Unlocking $1 Trillion: The Bankability Challenge in Industrial Decarbonisation

In this episode of the Climate Confident podcast, I sat down with Faustine Delasalle, CEO of the Mission Possible Partnership (MPP), to delve into the real challenges, and opportunities, of decarbonising heavy industry and transport.

Faustine and I explored the current state of industrial decarbonisation, including the progress made over the last five to six years in proving that sectors like steel, cement, and shipping can transition to low-carbon alternatives. But as she points out, technical feasibility doesn’t always translate into financial viability. The sticking point? Making green industrial projects bankable.

We discussed the role of the so-called "green premium" (or dirty discount), why demand signals are crucial, and how the current lack of buyers at scale is stalling momentum. Faustine makes a strong case for the combination of policy mandates and targeted subsidies to unlock investment - drawing comparisons with the growth trajectories of solar and electric vehicles.

A key takeaway from our chat: the path to scaling green hydrogen could start with ammonia, which Faustine sees as the first domino in the next industrial revolution. We also looked at which regions are moving fastest, what’s holding others back, and why emerging economies might play a central role in the coming decade.

If you're in policymaking, finance, or industry, and serious about accelerating climate action, this is one to tune into.

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Transcript

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Faustine Delasalle: 0:03

You can call that the green premium. You can call that the dirty discount. But that difference means that it's very difficult to have a bankable case to invest in a green steel production plant or to invest in a green ammonia production plant around the world. And so what we're really going after now is how do we improve the bankability of those projects. Because if they're not bankable, they won't be investable and they won't be financed and they won't see the light of day

Tom Raftery: 0:35

Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 214 of the Climate Confident Podcast, the go-to show for best practices in climate emission reductions and removals. I'm your host, Tom Raftery, and if you haven't already, be sure to follow this podcast in your podcast app of choice so you never miss an episode. Before we dive in, a huge thank you to this podcast's, amazing supporters your backing, keeps this podcast going and I truly appreciate each and every one of you. If you'd like to join our community of supporters, you can support the show for as little as three euros or dollars a month, which is less than the cost of a cup of coffee, and you just need to click the support link in the show notes of this or any episode, or just visit tinyurl.com/climate pod. Now in today's episode, I'm delighted to be talking to Faustine Delasalle, and we'll be talking industrial decarbonisation. And in the coming weeks I'm gonna be speaking to Alexi Beltyukov, who's co-founder of United Fuel Technologies. We'll be talking about renewable fuels, Avi Greenstein, CEO of Bamboozle. We'll be talking about sustainable houseware, and Laura Perez, who's the head of sustainability for Oxford pv. So some great episodes to look forward to. In the meantime, back to today's episode, and as I said today, I'm talking to Faustine Faustine. Welcome to the podcast. Would you like to introduce yourself?

Faustine Delasalle: 2:04

thanks for having me, Tom. I'm Faustine Delasalle. I'm the CEO of an organisation called the Mission Possible Partnership, MPP in short. And MPP is an organisation that focuses on decarbonising some of the most difficult sectors to decarbonise in heavy industry and heavy duty transport. So that's our mission in life. I'm French, as you may tell by my accent and I'm also the mother of two daughters which I like to mention.

Tom Raftery: 2:33

Very nice. Very nice. And how did you get into this ine? What was your kind of Pathway to being where you are now in the Mission Possible Partnership. I.

Faustine Delasalle: 2:42

It's an interesting question. I actually worked in politics in France for several years before deciding to try and engage with the real economy and shifted career after six years in politics. Went to London to change career and location at the same time, and was thrown a bit by chance in the energy space. I was looking for a career with a mission, but didn't know anything about energy. And had the opportunity to join a very young organisation at the time called the Energy Transitions Commission which is a big coalition of companies working together on the energy transition. And these were the very early days of the Energy Transitions Commission, which is chaired by Lord Adair Turner. And I was the first director of the ETC for several years. And the Mission Possible Partnership is really a daughter organisation from the ETC. So we're always laughing with Adair saying that I'm already a grandmother to some extent.

Tom Raftery: 3:45

And what has surprised you most in your journey from politics to now being in the MPP?

Faustine Delasalle: 3:53

I'd say it's the level of commitment and momentum for climate, the climate transition across all types of organisations. And I've had the chance of working with NGOs, obviously, but also with people across different types of financial institutions. people across different types of companies, including the bad guys the heavy industry players, the oil and gas companies. And across all of those organisations, I found passionate people who really wanted to make a difference and fight climate change. And that's what keeps me optimistic on the bad days. There's a lot of energy and goodwill going into this challenge.

