This chapter provides an analysis of investments that can be supported by transition finance in three important areas – heavy industry, critical minerals and natural gas – building on the preceding assessment of investments and providing illustrative cases and non-exhaustive key performance indicator (KPI) examples to underpin transition strategies.

As with the investment amounts highlighted in Chapter 1 that can be supported by transition finance, inclusion here does not automatically render an activity eligible for transition finance, since such eligibility depends on meeting the relevant process requirements. Equally, the absence of an activity from this chapter does not imply that it is ineligible for transition finance.

Heavy industry: The cement and steel sectors are a foundation of economic development and are major emitters, accounting for about 14% of direct energy and process CO₂ emissions. Near-zero emissions technologies are essential to achieve net zero pathways, these technologies are still in the preliminary stages of commercial deployment. In the near-term, transition finance can support interim steps towards reaching near-zero emissions solutions.

Critical minerals: As these are the material backbone of energy supply chains, scaling mining and refining is crucial to meeting increasing demand driven by energy applications such as electric vehicles, battery storage, renewables and grid networks. At the same time, the extraction and processing of minerals may have adverse impacts that require safeguards addressing not only greenhouse gas (GHG) emissions but also, among others, high water use, land degradation and biodiversity loss. Transition finance can unlock high-impact projects that lower emissions and avoid or mitigate other impacts, guided by practical KPIs.

Natural gas: Natural gas is set to remain a part of the global energy mix for many decades but the applicability of transition finance to gas varies by country and sector and over time. Priority should be placed on front-loading methane abatement, reducing emissions from liquefied natural gas (LNG) liquefaction providing infrastructure for low-emissions gases and helping, alongside other technology options, plants to provide flexibility for electricity systems, under transparent, time-bound plans that align with national energy and climate strategies.