Climate Finance Roundup - December 20

Germany & Netherlands to support synthetic fuel production; EIB funds PFAS removal from water;

Germany & Netherlands to support synthetic fuel production

Germany and the Netherlands have jointly launched a €3 billion scheme to support the production of renewable fuels of non-biological origin (RFNBOs), including renewable hydrogen, globally. The scheme, which will be implemented through a competitive bidding process concluding in 2025, aims to construct at least 1.875 GW of electrolysis capacity. The funding will be allocated based on a double auction system, connecting RFNBO producers (mostly non-EU) and buyers in Germany and the Netherlands, with state resources bridging the price gap. European Commission

EIB funds PFAS removal from water

The European Investment Bank (EIB) provided €22.5 million to Chromafora, a Swedish cleantech company, to develop and commercialize its technology for removing PFAS from water. This aligns with InvestEU’s priority for clean water and EU environmental-sustainability goals. The funding will support the development and deployment of water-treatment units across Europe between 2024 and 2028. European Investment Bank

European Central Bank reduces interest rates

The European Central Bank (ECB) has announced a 25 basis points reduction in key interest rates while acknowledging the impact of EU Emissions Trading System and climate risks on inflation projections. The ECB forecasts inflation to reach 2.1% in 2027 when the expanded EU ETS becomes operational. The bank has highlighted climate crisis and extreme weather events as potential upside risks to inflation through their effects on food prices and energy costs. Bank for International Settlements (BIS)

Funding Announcements

• Italy has approved a €9.7 billion scheme to support renewable electricity production, aiming to foster the transition to a net-zero economy. The scheme will support onshore wind, solar, hydropower, and sewage gas electricity production installations, adding 17.65 GW of renewable capacity. Aid will be granted through a bidding process with a variable payment under a two-way contract for difference (CfD) for 20 years. European Commission | Energy

• Poland: The European Investment Bank (EIB) and ORLEN Group signed a PLN 900 million loan agreement to finance Energa's power network upgrades. This brings the total EIB financing for Energa to PLN 1.8 billion in 2024, out of a total of PLN 3.5 billion authorized for 2024-2025. The project will add 830 km of power lines, 320 km of new connections, 170,000 smart meters, 1,000 EV charging stations, and increase RES connection capacity by 1.4 GW. European Investment Bank

• The European Investment Bank (EIB) signed two loans totaling €700 million with EDP SA to finance renewable energy projects and grid modernization in Portugal, Spain, and Italy. €500 million will fund solar and wind projects (1943 MW capacity), and €200 million will modernize EDP's electricity distribution networks. These projects support the REPowerEU objective of energy security and the EU's energy transition. European Investment Bank

• The European Investment Bank (EIB) and Iberdrola signed a €100 million green loan agreement to build a 242.78 MWp photovoltaic plant in Enna and Catania, Sicily. The plant, backed by SACE’s Archimede Guarantee, is expected to be operational in 2025 and will generate approximately 400 GWh annually, meeting the needs of 154,000 households. This is the EIB’s first SACE-supported operation with Iberdrola. European Investment Bank

• The European Investment Bank (EIB) has announced €16.5 million in EU-backed funding to renew urban public transport in Kyiv, Mykolaiv, Ivano-Frankivsk and Odesa. The funding will be used to purchase new buses, dual trolleybuses, and trams, along with spare parts and maintenance equipment, ensuring reliable and efficient public transport. This is part of the EIB’s Ukraine Solidarity Urgent Response package and aims to improve urban mobility and build resilience in cities affected by the war. European Investment Bank

• The European Investment Bank (EIB) has lent the Cypriot government €100 million to improve road infrastructure. The project, part of a €200 million package, includes upgrades to motorways, regional and rural roads, bridges, tunnels, and cycling lanes, as well as improved drainage and traffic management systems. The loan aims to enhance safety, mobility, and climate change resilience. European Investment Bank

• The World Bank approved a US$250 million program for Morocco to enhance the climate resilience of its agri-food system and improve food safety. A US$5 million grant from the Livable Planet Fund will support smallholder farmers in adopting climate-smart practices. The program aims to benefit 1.36 million people, including farmers and consumers. worldbank.org

• Bangladesh has received $1.16 billion in financing from the World Bank for inclusive and climate-resilient development. The funding supports policy reforms to improve public planning and financing for green and climate-resilient interventions, reduce air pollution, and enhance sustainable water and sanitation services. Projects include a $500 million green and climate-resilient development credit, a $379 million health program, and a $280 million water supply improvement project in Chattogram. worldbank.org

