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Green hydrogen, produced from water and renewable power through the electrolysis process, can play a crucial role in the low-carbon transition to achieve the net-zero emission targets. Currently, the production cost of green hydrogen is not competitive when compared to hydrogen produced from natural gas. High capital costs are a major factor constraining its cost-competitiveness. This working paper utilises financial market data to address the knowledge gap concerning the range of Weighted Average Cost of Capital (WACC) for green hydrogen projects. It also conducts a survey among investors and financiers to identify key risk factors contributing to the high WACC. The key risks that have been identified include offtaker risks, lack of credible offtakers, price uncertainty of green hydrogen, and the absence of hydrogen trading markets. These risks are closely connected to the available risk mitigation strategies and tools. The paper summarises key risk mitigation strategies identified through case studies of lighthouse green hydrogen projects that have either reached or are nearly point of reaching financial investment decisions.

Industry decarbonisation is a cornerstone to reach net-zero emissions by this mid-century. The diversity of industrial activities, processes and products, the complexity of global industrial value chains, and the international competition make industry decarbonisation a challenging objective. Annual investments in low-carbon technologies for industry decarbonisation need to increase by a factor of three to five by 2030 compared to current levels to align industrial emissions with net-zero pathways. This paper analyses available financing solutions to scale up investments at pace, especially in emerging and developing economies where industrial production is growing rapidly whilst available finance is limited. It highlights de-risking and financial instruments and models that can help accelerate investments and draws lessons from twelve financing industry decarbonisation case studies which demonstrate how private capital can be mobilised.

Successfully transitioning to net-zero greenhouse gas (GHG) emissions requires effective mitigation policy packages, which include carbon pricing measures: a cost-effective policy instrument that not only reduces emissions but also generates revenue to support the transition. This fourth edition of Effective Carbon Rates provides an overview of the carbon pricing landscape, examining fuel excise taxes, carbon taxes, and emissions trading systems (ETSs) through 2021, with updates on developments until 2023. The policy mechanisms examined directly impact the cost of emitting GHGs, influencing shifts in production, consumption, and investment towards low- or zero-carbon options. The analysis covers 72 countries which together account for approximately 80% of global GHG emissions. The report focuses on developments in ETSs and transport fuel taxes amidst the energy crisis and provides comprehensive and comparable data on the current status of GHG emissions pricing that can assist policymakers in identifying priorities and refining carbon mitigation strategies.

Multifactor productivity is a comprehensive measure of productivity where the underlying production function accounts for multiple factor inputs, traditionally labour and produced capital. While single-factor productivity is intuitively simple, such measure offers a biased picture of the economy because it attributes all variation in output growth to a single factor input (e.g. consumption of fossil fuels or material resources) while the role of other factors is ignored. Multifactor productivity aims at addressing this shortcoming, and as such it is a valuable component of the OECD set of Green Growth headline indicators. This paper presents further progress in measuring the EAMFP and related growth accounting indicators in 52 countries for 1996-2018. An important novelty is the inclusion of renewable natural resources such as land, timber and fisheries, and ecosystem services such as coastal and watershed protection. Exploratory results on accounting for renewable energy resources are also included.

The Mitigation Work Programme (MWP) was established at COP26 to urgently enhance mitigation ambition and implementation in this critical decade. This paper explores how the MWP could build on and amplify relevant existing efforts, within and outside the UNFCCC, to trigger the rapid scale up of mitigation efforts required to keep the temperature goal of the Paris Agreement within reach. As a multilateral platform backed by the legitimacy and convening power of the UNFCCC, the MWP could help to raise awareness of available tools and solutions, build momentum behind relevant ongoing mitigation-related initiatives without being prescriptive, and deliver more effective, targeted mitigation efforts across all fronts in the near-term. This paper also outlines potential options for the annual decision on the MWP which provides an important opportunity to maintain attention on the need to urgently scale up mitigation efforts and encourages learning-by-doing. The annual MWP decision could be structured around different mutually supportive elements including lessons learned from the MWP’s first year, follow-up from MWP activities and related mitigation commitments at previous COPs, synergies with other UNFCCC processes, and how to complement the global stocktake.

L’Observateur de l’action climatique est une des principales publications du Programme international pour l’action sur le climat (IPAC). Cette synthèse couvre les mesures relatives à la lutte contre les changements climatiques et les progrès accomplis en vue de la neutralité carbone dans 51 pays de l’OCDE et partenaires de l’OCDE. Cette année, le rapport contient un résumé des informations relatives aux émissions de gaz à effet de serre, une évaluation des aléas climatiques et les dernières tendances en matière de mesures relatives à la lutte contre les changements climatiques. Les décideurs politiques et les acteurs de terrain sont les destinataires de cette synthèse dont les résultats montrent que, à moins d’être plus ambitieux et d’accroître significativement l’envergure des actions en faveur du climat à l’échelle nationale, les pays ne relèveront pas le défi de la neutralité carbone.