Tom Raftery: 4:39

Nice, industrial decarbonisation, it, it, it's hugely complex and difficult, but it seems to have made some strides in recent years, or at least that's my impression. What do you see? Well, A, do you agree? And B, if so, what do you see as the biggest milestones we've hit so far and and why do they matter?

Faustine Delasalle: 5:01

It's quite incredible what has been achieved over the past five to six years. And when we started looking at Is it possible to decarbonise heavy industry and heavy duty transport back in 2017, 2018, at the ETC at the time, nobody really knew the answer to that question, or everybody assumed that the answer was no, it's impossible to decarbonise. And over the course of the past five, six years, first we've proven that it is possible to decarbonise. Then we've managed to convince all of the major corporates in those sectors that it is technically feasible and that they should get there. Most big companies in those sectors have taken climate commitments. We've put that topic on the agenda of policymakers as well. I think every key government G20 economies all have an industry decarbonisation strategy now. Whether or not it's sufficient is a different question, but at least it's on the agenda. And beyond the commitments, we've seen pilot projects, demonstration projects, and even commercial scale projects now across almost all of the sectors. If you think steel, cement, chemicals, but also things like sustainable aviation fuels, sustainable shipping fuels. So we've gone from. You're completely crazy. This is science fiction, which I have heard in the first days when I was working on those topics to actually we have a pipeline of about 700 projects, commercial scale, industrial projects across the globe. Not all of those projects will see the light of day. They're not moving fast enough. But going from crazy to we have projects on the ground over the course of five to six years. It's quite an achievement.

Tom Raftery: 6:56

a big difference between making commitments. And actually delivering on those commitments. So talk to me a little bit about that.

Faustine Delasalle: 7:08

And I think that's what's coming back to bite a number of big companies that had made very bold commitments I'd say around 2020, 2021 and who are now in the tough place because well, companies operate based on economics, right? They still need to get the business running and in the sectors that we're talking about, those harder to abate sectors, the cost of producing green is still higher than the cost of producing dirty. You can call that the green premium. You can call that the dirty discount. But that difference means that it's very difficult to have a bankable case to invest in a green steel production plant or to invest in a green ammonia production plant around the world. And so what we're really going after now is how do we improve the bankability of those projects? Because if they're not bankable, they won't be investable and they won't be financed and they won't see the light of day. So that's really the challenge we're in right now.

Tom Raftery: 8:13

Okay. And how do we make them bankable?

Faustine Delasalle: 8:16

Big question. We've been scratching our brains on the subject for for the past 12, 18 months, speaking to project developers big and small across the globe on what could make a difference. And what comes back again and again and again is one thing. They need a buyer. Sounds simple, but you can't quite invest in something if nobody is ready to buy the product that you'll be producing and to buy it at the right price, which is really the issue here. So we need to figure out how to scale demand for green commodities at a premium. There's been a lot of great efforts in the past from organisations building voluntary demand signals. So think, buyers, clubs, companies taking the commitment to purchase 1, 2, 3, 5 percent green steel out of their total steel consumption, for instance, the first movers coalition led by the World Economic Forum is one of those efforts. There are other buyers clubs out there and they've done a tremendous work to do the very first step. I think a number of projects that are now in construction or that have just started operating would not have seen the light of day without those efforts. But those voluntary commitments are actually limited. They really struggle to get to the next level of scale because companies are ready to do it on 2 percent or 3 percent of their procurement, not on 40 percent or 50 percent of their procurement. And so to get to a bigger scale, our conviction is that we need policy to kick in. We've published a big report at COP29 last year, The Policy Playbook on how to stimulate demand for green commodities, through policies like mandates, through policies like product standards, building standards, that would force the buyers of steel, cement, transport fuels to buy at least a share of their procurement to buy green. And that would create greater certainty of market for the producers, and so it could facilitate investment.

Tom Raftery: 10:34

Okay. We've seen in the past other examples where this kind of carrot and stick approach worked, although you just seem to be talking about more of a stick than the carrot and stick. As in if if I'm thinking back to the renewables around kind of 2008 to 2016, they got subventions. And also there were feed in tariffs as well. There there were particularly in Germany, we saw people being given, I think it was 45 cent per kilowatt hour for every kilowatt hour of solar generated, which is incredibly generous. I'm getting 5 cent per kilowatt hour for mine today. So 45 cent back in 2008 from the, the German that really kickstarted the solar industry. And if we think as well in terms of electric vehicles, we've seen here in Europe a twin effort where you as a buyer, you get a subvention on a vehicle if you're buying it, you get a bigger subvention, if you're scrapping an internal combustion engine vehicle and the manufacturers are being pressured as well because there are in 2020 they had to have I think it was 120 grams co2 per kilometer average across the entire fleet that they sold and this year 2025 that has dropped to I think it's around 90 now so this is forcing the manufacturers from one side and of course we have the phase out of internal combustion engine vehicle sales in Europe by 2035 so It's a combination of carrot and stick. Do you think that'll work as well in the industrial sector?