• The Central Bank of Barbados has managed the Enhanced Credit Guarantee Fund (ECGF) with IDB funding support, which has approved 326 guarantees totaling over USD 65 million. One-third of the guaranteed amount during the second loan programme went to the renewable energy sector. The bank is now negotiating a third round of USD 50 million funding that will focus on climate adaptation, export readiness, and financial inclusion. Bank for International Settlements (BIS)

• Australia-based AZZO, an energy management software and services company, secured a growth capital investment from Angeleno Group, a clean energy and climate solutions venture capital firm. This investment will accelerate AZZO’s global expansion and development of its EnergyX IoT platform, which helps organizations manage energy, including renewables, for sustainability and resilience. Dominic Drenen will join AZZO as Chairman of the Board. azzo.com

2024 Review from Hong Kong Exchange

HKEX 2024 Review - Hong Kong-based HKEX has implemented new climate-related disclosure rules effective from 2025 and is moving towards ending single-gender boards among its listed issuers by January 1, 2025. They launched a Sustainability function and the HKEX Foundation donated HK$86 million in 2024, supporting various sustainability initiatives. The LME added Jeddah as a copper and zinc warehouse delivery point and is exploring Hong Kong as a new warehouse location, and announced implementation of mandatory Carbon Border Adjustment Mechanism emissions reporting for all LME-listed aluminium brands. HKEX

Rebalance Review of S&P Energy Indices

S&P Dow Jones Indices has published a rebalance review of the S&P Global Clean Energy Index and the S&P Global Clean Energy Select Index, which had their semiannual rebalances on October 18, 2024. The weighted average exposure score for the S&P Global Clean Energy Index increased slightly from 0.92 to 0.93. Significant changes in market allocation included a 6.41% increase in the weight of the U.K. and a 2.13% increase for Brazil, alongside an 8.80% decrease for the U.S. The indices track clean energy technology firms and clean power generation companies; the S&P Global Clean Energy Index underperformed the S&P Global BMI YTD, down 19.93% in USD total return terms. S&P Dow Jones Indices

More Climate Finance News

• US-based CRC-IB, a New York-based investment bank focused on energy transition, advised Walmart on financing for 31 community solar projects and Matrix Renewables on tax credit and debt financing for a 210MWac solar project. Gary Durden, Partner & Managing Director at CRC-IB, shared insights on the lending market and how banks are adapting to potential regulatory changes, particularly regarding transferability bridge loans for projects with long construction timelines. CRC-IB

• The U.S. Environmental Protection Agency has granted California waivers to implement its Advanced Clean Cars II and Low NOx rules for trucks vehicle emissions standards. These standards will help California and other adopting states address air pollution and climate challenges by reducing tailpipe emissions and transitioning to cleaner vehicles. This builds on California's 57-year history of receiving EPA waivers for vehicle emission standards. Natural Resources Defense Council

• Canada-based PyroGenesis Inc. has announced a debt-to-equity conversion agreement with HPQ Silicon Inc. to resolve an outstanding liability of $4,941,440. The liability was converted into 17,968,873 units of HPQ at $0.275 per unit, each comprised of one common share and one warrant. This is related to their collaboration on the Fumed Silica Reactor (FSR) project, which aims to produce fumed silica in an eco-friendly way. PyroGenesis Canada Inc

• The World Bank’s EU Regular Economic Report finds that clean technology exports from Central and Eastern European countries (Bulgaria, Croatia, Poland, and Romania) could at least triple, boosting the EU's green growth. The report highlights the potential for these countries to significantly increase exports of electric vehicle batteries, heat pumps, wind turbines, and solar panels, contributing to the EU's Net Zero Industry Act goals. Realizing this potential requires a coordinated EU strategy and substantial private sector investment. worldbank.org

• South Africa's Eskom, the electricity producer, has reported a net loss before tax of R25.5 billion for the financial year ending March 2024, an improvement from the previous year's R34.6 billion. The establishment of the National Transmission Company South Africa (NTCSA) as a subsidiary of Eskom led to a once-off accounting adjustment resulting in a loss after tax of R55 billion. Despite challenges, Eskom recorded more than 260 days of no load shedding and significant diesel cost savings. South African Government News Agency

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