In this issue: Industrial Transition Accelerator; US Green Industrial Hubs; Near-Zero Aluminium

Signal from MPP | Issue No. 2401-12

A BUSY 2024 is already well underway as MPP steps up to host the Secretariat for the new Industrial Transition Accelerator, launched last month at COP28 in Dubai with the generous support of the COP28 Presidency and Bloomberg Philanthropies.

MPP remains focused on the delivery of first deep decarbonisation projects in harder-to-abate sectors, and the ITA is a unique vehicle to reach and mobilise industry, finance, and governments in service of this mission. The global project pipeline currently falls far short of our 2030 Milestones, the minimum real-economy threshold for action in this decade to make the global goal of net zero viable by mid-century.

We’re learning by doing. This year we’ll double our efforts to share insights and experience from our diverse portfolio of projects.? This edition dives into recent progress at MPP-supported two green industrial clusters in the Texas Gulf Coast and greater California.? Our partnership is uniquely positioned to give a bird’s eye view of what’s working, and what doesn’t work to unlock projects.

As always, thank you for sharing this newsletter – and don’t hesitate to share your comments and feedback. We look forward to working with you in 2024.

Mission Possible Partnership is?a movement of climate leaders in business and civil society driving industrial decarbonisation across the entire value chain of the world’s highest-emitting sectors: aluminium, cement, chemicals, steel; aviation, shipping, and trucking. We’re charting the inventive steps and radical collaboration to enable commercial-scale First Projects in this decisive decade.

Please comment, send feedback or message us with insights.

1.???? Industrial Transition Accelerator

Collaboration is key to reach tipping points in this decade ?

COP28 Presidency, United Nations and Bloomberg prioritise harder-to-abate industries

IN OUR NEW ROLE as host of the Secretariat to the Industrial Transition Accelerator (ITA), MPP will build, support and deepen multi-stakeholder efforts to unlock investment in the transition of harder-to-abate sectors in the next two to three years. The Secretariat will work collaboratively with industry leaders, governments, and investors to unlock delivery of green industrial projects consistent with credible 1.5°C-aligned targets, building on the rich landscape of initiatives already developed by ITA partners.

In coming years, this unprecedented collaboration will position us to:?

• Directly support a cohort of projects across six sectors – aluminium, aviation, cement, chemicals, shipping, and steel – in a subset of geographies, to identify and unlock barriers to investment within three years;
• Leverage the reach of ITA partners, including COP Presidencies and UN Climate Change, to inform policymaking on key policy levers like carbon pricing and demand-side regulations, in the run-up to the next round of Nationally Determined Contributions (NDCs);
• Coordinate pre-existing initiatives to drive a step-change in efforts to scale-up clean energy solutions for industry, grow premium demand for green commodities, and de-risk investments and transactions in new green industrial value chains.

Recent momentum in the roll-out of solar energy and electric vehicles has helped to build confidence that key decarbonisation technologies can reach tipping points – the inflection point on a steep S-shaped growth curve, when innovative products break into mainstream markets. The ITA will work to reinforce this trend to enable rapid deployment of clean technologies in heavy industry and transport.

Launched last month in Dubai under the leadership of the COP28 Presidency, UN Climate Change, and UN Envoys Michael R. Bloomberg and Mark Carney, the ITA benefits from a three-year budget of $30 million, generously funded by the UAE and Bloomberg Philanthropies. The ITA is governed by an independent Leadership Council, co-chaired by COP28 President Dr Sultan Al Jaber, UN Climate Change Executive Secretary Simon Stiell, UN Special Envoy on Climate Ambition and Solutions Michael R. Bloomberg, and UN Special Envoy on Climate Action and Finance Mark Carney.

MPP will lead the Secretariat and work hand in hand with the wide web of existing initiatives across industry, finance, and policy – which are represented on the ITA’s Leadership Council – to speed up ongoing efforts and leverage them to the benefit of an immediate wave of deep decarbonisation projects.

2. US Gulf Coast & California

Climbing the Experience Curve: learning by doing in clean industry clusters

Companies in MPP-supported clean industrial hubs eye new opportunities for clean molecules in domestic and export markets

Bryan Fisher, Director of US Hubs, Mission Possible Partnership

THE CONCEPT of an Experience Curve, also known as the Learning Curve, holds that costs fall by a predictable amount – typically 20-30 percent – each time “experience” doubles. This insight, from studies in the 1960s of aircraft manufacturing and semiconductor production by Bruce Hendersen, pioneer of modern management consulting, has evolved through the decades.

Today, Hendersen’s theory remains a powerful predictor of market dynamics and business strategy for First Movers – not least in the unfolding energy transition.

The challenge for greening industrial sectors is to speed up that experience curve. Having a first wave of deep decarbonisation projects operational by 2030 is an essential step on that journey. Thanks to groundbreaking support from Bezos Earth Fund, MPP teams are actively contributing to unlocking this first wave, working with an array of corporates and innovative consortia spanning 27 projects in two clean industrial clusters around Houston and greater Los Angeles.

High-level findings from this work over the past year include:

• Financial incentives, public funding and tax breaks under the US Inflation Reduction Act (IRA) are a game-changer, but not sufficient yet to catalyse commercial-scale deployment of low-emissions industrial technologies in heavy-emitting sectors.
• Frequent obstacles include the absence of demand for green industrial projects, which negatively impacts prospects for project financing, project permitting, and project acceptability by local communities – all high-priority workstreams for MPP’s US Hubs teams in 2024.

