Financing programmes and de-risking instruments

Current status of implementation and existing gaps

Several initiatives at the global, regional and national levels can be tapped into to ensure financing and de-risking instruments are leveraged appropriately for the accelerated deployment of sustainable heavy-duty vehicles.

Examples and initiatives

The EU’s Innovation Fund offers wider support to battery technologies, zero-emission vehicles and the associated charging infrastructure. The EU’s Social Climate Fund supports measures and offers investment aids to reduce emissions broadly in the road transportation sector.

Current status of implementation and existing gaps

Clean vessels are more expensive to finance than conventional vessels due to higher capital and operation costs and partly due to lack of historical credit risk data and technological uncertainty. However, conventional vessels may face stranded assets risks, and banks and regulators need to consider this when pricing the risk for low-carbon fuel vessels (EDF, 2024). Innovative financial and de-risking instruments have a role in de-risking clean vessels and building and accompanying associated infrastructure.

Examples and initiatives

The Green Shipping Guarantee Programme of the European Investment Bank was developed to provide loan guarantees to shipowners for investing in low-carbon technologies.

Current status of implementation and existing gaps

SAF development has seen several risk mitigation initiatives, including research and innovation grants, multilateral development bank support, loan guarantees, and long-term offtake agreements.

Examples and initiatives

In January 2025, the US Department of Energy’s Loan Programs Office announced a USD 1.67 billion loan guarantee to expand the Montana Renewables SAF production site.

In 2024, the European Bank for Reconstruction and Development supported the completion of the feasibility of SAF production in Kazakhstan. Kazakhstan’s gas operator, KazMunaiGas, and the national air carrier, Air Astana, supported the study.

Current status of implementation and existing gaps

Government support through various de-risking mechanisms have started to emerge to accelerate the transition to low-carbon steel production processes. Examples of these mechanisms include government-backed loan guarantees or insurance for capital investments in low-carbon steel technologies (Saygin and Cordonnier, 2023).

The OECD, via its Clean Energy Finance and Investment Mobilisation programme, is active in the finance space of the industry’s decarbonisation, supporting countries in the development of policies and financial instruments to scale up the financing of clean energy projects (OECD, n.d.).

Examples and initiatives

As part of the Clean Industrial Deal, the EU has announced a proposal to launch the Industrial Decarbonisation Bank, which aims to mobilise EUR 100 billion of funds for industrial decarbonisation (including electrification) projects (European Commission, 2025b).

In India, an innovative financing instrument titled “Financing steel decarbonization” was developed in 2022, aiming to mobilise private finance for low-carbon technologies in the steel sector including the supply of renewable energy to meet the electricity requirements of steel production facilities or for the production of renewable hydrogen (CPI, 2022).

Current status of implementation and existing gaps

Several government-led intermediaries engage in the purchase of green hydrogen and its derivatives, subsequently selling them to buyers through different mechanisms. This innovative approach covers the price difference between production costs and the buyer’s willingness to pay, effectively stimulating market development for green hydrogen. The collaborative effort aims to promote the growth of the green hydrogen market for chemicals and petrochemicals sector and support global decarbonisation initiatives.

Examples and initiatives

As part of the Clean Industrial Deal, the EU has announced a proposal to launch the Industrial Decarbonisation Bank, which aims to mobilise EUR 100 billion of funds for industrial decarbonisation (including electrification) projects.

Germany’s H2Global Foundation, using its intermediary Hintco, has forged partnerships for future auctions, securing funding commitments from Australia (EUR 200 million), Canada and the Kingdom of the Netherlands (EUR 300 million).

Current status of implementation and existing gaps

Financing for cement decarbonisation is growing, with the European Investment Bank, carbon contracts-for-difference and green bonds leading the way. Emerging markets lack strong de-risking mechanisms, limiting investment outside of Europe and North America, and the green premium for cement (40-100%) remains a key barrier to private investment, making large-scale financing risky without subsidies or offtake agreements (Future Cleantech Architects, 2024).

Examples and initiatives

The Climate Club Financial Toolkit maps 28 financial instruments, that can be implemented in the industrial sector (OECD/Climate Club, 2025).

As part of the Clean Industrial Deal, the EU has announced a proposal to launch the Industrial Decarbonisation Bank, which aims to mobilise EUR 100 billion of funds for industrial decarbonisation (including electrification) projects.

To accelerate the uptake of low-carbon hydrogen projects in the EU, the European Commission – under the European Hydrogen Bank – will launch a third round of auctions, with a total budget of up to EUR 1 billion by the third quarter of 2025 (European Commission, 2025b).

The Climate Investment Funds have launched a USD 1 billion initiative to decarbonise industry.