The Shovel Is All There Is: Why Hard-to-Abate Industries Need Climate Capital Now
We dug a hole. We dug it together. We are still digging it.
Not metaphorically. Literally — we pulled carbon out of the ground, burned it, and pumped the exhaust into the sky for two hundred and fifty years. The hole isn’t in the earth. It’s in the atmosphere. And for the last several decades, more has been falling in than we ever intended. The hole is deep. It is wide. It feels inevitable and unending.
So what do we do?
We grab a shovel.
This is the cruel irony at the heart of the climate crisis. The Industrial Revolution didn’t just start the problem — it handed us the only tools we have to solve it. Technology created the catastrophe. Technology is the only way out. I would love the answer to be stopping. But it won’t happen, it can’t happen, and we aren’t ready. So you don’t get to choose a different tool. There is no different tool. The shovel is all there is, and the question is only whether we’re smart enough to use it differently this time.
Where are we?
CO₂ in the atmosphere sat at roughly 280 parts per million for the ten thousand years of human civilisation before industrialisation. It passed 424ppm in 2024. The physics of what happens next — more frequent extreme weather, disrupted food systems, sea level rise — isn’t contested by anyone doing serious science. Or by anyone who wasn’t paid to dispute it. The IPCC’s Sixth Assessment Report makes the mechanism clear: we have a carbon budget, we’re burning through it, and the deficit compounds.
None of this is surprising. Most of it is scary. All of it is infuriating. What is surprising is where the solution money mostly isn’t going — and what is scary and infuriating is the same thing.
There are broadly two schools of thought in climate-conscious investing, and they are not mutually exclusive.
The first: build new green companies. Bet on the businesses that never had dirty habits to begin with. Solar developers, EV manufacturers, heat pump installers, green hydrogen startups. High upside, clean story, easy to explain at a dinner party.
The second: fix the companies that caused the problem. Help the steel plant, the cement manufacturer, the container shipping line, the petrochemical refinery transform their operations. Harder story. Morally uncomfortable. Why should the corporations that dug the hole get help climbing out?
Most headline climate capital flows toward option one. It’s more legible, more narrative-friendly, and frankly more satisfying. You’re building the future rather than cleaning up someone else’s past.
But the math of impact doesn’t care about the narrative. The eight hardest-to-abate sectors — steel, cement, aluminium, chemicals, oil and gas, aviation, shipping, and trucking — collectively account for around 40% of direct CO₂ equivalent emissions. All hard-to-abate sectors combined received roughly 7.4% of total global clean energy investment in 2024 — around $155 billion out of $2.1 trillion. Steel alone, responsible for nearly 5% of global CO₂e, exceeds that entire allocation by itself. These sectors are also the hardest to electrify, the slowest to change, and the most deeply embedded in the supply chains that make everything else possible — including the wind turbines and solar panels everyone agrees we need more of.
The numbers make the mismatch concrete. Steel alone generates nearly 5% of all global CO₂e — more than the entire “clean industry” investment category receives.
It’s galling. Possibly embarrassing. Most of us in developed economies carry a slice of this guilt. I benefit from the thick concrete walls that surround me. The steel of my staircase. The fuel of my flights.
We’ve been here before, and the teacher is an uncomfortable one.
Holes in the Greenhouse
In the 1970s and 80s, the science on chlorofluorocarbons — CFCs, the refrigerants and aerosol propellants then used in billions of products worldwide — made it clear that we were tearing a hole in the ozone layer. The Montreal Protocol of 1987 didn’t wait for replacement technologies to mature before mandating phase-out. Industry screamed.
DuPont, initially a fierce opponent, became one of the strongest advocates once it recognised that its R&D pipeline had a competitive head start in CFC alternatives. The ozone layer is recovering. The Protocol has, as a less-reported side effect, avoided the equivalent of 135 billion tonnes of CO₂ emissions between 1990 and 2010 alone — more than the entire Kyoto Protocol achieved. It is the single most effective piece of environmental regulation in history.
The speed of that transformation is the underappreciated part of the story. Global CFC consumption collapsed 99% in under two decades from its 1989 peak.
DuPont didn’t survive by clinging to CFCs. It survived by becoming indispensable in what came next.
And then it spent decades poisoning drinking water with PFAS — the “forever chemicals” used to make Teflon — while internal scientists documented the toxicity from as early as the 1960s. In 2023, DuPont, Chemours, and Corteva agreed to a combined $1.185 billion settlement with public water systems across the United States, on top of a broader cost-sharing arrangement worth $4 billion across PFAS liabilities. The film Dark Waters tells part of that story. The settlements continue.
This is the uncomfortable truth at the centre of the argument I’m making: DuPont is simultaneously the best historical proof that incumbent industrial players can transform when the incentives align, and a live exhibit of what happens when they don’t. The lesson isn’t that these companies are good. The lesson is that moral character isn’t the variable. Incentive structure is.
Its Climate Capitalism, Stupid
This dynamic repeats across the history of industrial transition. The shift from whale oil to petroleum-based lighting didn’t happen because whale hunters went out of business — capital and infrastructure flowed sideways into the next dominant technology. The electrification of manufacturing in the early twentieth century was led by companies that had everything to lose from change and chose to lead it anyway. Technological succession rarely looks like the old guard collapsing and the new guard rising from the rubble. More often, the ecosystem reuses the parts.
The S-curve of technological adoption makes this legible. New technologies emerge slowly, accelerate through a growth phase, plateau as the next curve begins its climb underneath. Petrol replaced steam. Plugs replace petrol. The transition isn’t neat or fast — there are hundreds of millions of internal combustion engines still being manufactured — but the direction isn’t in doubt.
