Record temperatures, extreme weather and mounting economic losses are making climate change impossible to treat as a distant risk: global temperatures in 2025 averaged 1.47°C above pre industrial levels, and the 2023–2025 period was the first three year span to exceed 1.5°C.
At the same time global energy transition investment hit a record US$2.3 trillion in 2025—more than double the amount spent on fossil fuels.
Renewable energy, electrification and other clean technologies are scaling rapidly. Renewable energy is now the top form of electricity production, surpassing coal last year. These signals give us confidence – but in industrial sectors, the transition is hitting roadblocks.
The question is simple: how do we get our markets moving fast enough to reward the investments needed to decarbonize industry?
The answer, however, is complex – part technological, part financial, and part political.
New technologies are becoming increasingly available, and some companies are making big investments on a more sustainable future. However, climate mitigation investment is slowing; the annual growth rate on global climate finance has decelerated from a 30% surge in 2021, to 6% in 2024, and an estimated 2–3% in 2025.
What is still missing in many markets is confidence that lower-emission production will be rewarded over the long term. Climate ambition needs market confidence to succeed, and now is the time to implement the tools that can drive us towards a better tomorrow.
Carbon pricing remains the most powerful signal
Carbon pricing is one of the clearest ways to make emissions part of economic decision-making. It puts a value on something that markets have historically treated as free and creates an incentive to invest in lower-emission technologies.
Carbon pricing is no longer a niche policy. According to the World Bank's latest State and Trends of Carbon Pricing report, 87 direct carbon-pricing policies are now in operation globally, covering just over 29% of global greenhouse gas emissions. Carbon pricing generated more than $107 billion in public revenue in 2025.
This is progress. But it is not yet enough.
For carbon pricing to drive industrial transformation, it needs to provide a sufficiently strong and predictable signal. We cannot keep going back and forth. Companies making capital-intensive investments in clean technologies that will be there for decades to come need confidence that lower emissions will continue to have economic value over the lifetime of those investments.
That means expanding carbon pricing, strengthening its effectiveness and improving compatibility between different systems. The objective should not be to create identical policies everywhere, but to move towards a world where emitting more consistently carries a cost.
Climate ambition cannot become a competitive disadvantage
There is another challenge: a company can face a meaningful carbon cost in one market while competing against producers elsewhere that do not face the same cost.
If that happens, emissions may simply move rather than disappear. Investment can follow the carbon price, leaving the most ambitious producers at a competitive disadvantage.
Climate policy needs to level the playing field between countries.
The EU's Carbon Border Adjustment Mechanism is one example of how this can be addressed. By putting a carbon cost on certain carbon-intensive imports, CBAM aims to reduce the risk of carbon leakage and create greater alignment between the carbon performance of European and imported products.
CBAM is not just a substitute for broader international carbon pricing. It is a bridge towards a market in which carbon has a more consistent economic value.
For industrial companies, this distinction matters. We need both the incentive to invest in cleaner production and confidence that those investments will not simply make us less competitive against higher-emission alternatives.
At Outokumpu, this is not an abstract question. Our stainless steel has up to 75% lower carbon footprint than the global industry average, supported by factors including our high recycled material content, low-emission electricity and our own ferrochrome production. This is a blueprint for hard-to-abate sectors: emissions reductions are not only critical, but they are also entirely achievable.
The wider question is how markets can ensure that this difference in carbon performance translates into a meaningful competitive signal.
We also need markets for low-emission materials
Carbon pricing addresses the cost of emissions. But it does not, by itself, guarantee demand for lower-emission products. This is where lead markets become important.
Today, companies can produce increasingly low-emission materials, but many customers still make purchasing decisions primarily on price, performance, and availability. This can create a difficult cycle: producers hesitate to invest because demand is uncertain, while customers hesitate to commit because low-emission products can carry a premium.
Governments can help break that cycle.
Public procurement, product standards, infrastructure requirements, and targeted incentives can create early demand for low-emission materials. That demand gives companies greater confidence to invest, helps technologies scale and can ultimately bring costs down.
We are already seeing what this can look like in practice. We are partnering with our customers in low-emission stainless steel, like Grundfos, as they work to reduce emissions in their own value chains. These examples matter because they demonstrate that demand for lower-emission materials is emerging.
But individual frontrunners cannot create an industrial transition alone. We need markets that consistently reward lower emissions, not only individual companies willing to pay a premium for them.
Lead markets can help turn climate leadership from a niche position into a mainstream competitive advantage.
The goal is market confidence – COP31 must deliver on that
COP31 should help strengthen market confidence by advancing three priorities: expand and strengthen carbon pricing; create lead markets for low-emission materials; and ensure a level playing field through effective trade policy.
Together, they can create something that industrial decarbonization urgently needs: market confidence.
The objective should be bigger than simply reducing emissions. We should create the conditions in which the sustainable choice becomes the competitive choice. That is an economic opportunity. The regions that combine ambitious climate policy with competitive industry, innovation and access to clean energy can attract investment and build the industries of the next generation.