Climate Finance News - December 11
UK to support Hydrogen-to-Power, nuclear fusion, submarine cables; Switzerland will amend Climate Disclosure law; Stellantis-CATL battery JV;
In this newsletter
UK to support hydrogen, nuclear fusion, nature, submarine cables
Funding & Deals
Disclosures by financial market participants under EU SFDR
Asia-Pacific Climate Report
UN webinar on nature-related regulations for banks
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UK to support hydrogen, nuclear fusion, nature, submarine cables
The UK National Energy System Operator (NESO) has estimated a need for 40-45GW of long duration flexible capacity by 2030. Hydrogen-to-Power (H2P) has been identified as a key technology to provide low carbon inter-seasonal storage and flexible generation capacity.
The UK Government has now announced that it will support hydrogen to power (H2P) deployment through a market intervention called Hydrogen to Power Business Model (H2PBM).
The Department for Energy Security and Net Zero (DESNZ) conducted a consultation between December 2023 and February 2024, receiving 44 responses from industry stakeholders. Based on this feedback, the government has committed to introducing the H2P Business Model (H2P BM), which will be based on a Dispatchable Power Agreement (DPA) style mechanism.
Key commitments under the H2P BM include enabling
H2P participation in the Capacity Market,
publishing a detailed H2P BM market engagement document in Spring 2025,
and establishing an H2P Expert Working Group to support policy development.
The initiative aims to address two main deployment barriers: First of a Kind (FOAK) technology risks and cross-chain risks related to hydrogen infrastructure. The business model will provide stable support payments to give investors revenue certainty while ensuring coordination across the wider hydrogen economy.
The UK and US have launched a £40.5 million joint fusion project with Tokamak Energy to advance clean energy technology through lithium research. The project, starting in 2025 at Tokamak Energy's Oxfordshire facility, will be funded equally (£13.5 million each) by the UK through its Fusion Futures Programme, the US Department of Energy, and Tokamak Energy, focusing on enhancing plasma-facing components for fusion energy development.
The UK Government has injected £343 million into the rural economy in December 2024, benefiting more than 31,000 farmers through various environmental schemes.
It includes new actions to improve flood resilience and species abundance and important funding to secure enhanced environmental benefits and deliver for nature recovery, including sensitive areas such as Sites of Special Scientific Interest (SSSIs).
The UK government through its Export Finance (UKEF) facility has provided £30 million in bond support to JDR Cables, enabling the company to secure new contracts in the floating wind sector and expand its global operations. The support includes an 80% UKEF guarantee with HSBC UK, Societe Generale and Bank Gospodarstwa Krajowego (BGK), and follows a previous £100 million working capital loan in 2022 that is funding a new submarine cable facility in Northumberland.
News from Governments
The Netherlands has launched the Hydrogen in Mobility Subsidy Scheme (SWIM) with a total budget of €22 million to support investments in hydrogen refueling stations and hydrogen vehicles. The scheme provides up to €6 million per application, with 40% subsidy for hydrogen refueling stations (max €2 million) and 80% subsidy for hydrogen vehicles (max €4 million), targeting transport companies, refueling station operators, shippers and passenger transport services.
(In more hydrogen news, South Korea's Samsung C&T has placed a EUR 5 million purchase order with Nel ASA for 10 MW of alkaline electrolyser equipment for its first nuclear-connected (pink) hydrogen production pilot plant. The project aims to produce hydrogen from excess nuclear power generation to improve energy efficiency The electrodes will be produced at Nel's fully automated facility in Herøya, Norway.
Switzerland's Federal Council has initiated a consultation on amending the Ordinance on Climate Disclosures to align with international developments. The consultation period will run until March 21, 2025. The amendments include new requirements for net-zero roadmaps targeting 2050, adoption of international standards replacing TCFD recommendations, and mandatory machine-readable reporting formats. The amended ordinance will take effect from January 1, 2026.
(November 15) Switzerland, Costa Rica, Iceland and New Zealand signed the Agreement on Climate Change, Trade and Sustainability (ACCTS), marking the first trade agreement focused primarily on environmental objectives. The agreement includes liberalization of over 300 environmental goods and 100 services, bans fossil fuel subsidies, and establishes guidelines for voluntary ecolabels. Implementation is expected by early 2026.
The European Commission has approved a €2.6 billion Estonian scheme to support the construction and operation of offshore wind farms in areas determined by the Estonian Maritime Spatial Plan. The aid will be provided through two-way contracts for difference over 20 years and a maximum aid cap of 65 €/MWh.
The European Commission has committed an additional EUR 10.7 million to Climate Fund Managers' (CFM) Climate Investor Two (CI2) Fund for climate projects in the Philippines. The funding will support various initiatives including the Isabela bioenergy project - a 10MW biomass plant and 4MW biogas plant in San Manuel that will reduce emissions by 40,000 tCO2eq annually, being developed through a joint venture between BioAsia Energy Holdings, Anvirya Ventures Pte Ltd, and La Suerte Rice Mill Corporation.