Faustine Delasalle: 12:15

Yes, I think the examples you're taking are exactly the right ones, right? And what's very interesting about those, especially when you look at the renewables story, is that you started with a lot of carrots and sticks, and then you got to a scale of production that triggered cost reduction, cost reduction, cost reduction, and more cost reduction. And now it's cost competitive, almost everywhere around the world, right? And you don't need those subsidies anymore. So, we may not get to cost parity that fast in heavy industry but we can get the cost down with scale. And that's what the Holy Grail is, but to get there, we'll need those carrots and sticks in the first years. And ideally, we need to do it way faster than we've done for renewables, which is a challenge here. But, The carrot and stick approach is the right approach and the reason we insist more on the stick right now is that there's actually across the big G20 economies, quite a lot of carrots already put out there. If you think about the US and the Inflation Reduction Act, it was a massive carrot thrown to the US industry, and we've been working in the US with our partners at RMI for several years. What we've seen is that the carrot only doesn't work. You do need the carrot and the stick where we're seeing projects progress more. And we've been working in Texas and in California. We've seen progress much more in California than in Texas. Same amount of IRA subsidy. But California has state regulations that are much more stringent. And so it's the combination of IRA plus state regulations that was really the winning combination. So we need that combination to happen. Acknowledging also that there are opportunities in emerging economies to progress without too much carrots because those governments may not have deep pockets to do an IRA equivalent. But because they have favorable economic conditions to produce renewable energy, to produce renewable hydrogen, they might be able to get away with a bit more stick and not that much carrots to progress in, in country.

Tom Raftery: 14:32

Right. Interesting. Yeah. And I've seen some interesting things come outta developing countries like Ethiopia has banned the import of internal combustion engine vehicles and Rwanda not so long ago has banned the sail of internal combustion engine two wheelers, which made up well over 50% of transport in Rwanda up to now.

Faustine Delasalle: 14:57

And what we see protectionist moves like across multiple countries around the world, there are economies where those protectionist instincts might actually play out positively for the industry decarbonisation, because, for instance, we're very active in Brazil. Brazil is a big agro producer. They're importing almost the entirety of their fertilisers, which is mind blowing. And it's extremely costly. It has a huge impact on their trade balance. But they could produce those same fertilisers at home with green hydrogen produced from their tremendous renewable energy resources. So there can actually be a, an economic case and a sovereignty case to some extent to develop green industry locally, especially in what we've called the new green industrial sunbelt of the world. So all of those places that have a lot of sun and a competitive advantage to go after green industrialisation.

Tom Raftery: 16:03

Nice. Yeah. And I'm glad you mentioned the finance because your has identified a 1 trillion investment opportunity in green industrial projects. Talk to me a little bit about that, what's holding it back, if anything, where can we get this trillion dollars?'cause I'd like a little bit of that.

Faustine Delasalle: 16:25

Of course. And, and look, look, what we're doing is that we're tracking the green industrial projects across the globe. We have a, if you go on our website, you'll have a global project tracker there. And we're tracking whether those projects have reached final investment decision, which is when they get sanctioned and start construction, whether they are past that and whether then they start operating. The pipeline of projects right now. The last update we've done is was for COP29 last year and the pipeline of projects that was there in November last year, represents about 560 projects that haven't reached that final investment decision stage, haven't been invested yet. And those we've assessed represent a 1 trillion investment opportunity. So those are projects that exist. They've been announced by companies. We know where to point to them on the map. But they haven't reached the right level of bankability yet. to be invested and move forward towards construction and operation. So that's the opportunity. And it's a tremendous, it's a green industrial revolution, right? So when you think about why invest in green industry, this is the next industrial revolution that can benefit a whole range of countries with a big investment opportunity, but to unlock it, you need demand because you need bankability.

Tom Raftery: 17:54

Right. Okay, back to demand again. Okay. Working as you do across the globe, are there any regions you see that are doing particularly well? And what lessons can we learn from them if so?

