Foster demand for low-emissions materials

Low-emissions materials, such as green steel and aluminum, are already on the market; however, they remain economically uncompetitive with their traditional counterparts, and much of the policy support implemented to date has focused on the supply side. Demand-side policy can help stimulate the market for green products and enable producers of these materials to securely expand their climate-friendly operations. Governments can therefore foster demand for low-emissions materials by leveraging a combination of regulations and incentives. Such regulations could be green procurement mandates, which require specified entities to buy materials that do not exceed a certain embodied carbon threshold (see more in Pillar 3: Buildings). Policymakers can also target upstream demand for low-emissions feedstock, such as mandating industrials that already use gray hydrogen to switch to green hydrogen. On the incentive side, policymakers can enact direct subsidies to compensate for the green premium gap, or the additional cost of procuring low-emissions materials, in combination with the penalties and quotas.