Climate Finance News - December 7
EU trade agreement with Latin American countries; Hydrogen import costs for Germany; BNP's Low Carbon Fund; Sustainability linked credit facilities
In this newsletter
EU trade agreement with Latin American states
Hydrogen import & production costs
Funding Announcements
News from International Institutions
Earlier this week, we covered
EU trade agreement with Latin American states
The European Union and Mercosur (Brazil, Argentina, Paraguay, Uruguay) have reached a political agreement that will
Ensure trade preferences in strategic net zero industry sectors such as renewable energy technologies, and low-carbon fuels.
Secure an efficient, reliable and sustainable flow of raw materials critical for the global green transition.
The agreement also includes “enforceable commitments on sustainable development, including on labour rights and sustainable management and conservation of forests” and €1.8 billion in EU support to facilitate green and digital transition in Mercosur countries through the Global Gateway initiative. Global Gateway is an EU initiative that aims to invest upto €300 billion for sustainable and high-quality projects in Africa, Asia-Pacific, Latin America and the Caribbean.
Hydrogen import & production costs
In 2021, Germany launched the HYPAT project to develop a global atlas of hydrogen potential to identify partner countries for developing a future green hydrogen economy. The project, funded by the German Federal Ministry of Education and Research BMBF, ran until February 2024 and has published its final report. The analysis expects
global demand for hydrogen in 2050 will range between 4-11% of global final energy demand, with Germany's hydrogen demand expected to reach approximately 20% of its final energy demand.
the cost of hydrogen use in Germany will be high (wholesale prices expected to be around 4 EUR/kg even in a competitive market) and the country should focus hydrogen use on sectors with limited alternatives (steel, basic chemicals, aviation, shipping)
pipeline imports from geographically close countries will be cheaper, though shipping may be economically competitive under specific conditions, such as shipping liquid hydrogen and ammonia
“costs of importing hydrogen to Europe to be 3.5 to 6.5 EUR/kg in 2030 and 2.5 to 4.5 EUR/kg in 2050”
The US Department of Energy has published the Hydrogen Shot report, which concludes that a levelised cost of hydrogen below $1/kg is possible with the 3 most mature production technologies - proton exchange membrane (PEM) electrolysers, liquid alkaline (LA), and oxide-ion-conducting solid-oxide electrolyzer cell (O-SOEC). However this will require technology advancements, innovation in manufacturing, economies of scale, and efforts for energy system integration.
Funding Announcements
France’s BNP Paribas Asset Management has launched the BNP Paribas Low Carbon Transition Infra Equity Fund I to make 8-12 equity investments in European clean energy, sustainable mobility and circular economy projects. The fund has an anchor commitments of €400m from BNP and a target of €750m from institutional investors. It has already made two investments in 2024 - a minority stake in I Squared-backed Absolute Energy in Italy and a co-controlling stake in Arkolia, a French rooftop photovoltaic company.
On November 20, BNP launched the Future Forest Fund (FFF) to invest in sustainable forestry. The Article 9 SFDR-classified fund targets USD 500 million and has achieved first closing of USD 130 million in November. It will invest in 8-12 assets across the US, Australia, New Zealand, and Europe, only in Forest Stewardship Council (FSC)-certified or certifiable forests.
France-based Elyse Energy has secured approximately EUR120 million in funding from Hy24, PGGM, Bpifrance and Mirova to develop its e-methanol and sustainable aviation fuel production projects in France and Spain.
(November 4) Swedish energy group Vattenfall signed a EUR 2 billion revolving credit facility that is linked to the company meeting its 2030 targets for reducing Scope 1 and 2 emissions.
News from International Institutions
The Asian Development Bank (ADB) has approved a $50 million loan to improve water resources management and climate resilience in India's Meghalaya state. The Climate-Adaptative Community-Based Water-Harvesting Project will develop a state-wide water-harvesting system master plan and support the construction of 532 water-storage facilities across 12 districts, including the development of 3,000 hectares of irrigation area and establishment of 50 weather stations in Garo, Jaintia, and Khasi regions.
(November 20) The Basel Committee on Banking Supervision expects to finalise the Pillar 3 disclosure framework for climate-related financial risks in the first half of 2025.
WTO members participating in the Trade and Environmental Sustainability Structured Discussions (TESSD) have conducted a review of progress across four working groups and discussed priorities for the 14th Ministerial Conference (MC14) planned for 2026. TESSD working groups have outlined plans to develop various deliverables for MC14, including compiling policy measures for climate objectives, promoting environmental goods and services trade, developing subsidy design guidelines, and creating best practices for circular economy sectors.
For MC14, possible outcomes of the Working Group include a compilation of trade aspects and best practices for priority sectors such as electronics, batteries, renewable energy, and textiles, and high-level and non-binding guidelines on circular economy and trade.
New research from LSE - Can investor coalitions drive corporate climate action?
