Making transformation risks measurable

However, many of the necessary technologies have not yet been demonstrated at industrial scale and are associated with significant technological, infrastructural, and market-related uncertainties. These transformation risks reduce the attractiveness of investments from the perspective of firms and simultaneously impede the financing of such projects by banks, as they undermine the stability of expected cash flows and increase credit default risk.

Effective transformation finance must therefore directly address the underlying risk factors. To this end, the study examines existing readiness frameworks as instruments for the systematic assessment of risks associated with industrial decarbonization technologies.

• The Technology Readiness Level (TRL), developed by NASA, enables the classification of technological maturity but remains limited to technical aspects. 
• The Commercial Readiness Index (CRI) extends the perspective to include commercialization aspects, while the extended TRL framework developed by the International Energy Agency integrates technological and commercial maturity within a consistent framework. 
• Systemic approaches such as the Net Zero Industry Tracker and the Adoption Readiness Level (ARL) further account for infrastructural, market, regulatory, and societal conditions. 
• The Net Zero Industry Tracker differs from other readiness frameworks by incorporating qualitative indicators alongside quantitative metrics. 
  Based on a comparative analysis, the study develops a novel methodology for assessing transformation risks in industrial decarbonization. At its core is a structured framework of key risk dimensions across energy infrastructure, industrial firms, and end-use markets, which are cross-cuttingly influenced by political-regulatory conditions and societal acceptance.

To enhance transparency and comparability, the identified risk dimensions are not only described qualitatively but also operationalized through quantitative indicators. This enables systematic measurement and cross-technology evaluation of transformation risks. The study thus provides an approach to systematically, comparably, and quantitatively assess transformation risks in industrial decarbonization, laying the foundation for addressing these risks in a targeted manner and more effectively mobilizing private capital.