Funding & Deals
Netherlands-based Stellantis and China's CATL have announced a joint venture worth up to €4.1 billion to build a large-scale lithium iron phosphate (LFP) battery plant in Zaragoza, Spain. The facility, planned to start production by end of 2026, could reach up to 50 GWh capacity and will be a 50-50 joint venture between the two companies. The transaction is expected to close in 2025.
Poland is building its first nuclear power plant with Westinghouse Electric Company (owned by Canadian companies Brookfield and Cameco). Canada is supporting the project with US$1.45 billion ($2.02 billion CAD) in financing from Export Development Canada (EDC). The plant will be developed by state-owned Polskie Elektrownie Jadrowe (PEJ) at the Lubiatowo-Kopalino site in Pomerania, and will use Westinghouse’s AP1000® reactor.
US-based AMP Robotics Corp. has raised $91 million in Series D funding led by Congruent Ventures to support the expansion of its AMP ONE™ systems for municipal solid waste sorting and single-stream recycling. The company already operates a first-of-its-kind system in Portsmouth, Virginia and has entered into an agreement with Waste Connections Inc. to equip and operate a recycling facility in Colorado.
India-based space technology company Pixxel has raised an additional $24 million in Series B funding to accelerate the deployment of its Firefly constellation of 18 commercial hyperspectral satellites. The first 6 satellites are set for launch in early 2025, offering 5-meter resolution imaging across 250+ spectral bands.
Disclosures by financial market participants under the EU SFDR
The EU’s Sustainable Finance Disclosure Regulation (SFDR)
lays down harmonised transparency rules for financial market participants and financial advisers on how they integrate environmental, social and good governance factors into their investment decisions and financial advice and on their overall and product-related sustainability ambition. It is designed to limit possible greenwashing where financial products marketed as sustainable or climate-friendly, or claims about financial business’ involvement, do not in practice satisfy those standards.
On October 30, The European Supervisory Authorities (ESAs) published their latest report on Principal Adverse Impact (PAI) disclosures under the Sustainable Finance Disclosure Regulation (SFDR), building on two previous reports since SFDR's implementation.
Currently, the PAI disclosures are mandatory only for Financial Market Participants (FMPs) with more than 500 employees. The analysis covered 65 FMP entity-level statements and included quantitative assessment of investment funds' product-level PAI statements using European ESG Template (EET) data obtained via Morningstar. It assesses such things as the clarity, location (for example, on the website) and completeness of the sustainability-related disclosures for investment products.
In terms of the location of disclosures, good practices include FMPs that make their PAI statements easily accessible by dedicating a prominent section on their websites, often labelled as “Sustainability-related disclosures” or “SFDR.” This clear labelling facilitates transparency and allows investors to locate information quickly. However, some FMPs engage in poor practices by placing disclosures in hard-to-find sections of their websites or combining them with unrelated documents, often accessible only through search functions, which can create barriers for investors seeking this information. Zeidler
The analysis finds significant improvements in disclosure quality and accessibility, particularly for retail investors.
Key challenges identified include
data reliability issues,
lack of standardization in reporting across jurisdictions,
and resource constraints for both regulators and market participants.
The ESAs have recommended reducing the frequency of these reports to every 2-3 years to allow for more meaningful analysis.
The report also suggests reconsidering the current 500-employee threshold for mandatory PAI disclosures, proposing that alternative metrics based on investment size might be more appropriate for measuring potential adverse sustainability impacts.
Asia-Pacific Climate Report
The Asian Development Bank (ADB) has released its Asia-Pacific Climate Report showing potential GDP losses of up to 17% by 2070 and 41% by 2100 under high emissions scenarios.
The region faces implementation challenges due to continued fossil fuel subsidies. Developing Asia has implemented or is developing eight national carbon pricing initiatives while three additional countries are considering domestic Emissions Trading Systems (ETS).
The Asia-Pacific region has mobilized approximately $34 billion in adaptation finance during 2021-2022. As per the report, $102-431 billion is required annually to meet the adaptation needs of the region. The funding gap particularly affects lower-income economies and the region's poorest populations.
The report also finds that enactment of the 2022 Inflation Reduction Act in the US triggered an additional $1.4 billion investment into sustainable funds in Asia and the Pacific within three months of its announcement.
Why did the IRA affect the behavior of investors around the world?
The Inflation Reduction Act announcement shaped the investment choices of non-US investors, as a US commitment to climate action improved the chances of progress on the global climate agenda, and hence made the launch of similar green industrial policies worldwide more likely.
As a result, non-US headquartered sustainable investment funds saw most of the inflows upon announcement of the Inflation Reduction Act, in turn investing into Asia and the Pacific. ADB Blog
ADB Asia-Pacific Climate Report, October 2024
The UN Finance Initiative and the WWF Greening Financial Regulation Initiative will host a webinar on Navigating Nature-related Regulations for Banks: Mapping the Policy Landscape, on January 16 2025.