How do we decarbonise? Slowly, then suddenly. Hopefully in time.
What matters for investors and operators isn’t picking the winning new technology — that game is already crowded. What matters is correctly reading which incumbent industries are early on their transformation S-curve and have the structural capacity to make it.
The evidence that transformation is technically possible is no longer theoretical. SSAB’s HYBRIT project — a joint venture with LKAB and Vattenfall — produced the world’s first fossil-free steel using hydrogen instead of coal in 2021, delivered it to Volvo, and is targeting industrial-scale demonstration by 2026. Steel alone accounts for 7–9% of anthropogenic CO₂ emissions globally — if the steel industry were a country, it would be the fifth largest emitter on earth. The R&D timelines for green steel, low-carbon cement, and zero-emission shipping are measured in years, not decades. That’s not a reason to wait. That’s a reason to move now, while the assets are mispriced and the competition is thin.
The transformation is underway — but unevenly. Absolute steel-sector emissions across the top ten producing nations show who is moving and who is not.
Policy Carrots & Sticks
The policy architecture to force this movement is being assembled, imperfectly but meaningfully.
The EU’s Carbon Border Adjustment Mechanism entered its definitive regime in January 2026, requiring importers of steel, cement, aluminium, fertilisers, and hydrogen to purchase certificates covering the embedded emissions in their goods. Dirty production no longer gets to hide behind cheaper labour costs or weaker regulation — the carbon price follows the product to the border. In the United States, the Inflation Reduction Act’s Section 45Q tax credit now pays $85 per tonne for industrial carbon capture and permanent geological storage — a direct subsidy for exactly the kind of transformation that hard-to-abate industries need to make. These aren’t distant promises. They are live financial signals, already moving capital.
The carrot and the stick, in practice: if you transform, you can win. If you don’t, the cost of doing nothing compounds annually.
The companies that created this crisis are not going to be the heroes of the story. That ship has sailed. But the fastest path to meaningful emissions reduction runs directly through them, because they are the emissions. Helping them transform is not moral absolution. It’s strategic arithmetic.
Not all of them will make it. The ones that move now — that treat carbon liability as a balance sheet risk rather than a PR problem, that use the policy window before it shifts — have a real chance. The ones that don’t will be dismantled by the ones that do, or by the regulations catching up to them.
The hole isn’t going to fill itself. And the only shovel available is the one that dug it.
Sources
Emissions data
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WEF Net-Zero Industry Tracker 2024 — hard-to-abate sectors account for ~40% of direct CO₂e emissions. https://www.weforum.org/publications/net-zero-industry-tracker-2024/
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UNECE/COP27 Technology Brief — steel accounts for 7–9% of anthropogenic CO₂ emissions globally. https://unece.org/media/press/372890
Investment
- BloombergNEF Energy Transition Investment Trends 2024 — global clean energy investment hit $1.77 trillion in 2023. https://about.bnef.com/insights/clean-energy/global-clean-energy-investment-jumps-17-hits-1-8-trillion-in-2023-according-to-bloombergnef-report/
Montreal Protocol / ozone
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UNDP Montreal Protocol page — avoided 135 billion tonnes CO₂e between 1990 and 2010. https://www.undp.org/chemicals-waste/montreal-protocol
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UNEP Montreal Protocol overview — Kigali Amendment expected to avoid up to 105 billion tonnes CO₂e; largest single climate mitigation contribution to date. https://www.unep.org/ozonaction/who-we-are/about-montreal-protocol
DuPont / PFAS
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Environmental Working Group — DuPont, Chemours, Corteva $4 billion PFAS cost-sharing agreement; $1.185 billion public water systems settlement. https://www.ewg.org/news-insights/news-release/dupont-chemours-and-corteva-reach-4-billion-settlement-forever-chemicals
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SuperLawsuits PFAS settlements overview — internal documents show DuPont scientists documented PFOA toxicity from the 1960s. https://www.superlawsuits.com/legal-guides/pfas-lawsuit-3m-dupont-settlement-explained
HYBRIT / green steel
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Vattenfall HYBRIT press release — first fossil-free steel delivered to Volvo, 2021; industrial-scale demonstration target 2026. https://group.vattenfall.com/press-and-media/pressreleases/2021/hybrit-the-worlds-first-fossil-free-steel-ready-for-delivery
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LKAB HYBRIT announcement — corroborating source for the same milestone. https://lkab.com/en/press/hybrit-the-worlds-first-fossil-free-steel-ready-for-delivery/
Policy
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EU CBAM — Carbon Border Adjustment Mechanism definitive regime from January 2026, covering steel, cement, aluminium, fertilisers, hydrogen. https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
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IEA Steel page — CBAM context for steel sector specifically; IRA funding for hydrogen and CCUS. https://www.iea.org/energy-system/industry/steel
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Carbon Herald / Elliott Davis — IRA Section 45Q tax credit raised to $85/tonne for industrial carbon capture and geological storage. https://carbonherald.com/what-is-45q-tax-credit/
Investment and emissions data
- Climate TRACE v5.5 (2025) — iron and steel, cement, aluminum, aviation, and shipping CO₂e, 2023 global totals. CC 4.0. https://climatetrace.org/data
- BloombergNEF Energy Transition Investment Trends 2025 — public summary: “clean industry” ~$155B of $2.1T total clean energy investment (2024). https://about.bnef.com/energy-transition-investment/
→ Data sourcing and methodology for the charts in this article: The Numbers Behind the Mismatch
