Finance

Why it matters

Many projects struggle to secure finance – both for early development work and for capital expenditure. This usually comes down to a mix of project – or developer-specific risks (such as thin balance sheets, or an unproven track record) and market risks (such as uncertain demand and revenue). Strong projects and supportive policy are not enough on their own to unlock investment at the scale and pace needed: it also takes the right blend of concessional and private finance, adapted to the specific risks facing early movers in capital-intensive industries, to turn promising concepts into bankable investments.

Where are we now?

Concessional finance remains scarce relative to early-stage and first-of-a-kind (FOAK) project needs, and private capital is often reluctant to commit ahead of proven technology and demand certainty. Many strong projects stall before FID – not for lack of merit, but because the way finance is currently structured is not yet built to absorb their risk profile. While MDBs and DFIs have started to respond to the needs of industrial decarbonisation through dedicated initiatives with broad geographical reach (such as CIF’s IDP below) and industry-specific country platforms, these are recent and have not yet translated into an acceleration of the number of clean industrial projects reaching investment, especially FOAK or SOAK (second-of-a-kind) deep decarbonisation projects.

Feedback from project developers and financial institutions points to three areas of intervention with real potential to move the pipeline forward: mobilising concessional finance to scale green offtake through mechanisms like public procurement, contracts for difference, and double auctions; widening access to DevEx funding and technical support, particularly for smaller national producers and new entrants; and pairing concessional and private capital to de-risk early, high-impact first-of-a-kind projects, speeding up FIDs and opening a path to scale.