Guest post by: Rukmini Glanard, Chief Business Officer at GETEC
Europe has made strong progress in financing renewables. Solar and wind have matured into predictable, bankable assets, supported by clear policy frameworks and standardised contracts that reduce uncertainty. Capital is now flowing into these technologies at record levels and even large-scale battery storage is quickly becoming an investable asset class as the technology stabilises and supportive policies take hold. Challenges remain, from grid bottlenecks to higher capital costs, but overall, the renewable sector has reached a level of maturity and investor confidence that other parts of the energy transition are still working towards.
Industrial decarbonization, however, remains a different story. Industry makes up a fifth of Europe’s emissions, yet investment in modernising factories, electrifying heat, recovering waste energy or replacing fossil fuels is far behind where it needs to be. The technologies are here and used widely, from industrial heat pumps and biomass solutions to waste heat recovery, district heating and digital optimisation. What is still missing is sufficient capital at scale. Unlike renewables, industrial projects often lack the financial structures, standardisation and confidence that make large scale investment possible. The gap is less technological than financial.
Understanding the structural barriers
Transforming industrial energy systems is fundamentally more complex than building a wind farm or solar park. It happens inside live production environments, depends on operational behaviour and often requires several technologies to work together. No two sites look alike, which means no two projects look alike either. For investors, this creates a landscape of one-off assets that are difficult to compare and even harder to assess using standard risk models.
Significant engineering progress has been made. The financial framework, however, has not yet fully caught up with the complexity of industrial reality.
1) The economics remain challenging for industry
Deep retrofits and system upgrades often require investments that only pay back over ten to fifteen years. The financial outcome depends on energy prices, production cycles and day-to-day operations, all of which can change over the life of the asset. Unlike renewables, there is no simple, replicable contract model that anchors revenue and spreads risk in a predictable way.
The limited predictability makes due diligence more complex. Lenders struggle to model risk, timelines slip and projects stall. Without mechanisms that stabilise the economic outlook, the cost of capital can remain prohibitively high for many industrial actors.
2) Policy fragmentation continues to undermine investor confidence
Across European markets, the policy landscape for industrial decarbonization remains uneven. Incentives differ from country to country, permitting processes can be slow or unpredictable and access to grid infrastructure remains uneven. Carbon pricing is an important tool, and greater long-term visibility would strengthen its role as a reliable investment signal.
Even strong projects become difficult to finance when the policy environment feels uncertain. Investors respond by adding risk premiums, which in turn makes projects less competitive. Europe has strong ambition, but consistency across markets has yet to fully emerge.
3) Carbon data is not yet consistently investment-grade
Large-scale investment requires reliable, comparable and verifiable carbon data. Today, emissions baselines and reduction claims are still calculated using different methodologies. Monitoring still relies too heavily on manual reporting, and verification practices vary widely.
This inconsistency can limit investor confidence. Without investment-grade carbon data, industrial decarbonization remains a collection of isolated projects rather than a portfolio-ready asset class. Scaling remains difficult where measurement frameworks are not yet fully aligned.
Building a bankable asset class for industrial decarbonization
These barriers are solvable with the right mix of policy, finance and market innovation. Encouragingly, industrial decarbonization is now firmly on the policy agenda, and recent initiatives point in the right direction. The next step is translating this momentum into bankable project structures that can scale across markets. Renewables faced their own challenges a decade ago, and overcame them through a combination of clear rules, smart subsidies, standardisation and innovation in financial structures. Industry would benefit from a similar transformation.
Sharing risk through blended finance
Public and multilateral funding can help absorb the early uncertainties that currently deter private capital. This approach worked in the early years of offshore wind, where public guarantees reduced risk until private markets gained confidence. A similar strategy could accelerate industrial decarbonization by helping to absorb regulatory or integration risk and creating predictable conditions for investment.
Turning bespoke retrofits into standardised projects
Renewables only scaled once the industry aligned behind common contract structures and technical standards. Industrial decarbonization requires the same shift. Model agreements shared due-diligence frameworks and harmonised ways of measuring avoided emissions would make projects easier to evaluate and compare.
If Europe can reduce the need for fully bespoke contracts for every factory retrofit, capital is likely to move significantly faster.
Linking finance to real-world performance
Financial instruments like Contracts for Difference for avoided emissions or sustainability-linked loans can link returns directly to verified carbon reductions. This makes outcomes more predictable for investors and encourages companies to optimise performance, and shifts the focus from funding hardware to funding results, aligning the incentives of the factory owner with the sustainability goals of the lender.
Making carbon data as credible as financial data
To unlock large scale investment, carbon data needs to be as reliable as financial data. Investors need clear baselines, consistent methodologies and independent verification to understand whether a project truly delivers.
Better data lowers financing costs and makes it possible to group multiple projects into portfolios that institutional investors can support. This data transparency is the bedrock upon which a new asset class can be built.
A new investment frontier for Europe
Although often seen as the hardest part of Europe’s climate transition, industrial decarbonization offers some of the clearest economic advantages. The same measures that cut emissions in factories also lower energy costs, reduce exposure to volatile global fuel markets and strengthen Europe’s competitiveness in supply chains that increasingly value low-carbon production.
Closing the financing gap is therefore not only a climate priority. It is a strategic investment in Europe’s industrial resilience. A secure energy system and a competitive manufacturing base will depend on ensuring that essential industrial infrastructure keeps pace with the transition.
What helped renewables scale can now help industry: clearer rules, faster permitting, better data and financial tools that reward verified outcomes. The technologies exist, companies are ready to invest and capital is available. What is still needed is a framework that can make industrial decarbonization a standard, scalable investment category rather than a series of one-off projects.
If Europe manages to build this foundation, industrial decarbonization will not only reduce emissions but strengthen the continent’s economic backbone. The missing middle of the energy transition can become Europe’s next major investment frontier. What it needs now is confidence, consistency and clarity.