Faustine Delasalle: 18:08

I wouldn't say anyone is doing particularly well given the urgency we're facing, right? The clock is really ticking and we're, in terms of transformation of the projects into construction and operation phases, we're going way too slow. That's the dark side of, of where we are now. What I think is quite interesting is that there's growing momentum in emerging and developing economies. Half of the projects that have been announced over the past six months have been announced in emerging and developing economies. So it's no longer just a kind of Western plus China story. The US has had a big push, as we said, within Inflation Reduction Act and the subsidies, especially the hydrogen subsidies that were attached to it. So there should be some momentum remaining in the US in that context. I think Europe is in a tricky place because historically that's where almost all of the very first projects announced in each of the heavy industry sectors that we're looking at have been announced in Europe because there was a real political willingness to go after clean tech and government subsidies lined up to support that move. But the European industry is in a tough space. Europe is also not necessarily, if you accept Spain, Portugal on the one hand, and the Nordics on the other, not the best place to produce gigantic amount of clean energy cheaply. So there's a real question around how Europe can maintain an industrial base that is competitive in that green industry revolution. Really push its technology leadership, which it has because they started first. But also find the right trade partnerships with other countries to get access to the energy or the energy intensive commodities that they need in the future.

Tom Raftery: 20:50

Okay, And in terms of policy, because you mentioned we're going to need to work from policy to stimulate a lot of this demand, what kind of actions should governments take today to accelerate demand for low carbon products?

Faustine Delasalle: 21:07

So I think we've really seen, as we discussed earlier the combination of subsidies and mandates work well to trigger the pump. In sectors like fuels, like sustainable aviation fuel mandates, like the ones that are now being implemented in the UK and Europe, but also across a number of countries in Asia. There's one being set up in Brazil as well. Those have really facilitated investment in sustainable aviation fuel plants, and for materials like steel or cement, you would have to look at what are the big sectors that buy those commodities. So obviously the construction sector buildings and building standards are particularly important to drive demand for green construction materials. And then some key consumer products like cars and your white goods in your house. Those are the key kind of consumer sectors for heavy industry. So those are the ones you need to focus on.

Tom Raftery: 22:14

And what is the role of the private sector versus governments in making these projects bankable, if any?

Faustine Delasalle: 22:23

Well, the more voluntary demand we can have, the better, right? That's always the case. And we continue to encourage all of those buyer's clubs that exist out there. There's also, I think, a need for better dialogue between the different steps of the value chain so that they understand what they need from each other to have the right product delivered in the right place, et cetera. And more fundamentally, I think, we know that policymakers are influenced by big companies in their backyard. So it's, it's really important for companies to, to demonstrate that this is feasible. And I think they have over the past few years, because we've seen the first few projects, we've seen the first few offtake agreements between suppliers and buyers. So they've demonstrated this can work to give policymakers the confidence that they can now deploy at scale, but we need to continue kind of that back and forth between government and policymakers to boost confidence on both ends.

Tom Raftery: 23:29

You've worked, I mean, you're working across sectors like steel, cement, shipping, et cetera, aluminum. What sector do you think will hit a decarbonisation tipping point first and why?

Faustine Delasalle: 23:42

Our hope and intent and focus and efforts is for ammonia to go first. Ammonia, your listeners might not know that, but ammonia is used to produce fertilisers. And to produce explosives today. And it's considered as one of the leading options, if not the leading option, to be a new sustainable fuel for shipping. So there's multiple markets looking at ammonia as their input. And ammonia is the most easy transformation of hydrogen, if you want, there's only one step from hydrogen to ammonia. And it's already a process that exists because all ammonia around the world produced today is already transforming hydrogen into ammonia. So it's the easiest step to transform, to replace the gray hydrogen that they're currently using by green hydrogen or blue hydrogen, but clean hydrogen. And if we do that and manage to scale that in the ammonia market, then we'll scale production of clean hydrogen. And if we scale production of clean hydrogen, we should be able to achieve cost reductions. Economies of scale, and that will then benefit all other sectors, steel, aviation that will want to use hydrogen as well. But that's kind of, in our minds, it's the first domino. It's ammonia as the first domino to scale hydrogen production, clean hydrogen production and therefore facilitate the transition of everyone else in the space.

Tom Raftery: 25:21

And what's the one untapped opportunity in industrial decarbonisation that you think the world isn't paying enough attention to?

Faustine Delasalle: 25:31

Well, ammonia is definitely one.

Tom Raftery: 25:35

Any others?

Faustine Delasalle: 25:37

And the others well, I'd say going back to basics as well, in terms of pursuing energy efficiency where you can and pursuing systems efficiency as well. And we often forget that you can build a building still with cement, but with less cement. You can fly less. You can build automotives and lightweight them so that you have the right balance between steel and aluminum and use less steel and aluminum. So those design options are also really important to make progress in terms of short term emissions reduction.

