Financing industrial decarbonisation: Managing risks and uncertainties to promote green investments in energy intensive industry

The purpose of this project is to study how risk and uncertainty affect financial markets willingness to invest in climate projects in the energy-intensive and natural resource based industries (ENRI).

To decarbonize, these industries require large investments in radically new production methods previously not employed at a large scale. Radical investment projects face a more complex risk structure compared to e.g. incremental investments in existing technologies. The heightened risks and uncertainties in turn decreases the level of funding available on financial markets.The purpose of this project is to i) identify the direct and indirect technical, economic, and political risks and uncertainties of climate investments in ENRI, ii) study how firms, investors, and policymakers perceive these risks and uncertainties and how they handle them, and iii) to provide evidence-based and practical solutions to mitigate the risks and improve the risk handling.We contribute to the academic literature on radical technological change, their risk and uncertainties, and the effect of these on financial market’s willingness to invest in such technologies. We contribute to wider society through evidence-based practical solutions to mitigate risks and improve risk management and thus indirectly to access to capital on financial markets. Throughout the project, we are planning close interactions with key stakeholders from industry, financial markets, and policy makers