Bridging the Missing Middle in Clean Technology: An Engineering, Finance, and Policy Approach

Abstract

To meet internationally agreed upon climate goals, the world must rapidly deploy both mature and next-generation clean technologies over the upcoming decades. Without the widespread deployment of next-generation technologies such as CCUS and green hydrogen, the speed of carbon emission reductions needed to meet net zero goals is simply not realistic. However, to achieve the required speed and scale of deployment, next-generation technologies must be able to overcome a large financing gap between the RD&D phase and the phase of large-scale deployment in the real world. This gap is often termed the “missing middle”. These technologies face a chicken-and-egg problem where they need to attract large amounts of relatively low-cost capital to grow, yet they are perceived as too high-risk for private investors to support. Thus, the target of this thesis is to investigate how government subsidies can help bridge this gap and accelerate the commercial viability of next-generation clean technologies. Drawing on historical case studies of mature clean technologies like solar PV, comparative analysis of key technology characteristics, and insights from industry experts, this thesis estimates the level of subsidization that CCUS and green hydrogen will require in the future to achieve “systemic bankability” and ideates on policy design to enable their successful scale up.