Tom Raftery: 26:17

If we move out 10 years to 2035, how do you think we'll look back on this moment in industrial decarbonisation, And what do you think? Or what do you hope we'll say about 2025 and the actions we've taken in the last 10 years?

Faustine Delasalle: 26:34

It's interesting you ask this question because our whole organisation is right now focused on 2030 as the milestone. We have a target for 2030 based on all of the analysis we've done in past years. We know that we need about 700 green industrial plants to be up and running in 2030 to be on a 1.5 degree compatible trajectory. So to help the world limit the rise in global temperatures to as close as possible to 1.5 degree. And I'm not overly optimistic that we'll meet that 2030 milestone, because if you think about the time we have left to meet it, it's basically 12, 18, 24 months at best, because you need several years to actually build the plant once you've approved it. So if plants are not approved by end of 2026, There's no way they will be up and running by 2030. So that's kind of our immediate challenge. But then if you shift the focus to 2035, I'm way more optimistic. Because although I'm not sure, increasingly pessimistic on the fact that we'll hit our targets by 2030, it makes me very optimistic that we have such a huge amount of projects in the pipeline announced across the globe. And even if they're not up and running in 2030, they might be in 2031, 2032, 2033. So I'm more optimistic about the change that will have happened by 2035.

Tom Raftery: 28:06

is that time enough?

Faustine Delasalle: 28:09

It's, it's insufficient to limit the rise in global temperatures as much as possible, right? But it's better than if we do nothing and keep keep temperatures rising more and more. Any half degree counts, right? So, that's the objective is to go as fast as possible with as many projects as possible.

Tom Raftery: 28:34

And what about some emerging technologies? Are there any emerging technologies like AI or blockchain or any of these kind of things that you see have a role in accelerating decarbonisation?

Faustine Delasalle: 28:47

Well, I'd say it's three things. One is that, I actually see AI as a threat right now, just because it consumes so much electricity that it will make it more difficult for energy intensive industries like steel or cement to get their hands on cheap electricity. So I think the competition for clean electrons is being intensified by the rise of AI. On the other hand there are definitely opportunities for more system efficiency for more energy efficiency, that new technologies and AI technologies can bring, right? So that's an area where I'm hopeful. And there's a bunch of technologies and we focus as an organisation more on making technologies that are mature enough, get to commercial scale and deploy at scale. But there's also very interesting technologies across sectors like cement, for instance, that are not yet as mature but could be real game changers in the space, new cement chemistries, for instance. So that's, that's exciting.

Tom Raftery: 30:02

Okay, fantastic. A left field question for you. If you could have any person or character alive or dead, real or fictional as a spokesperson for industrial decarbonisation, who would it be and why?

Faustine Delasalle: 30:23

This is the type of question that I really struggle with. So, I'm not big on superheroes, so, or on big celebrities. Everything we do at MPP is done in partnership with others. We really believe in the power of collaboration. Can I go with a left field answer?

Tom Raftery: 30:44

Of course.

Faustine Delasalle: 30:45

I think I'd say the pioneers who did the opened the first mountaineering roots in the Himalayas, for instance, are quite a good symbol for what we want to do collectively with other partners because they're. they're climbing step by step, like every two, three years, we climb another milestone and then another milestone. At some point we'll get to the end of the route and to the peak. We're not there yet, but we keep climbing. And by nature, I think the work we do is a collective endeavour, like any mountaineering. expedition. So that's, I would go to the Mulleries and Herzogs of this world who have pioneered mountaineering in the Himalaya.

Tom Raftery: 31:36

Oh, Interesting. Nice. I like it. Good. Cool. We are coming towards the end of the podcast now, Faustine. Is there any question I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Faustine Delasalle: 31:50

This was a fun conversation.

Tom Raftery: 31:53

Okay, great. Super Fantastic. Faustine. that's been really interesting. If people would like to know more about yourself or any of the things we discussed in the podcast today where would you have me direct them?

Faustine Delasalle: 32:04

We're most active on LinkedIn. You can find me at my name, Faustine Delasalle, on LinkedIn. We have a Mission Possible Partnership page as well with a monthly newsletter called Signal that people can sign up to and our Mission Possible Partnership website is also a good place to go for all of our analysis of past years. There's a lot accumulated there and the global project tracker I mentioned is also on our website.

Tom Raftery: 32:31

fantastic i'll put those links in the show notes Faustine so everyone has access to them. Great Faustine that's been really really interesting thanks a million for coming on the podcast today.

Faustine Delasalle: 32:40

Thanks for having me.

Tom Raftery: 32:41

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to tomraftery at outlook. com or message me on LinkedIn or Twitter. If you like the show, please don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.