Transition Acceleration Framework

The transition is underway. The hard part is next.

The global energy transition has come further, faster than most expected a decade ago. Annual clean energy investment now exceeds fossil fuel investment worldwide. Solar PV and onshore wind are now the cheapest sources of new electricity in many markets. Electric vehicle sales have grown from a rounding error to a major share of new car purchases in key markets. And emissions trajectories that seemed locked in a decade ago have shifted meaningfully downward. This progress was driven by a combination of deliberate policy, sustained R&D investment, and trillions of dollars in private capital flowing into technologies that were once considered speculative.

But the transition is entering a new phase, which looks very different from the progress achieved up until this point. Those technologies that have achieved scale, like solar, wind and electric vehicles, face new challenges to continued growth. The technologies and sectors that still need to scale, such as low-carbon cement and steel, clean fuels, advanced nuclear, and carbon removal, are harder, more capital-intensive, and further from commercial maturity than those already at scale. They also represent a rising share of remaining emissions. Getting them to scale will require directing capital, policy, and institutional attention with far greater precision than has been required to date. Decarbonization is also happening more quickly in some geographies than in others.

For decision-makers committed to accelerating the transition, the question is no longer whether to invest; it is where to invest to make the biggest difference. Existing analytical tools were not built to answer that question, and the answers vary substantially by technology, region, and even by project. The Transition Acceleration Framework (TAF) is built for this purpose, providing the rigorous, forward-looking analytics needed to direct capital, policy, and institutional attention where they will matter most.

The additionality gap

The analytical tools available today are insufficient for helping decision-makers assess where their time, capital, and policy attention can have the biggest impact. For example, they register a dollar invested in a mature technology, already on a strong commercial path, and a dollar invested in a first-of-a-kind facility for a technology the world urgently needs as roughly equivalent. They do not distinguish a procurement decision that catalyzes a new market from one that participates in an existing one, nor a policy that unlocks a new trajectory from one that pours public dollars into a shift that is already underway. For both emerging and mature technologies, existing analytical tools ignore features of a given investment that will accelerate future deployment of that technology, including by opening up new sources of capital and supporting the build-out of necessary supply chains and infrastructure. And they do not capture important differences in decarbonization potential within a technology between regions. Attempts to resolve this are still consigned to retrospective or static analysis and are limited by the boundary of a single site, action, or company. And they take time from dedicated practitioners seeking to affect meaningful change with the capital they control.

The tools currently available to practitioners engaging on climate—scope-based accounting, TCFD, SBTi, and ESG ratings—each serve a specific and important purpose. They answer real questions about an organization’s emissions footprint and its exposure to climate-related risk, and they have meaningfully advanced both corporate transparency and the market’s ability to price climate factors. But they were not built to answer a different set of questions, which matter most for accelerating the transition:

• How important is a sector, technology, or geography to the future trajectory of global decarbonization?
• How transformational is a given action within a sector, technology, or geography, beyond direct emissions reductions?
• How much additional decarbonization does that action deliver, beyond what is already attracting capital based on the financial returns alone?

As scope-based accounting is increasingly stretched to serve an impact-assessment role it was not designed to fill, the metrics it produces systematically under-reward the actions most consequential for deep decarbonization: heavy industry, first-of-a-kind facilities, early-stage technology investment, market-creating procurement, supporting infrastructure investment, innovative financing structures, or catalytic public spending. Investments in an already rapidly scaling technology look indistinguishable from investments that unlock a nascent one.

The Transition Acceleration Framework (TAF)

Rhodium Group has partnered with CalSTRS and Generate Capital to develop the Transition Acceleration Framework (TAF) to help allocate capital to where it is needed most.

TAF provides quantitative answers to specific questions about where a marginal dollar, a marginal policy, or a marginal procurement decision will deliver the most decarbonization beyond the trajectory the world is already on. It is a forward-looking decision-support framework explicitly highlighting capital efficiency and additionality, built to close the additionality gap.