“The IRA kicked up some dust and industry is responding with an unprecedented number of project announcements. That said, we’re seeing that the supply side incentives in IRA are often not enough to close the economic gap for many projects, which means they need to find ways to optimise costs or find willing off-takers to pay a green premium,” said Bryan Fisher, MPP Director of US Hubs.

Beyond direct project support, MPP is involved in an array of business, government and community forums, so that lessons learned on the ground in Texas and California can help inform strategic and investment choices for up to 150 large-scale capital projects in both regions.?

"For the most part we see other companies doing similar things not so much as competitors: the potential is so big – if we can build the market together – everybody wins" Joshuah Stolaroff, CEO, Mote Hydrogen

Of 14 projects supported by MPP in California, highlights include two Sustainable Aviation Fuel (SAF) plants, new charging capacity for 200 zero emissions trucks in the Port of Long Beach, and collaboration between cement producers and project developers from other industries to explore carbon capture and offtake opportunities.

Bryan Fisher, Director of US Hubs, Mission Possible Partnership

In the Texas Gulf Coast, notable early results include feasibility studies for new SAF offtake agreements; bolstering of plans to use low-emissions ammonia as a maritime fuel for green shipping corridors from the Gulf Coast to the world; and matchmaking prospective European buyers with US low-emissions hydrogen producers under the auspices of the new Transatlantic Clean Hydrogen Trade Coalition (H2TC), which is hosted by MPP and was launched in October, as reported by Edie, the sustainability news website.?

If the hill is steep, the scope for collaboration is wide: a majority of MPP’s project work has supported innovative consortia involving relatively smaller companies typically with a market capitalisation of less than $1 billion.

In 2024, we will step up our outreach to share insights from our work, including via this LinkedIn newsletter (with sincere thanks to you, our 2,600 subscribers and counting). Expect more on the multiple actions involved in building a business case – up and down industrial value chains – to unlock green industry and transport projects in this decisive decade.

3. Greener Aluminium

Momentum builds from Dubai to Shanghai

MPP takes sector transition strategy to China, while MPP partner RMI launches Sustainable Aluminium Finance Framework

ALUMINIUM production is currently responsible for around 1.1 Gt (two percent) of global CO2 emissions, but MPP’s Sector Transition Strategy, launched in 2023 with the support of the International Aluminium Institute and 28 industry leaders, demonstrated the feasibility of rapid progress by 2030.

In China, primary aluminium production has reached record levels in recent years, due in part to an easing of constraints on power availability locally, combined with high electricity costs slowing down production in Europe. MPP and partners are building the case for collaboration up and down the aluminium value chain to decarbonise the global industry.

• About 60% of global primary aluminium production is in China.
• Most of China’s aluminium smelters are still powered by coal.
• Aluminium producers in the southwest start taking advantage of hydropower to decarbonise smelters.
• A first framework to support decarbonisation of aluminium was launched by RMI at COP28 – its benchmarks recognise wide variation in starting points for emissions intensity across the sector.

Proving the business case for commercial-scale decarbonisation in China, the world’s largest aluminium producer, is critical to reduce global emissions by mid-century. So, it is a measure of MPP's growing reach and reputation that aluminium sector lead Jason Martins was invited to introduce our Aluminium Sector Transition Strategy to industry leaders across the Chinese sector at the 11th AZ Global International Aluminium Conference in Shanghai last year.

[GU1]? Just two months later, at COP28 in Dubai, MPP founding partner RMI launched the first Sustainable Aluminium Finance Framework, setting out principles to enable banks to measure and disclose their lending portfolios’ aluminum-related emissions. Building on precedent set by MPP and RMI working jointly to inform bank portfolio management in the steel sector (Sustainable Steel Principles), the aluminium framework was backed by four leading banks – Citi, ING, Société Générale and Standard Chartered. Using MPP’s Sector Transition, the framework allows for a diversity of starting points, acknowledging the wide spread of emissions intensity in the sector:

• Part of the global production already operates based on hydro power while the rest is split between coal-based and gas-based power production.
• Varying shares of primary and recycled feedstocks also drive differences of carbon footprint between sites and companies.?

“Aluminum is a key material in the development of electric vehicles and renewable energy infrastructure to transition to a future focused on lower carbon emissions. The Sustainable Aluminum Finance Framework will bridge this need by making it easier for banks and aluminum producers to work closely to drive decarbonisation.” Louis Langlois, Senior Vice-President, Alcoa

Financial institutions can adopt the Framework to assess the emissions footprint of their aluminium loan books, to work with their clients to report emissions, and support investments in new low-carbon technologies. The framework builds on analysis from the MPP Aluminium Transition Strategy, which can be found here. The full suite of assets for MPP’s seven sector transition strategies, including infographics, executive summaries and open-source Python models is available on our website.

Reminder: In case you missed it during the crowded roster of the Dubai COP, MPP’s new Concrete and Cement Transition Strategy, was released on December 4. Co-developed with industry, this completes the suite of 1.5°C-aligned strategies to decarbonise our seven sectors.

Mission Possible Partnership is?a movement of climate leaders in business and civil society driving industrial decarbonisation across the entire value chain of the world’s highest-emitting sectors: aluminium, cement, chemicals, steel; aviation, shipping, and trucking. We’re charting the inventive steps and radical collaboration to enable commercial-scale deep decarbonisation projects in this decisive decade.