Decarbonising heavy industry sectors, especially ammonia, aluminium, cement, and steel, is critical to meet the EU’s proposed 90% net Greenhouse Gas (GHG) emissions reduction target by 2040, and climate neutrality by 2050. It is also a strategic economic imperative, supplying critical inputs to downstream sectors. Reducing their exposure to volatile fossil fuel markets by accelerating their transition will be vital to safeguarding Europe’s industrial resilience, competitiveness and longterm prosperity. Calculations suggest that the EU’s pipeline of commercial scale deep decarbonisation projects in these sectors represents a €100bn investment opportunity
A major barrier to delivering clean industrial projects is the absence of robust markets for clean industrial products. Uptake remains limited, despite a relatively small impact on prices of end products from using clean materials and chemicals – for many products around 1% or less for a complete shift to using clean commodities. Pioneering companies have made voluntary commitments to procure green materials, but this voluntary demand on its own is not enough to catalyse large-scale investment and realise the EU’s pipeline of projects. Without secure demand, projects struggle to secure long-term offtake agreements and remain bankable.
The EU’s pipeline of deep decarbonisation projects in heavy industry – spanning ammonia, cement, and primary aluminium and steel production – represents a close to €100bn investment opportunity, according to our calculations. Yet momentum is stalling: since 2024, only two deep decarbonisation projects in the EU reached Final Investment Decision (FID), the critical go-ahead for construction. This study “Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets” prepared by the Industrial Transition Accelerator secretariat and E3G explores six possible lead markets for four key industrial commodities: clean ammonia, aluminium, cement and steel, and identifies policy instruments that can trigger uptake in these lead markets.
Access the report here