of the Bezos Earth Fund, alongside a working group of the following organisations: RMI, Systemiq, Bain & Company, Center for Green Market Activation, H2Global, J.P. Morgan, and Morrison Foerster.

Additional quotes 

“Solutions to tackle the most carbon-intensive sectors stand at the ready, but companies need confidence that their products will find customers,” said Thomas Koch Blank, Managing Director at RMI. “By absorbing the risks and the cost differential of green commodities, Green Market Makers play a critical role in scaling markets and demand for low-carbon fuels and materials. Initial pilots demonstrate how targeted interventions can drive exponential market growth, bringing green solutions to the mainstream and fast-tracking climate action.”

Green Market Makers offer pragmatic, innovative, market-based solutions that integrate public support with industry engagement up and downstream, championed by NGOs, financial institutions and climate philanthropy,” said Eveline Speelman, Partner at Systemiq. “Cross-system stakeholder collaboration is essential to refine and scale these instruments to overcome the complex web of market failures impeding the scale up of low-emissions commodity markets. At this moment in the transition, direct value chain interventions are essential to deliver outsized impact; Green Market Makers promise to achieve market acceleration by catalysing this integrated public-private commercial opportunity at scale.

Kim Carnahan, CEO of the Center for Green Market Activation, said: “Through our work at the Center for Green Market Activation, we have seen first-hand how tools like book and claim systems and buyers alliances can effectively harness corporate climate ambition and activate new markets for green fuels and materials. Through the combined efforts of corporate voluntary action and supportive government policy, we can optimize the use of these approaches across industrial sectors to speed the transition to ultra low carbon technologies needed for a net-zero future.”