Reducing carbon dioxide emissions in the global industrial sector is an uphill battle due to investor reluctance to pour money into costly, emerging technologies like clean hydrogen, according to Bloomberg NEF’s latest findings.

The industrial sector — which includes cement, steel, fertilizers and chemicals — is responsible for nearly a quarter of the world’s greenhouse gas emissions, according to BNEF. In fact, this sector is poised to surpass all others to become the world’s largest source of emissions by 2050.

These industries could clean up their emissions if they employ technologies to capture, utilize and store CO2 emissions (CCUS), use clean hydrogen as a fuel or heating source, make bioplastics and deploy recycling and energy efficiency measures, BNEF wrote in the analysis.

Although CCUS and clean hydrogen can be employed to make low-carbon steel, cement and chemicals, the analysis finds risk-averse investors are shying away from these two technologies because they are “prohibitively costly” and nascent. Instead, investors have been placing their bets on established cleantech like renewable energy, electric vehicles, energy storage and electrified heat pumps.

BNEF began tracking global investments in CCUS, hydrogen and sustainable materials, which includes bioplastics, energy efficiency measures and recycling, in 2018. Since then, the chart shows spending in these emerging technologies more than quadrupled in 2022. However, BNEF said these figures still reflect about 3% in total cleantech spending.

To reach net-zero CO2 levels from the industrial sector, the share of total investment in CCUS, hydrogen and sustainable materials “must quadruple,” equating to a cumulative spending of $24.2 trillion by 2050, BNEF wrote.

BNEF recommends governments pass subsidies and mandates to stimulate more investment and an expansion of infrastructure needed to store and transport CO2 and clean hydrogen. These recommendations indicate that some form of mandates are likely needed to push the industrial sector, especially in the United States where the 2022 Inflation Reduction Act is already providing generous subsidies — although we are still very early in the IRA’s existence.