Mahdieh Askarian

This study proposes a novel national framework for just transition financing, grounded in a financial leadership pathway within cross-sectoral coordination. Embedding the principles of just transition into banking activities emerges as an effective strategy to develop clean energy supply-demand chains while ensuring equitable economic and social outcomes. Key roles and responsibilities for public and private stakeholders are outlined in a structured business plan (BP), supported by Delegation of Authority (DOA) provisions: 1) Ministry of Petroleum: Identifies and prioritizes projects with high GHG reduction potential (Scope 1 & 2 emissions) based on techno-economic analyses and Greenium effects; 2) Ministry of Economy: Assesses project alignment with just transition criteria, including regional economic diversification, governance strengthening, human capital development, and workforce justice; 3) Designated Green Bank: Implements industry-leading environmental and social safeguards. It issues tradable green certificates for Sustainable Development Goals (SDG) compliant processes and products. Financing mechanisms linked to certificate trading between different stakeholders are proposed; 4) Private Sector Engagement: Energy-demanding entities co-finance clean energy operations through incentives like green-labeled products. Financial support includes direct investments, credit facilitation, and corporate social responsibility (CSR) budgets, with green certificate credits weighted by participation level. Green loans (lower interest rates) and debt instruments further incentivize adoption to support projects utilizing green products. The mentioned framework is applied to CO₂-based Enhanced Oil Recovery (EOR) projects. Different scenarios configured various reservoirs and CO₂ source -including carbon capture from refineries, steel, and power plants- are evaluated. Downstream industries (e.g., steelworks) benefit from cleaner energy streams and green-certified products. Industries such as steel manufacturers and subsidiaries may engage financially due to market incentives for green-labeled products. Additionally, green loans for infrastructure (e.g., green pipelines/vessels) of EOR-CO₂ projects, with a traded green project portfolio facilitated by circulating green certificates. The cash flow of these interconnected projects is analyzed, and a green credit flow model is proposed accordingly. Results show that depend on characteristic of each scenario, specific projects can be successfully financed within this integrated circular system. Ultimately, this innovative approach illustrates how financial leadership can foster large-scale sustainable energy projects, advancing both decarbonization and just transition objectives.