To grasp the full scale of the world’s need for transition finance, a good place to start is cement. The key ingredient in concrete, the most widely used man-made substance, cement is produced by a series of complex processes in which raw materials such as limestone and clay are ground to a powder and baked at extremely high temperatures. Carbon dioxide is generated both as a byproduct of the chemical conversion process and through the use of fossil fuels to heat the kilns.
But while this might reduce its emissions, gas is still a big polluter, generating about 35 per cent of America’s energy-related carbon emissions in 2022, according to the US Energy Information Administration. Yet that new gas infrastructure could remain online for decades. In the face of these risks, some see financial instruments as powerful accountability tools, particularly in fixed-income markets.