Making clean tech the best business case
Breaking the financial and regulatory barriers
To meet climate goals at scale and speed, countries need to foster cost-efficient CO2-free technologies that can win on both performance and price. Today’s transition depends not just on innovation, but on removing the financial and regulatory barriers that hold back its deployment. Aligning public support, private capital, and market incentives with the most impactful zero-emission solutions is key to making clean technology the foundation of resilient, competitive economies.
Criticality of the topic
Affordable, zero-emission technologies are the backbone of a scalable and politically durable climate transition. While many solutions exist, high upfront costs, policy uncertainty, and fragmented incentives continue to inhibit deployment at scale. Inconsistent signals across markets and sectors create investor hesitation and slow learning curves. A stable, technology-neutral framework is essential to unlock innovation, reduce costs through competition, and avoid favouring politically convenient options over effective ones. Ensuring that capital flows toward the most impactful, cost-efficient solutions is critical, not only for climate goals but also for maintaining economic competitiveness and social support.
Latest developments
Cost declines have made solar PV, onshore wind, and batteries increasingly competitive with fossil-based alternatives, driven by economies of scale, supply chain maturation, and strong policy support. While these technologies have historically relied on government subsidies, renewable generation sources like solar PV and wind are already cost-effective in some markets. At the same time, support mechanisms are evolving: instruments such as the UK’s updated Contracts for Difference (CfD) scheme, Germany’s innovation tenders, and the EU Innovation Fund are shifting focus from technology-specific promotion toward rewarding carbon abatement, system integration, and cost-efficiency.
Emerging solutions, such as green hydrogen, e-fuels, small modular reactors (SMRs), direct air capture (DAC), fossil-free steel, and nuclear fusion, draw strong investment as industries look for breakthrough technologies to cut emissions. However, many of these technologies still face high costs, complex infrastructure requirements, and uncertain market demand. As a result, some investors are reconsidering the balance between emerging and established options, with interest in proven, mature low-carbon technologies as a more immediate path to reliable, low-emission energy supply.
Volatile policy environments remain a concern. Retroactive changes in countries like Spain, Romania, and China have shaken investor confidence, particularly in early-stage or capital-intensive technologies. Meanwhile, a global competition for cleantech investment is intensifying. Major policy packages like the IRA, REPowerEU, and Japan’s GX fund are reshaping global incentives and triggering a subsidy race for clean technology leadership.
Trends and outlook
Technology cost curves are expected to decline further, though progress will vary by maturity, sector, and region. Public support is likely to evolve from broad subsidies toward more targeted instruments that de-risk investment and accelerate scale-up, particularly in hard-to-abate sectors. Transparent, stable, and technology-neutral policy frameworks will be key to fostering investor confidence and preventing distortions. Increasingly, global competitiveness will hinge on the ability to mobilize capital toward scalable, low-cost solutions. Governments that align incentives with real-world performance and impact, rather than political preference, will be best positioned to attract innovation and lead in clean technology markets.
Governments and other policymakers
Policymakers should implement technology-neutral incentive schemes, such as carbon contracts for difference, innovation tenders, and competitive grants, that reward cost-effective emissions reductions across sectors. Ensuring long-term regulatory stability and predictable funding frameworks is critical to de-risk capital-intensive investments and support domestic supply chain development.
At the same time, phasing out fossil fuel subsidies and expanding CO₂ pricing to cover all sectors and imports will help correct market distortions and level the playing field for clean technologies. Dedicated funding corridors should also be established for first-of-a-kind and scale-up projects in high-impact areas such as industrial heat pumps, hydrogen, e-fuels, and carbon capture. Electricity markets should be adapted to effectively integrate storage systems such as BESS, enabling them to support the grid rather than add to its stress.
Companies and industrial players
Companies should embed abatement cost assessments into their investment and R&D strategies to prioritise scalable, cost-efficient decarbonization solutions. Participating in cross-sector consortia and industrial clusters can help de-risk emerging technologies by sharing infrastructure and accelerating learning.To enhance project bankability, firms should make use of forward contracts, long-term power purchase agreements (PPAs), and other hedging tools that stabilise revenue streams and attract capital. In parallel, companies should advocate for transparent and technology-neutral access to public support schemes, ensuring that incentives are allocated based on performance and potential impact rather than sectoral lobbying.
Investors
Investors should prioritize capital allocation toward cost-effective, scalable, and verifiable zero-emission technologies aligned with science-based decarbonization pathways. Beyond ESG labels, investment decisions should be based on real-world cost-efficiency, scalability, and emissions impact. To support emerging climate technologies, investors can develop tailored funding structures such as blended finance vehicles, green infrastructure funds, and venture debt instruments adapted to higher risk profiles. Active engagement with regulators is also critical to promote predictable, long-term, and technology-neutral policy environments that reduce investment risk and accelerate the commercialization of capital-intensive innovations.
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