Climate Finance Roundup - November 29
Sustainability-linked financing for corporates; Caixa Bank's Sustainability Plan; KfW funds Germany Hydrogen pipeline network; Infrastructure deals; Brazil funds rural development, infrastructure;
In this newsletter
Deals
Europe and Central Asia
East Asia and Pacific
Latin America
Africa
North America
Start with this very informative read on Sustainability-linked financing from Nordea
In the corporate context, sustainability-linked funding is a form of transition financing, where we link the commercial terms of the financing to the company’s capability to deliver on their sustainability targets. All of the other terms are the same as in a standard loan or bond. For loans, the loan can be either a revolving credit facility (RCF) or a term loan. The biggest difference compared to green financing is that a sustainability-linked loan (SLL) or sustainability-linked bond (SLB) can be used for general corporate purposes. In contrast, the proceeds from a green loan or bond need to be dedicated to specific, agreed-upon green activities.
Deals
France-based Mirova (affiliate of Natixis Investment Managers) and BNP Paribas Asset Management have each become majority shareholders in Arkolia, France's second-largest independent rooftop solar power producer, with a €200 million investment. Arkolia operates in solar, wind, and biogas sectors with 562 MW installed capacity (in 2023) and targets 1.5 GW by 2030. The transaction is waiting on regulatory approvals, and is expected to close in H12025. Mirova Press Release
Blackstone Credit & Insurance has agreed to acquire $1 billion infrastructure loan portfolio from Santander. The portfolio majorly includes utility-scale renewable energy, digital infrastructure, and transportation assets across Western Europe and the US. BlackStone Press Release
UAE-based Masdar has acquired a 70% stake in Greek renewable energy company Terna Energy for €3.2 billion, becoming the largest renewable energy portfolio holder in Greece. Terna Energy operates 1.2 GW of renewable capacity across Greece, Bulgaria, and Poland, with plans to reach 6 GW by 2029. Masdar Press Release
Europe and Central Asia
Germany’s KfW Development Bank has approved a €24 billion loan facility for Germany's 9,000 km+ hydrogen pipeline network. From 2025, natural gas pipelines will be repurposed and new hydrogen pipelines built to reach a total network length of 9040 km by 2032. The network will be built & financed by private operators, who will recover costs by charging a network fee from users. In the initial years, a ceiling will be set on the fee by the Federal Network Agency, and the difference between the cost and the ceiling, will be paid as annual compensation to the operator through an amortisation account setup using KfW’s approved loan facility. KFW Press Release | KfW - Hydrogen core network
The UK has announced expansion of its Emissions Trading Scheme (ETS) to include the maritime sector from 2026. It will also recognize non-pipeline transport methods such as shipping, road or rail, for transporting captured carbon. This will allow industrial sites that do not have access to CO2 transport pipelines, to still send captured CO2 for storage and have it deducted from their emissions. UK Government
The UK government has allocated £5 billion for sustainable farming and nature recovery over the next 2 years, including £60M for weather recovery (announced earlier) and £208M for protection from disease outbreaks. UK Government
UK's Natural England has implemented over 400 'seed corn' projects since 2019 for nature recovery and biodiversity enhancement, with each project costing less than £25,000. The initiative includes peatland restoration, species recovery, and community orchards, demonstrating successful outcomes in climate resilience and biodiversity protection. UK Government
Greece, EU Commission and EIB have established the Island Decarbonization Fund with a €1.6B initial budget for the Greek islands' decarbonization projects, including energy storage, renewable energy, and grid connections.
This Fund will be financed through the auctioning of up to 25 million allowances from the EU Emission Trading System (ETS), estimated to be worth around €2 billion.
Spain-based Caixa Bank has unveiled its 2025-2027 Sustainability Plan, committing to mobilize €100 billion in sustainable finance (56% increase from previous plan). Investments will focus on renewable energy, clean mobility, efficient building, industrial decarbonisation and sustainable intermediation. The Bank will reduce exposure in - electricity, automotive, industry, iron and steel, commercial & residential real estate, aviation, farming and oil & gas sectors. The bank is aiming for neutral CO2 emissions by 2050. Caixa Bank Press Release
Spain-based Naturgy and the European Investment Bank (EIB) have agreed on a €1 billion loan to support investments in new solar PV and onshore wind plants, as well as repowering and hybridization of existing facilities in Spain, which will increase renewable energy generation capacity in the country by 2.3 GW. The loan will also be used for investments in renewable energy storage batteries. EIB Press Release
ADB has launched the Glaciers to Farms programme that will assess the risk of glacial melt in Azerbaijan, the Kyrgyz Republic, Tajikistan, and Uzbekistan, and support investments in water, agriculture and for vulnerable communities, with a target $3.5 billion corpus supported by the Green Climate Fund
East Asia and Pacific
New Zealand and the United Kingdom have announced several climate initiatives during their inaugural Foreign Ministers' Dialogue, including a $51m combined funding for TIDES renewable energy fund for Pacific islands, enhanced Antarctic environmental cooperation, and new funding for Pacific Island ecosystem resilience through the Secretariat of the Pacific Regional Environment Programme. New Zealand Government
Latin America and the Caribbean
Brazil has sanctioned a new law authorizing R$500 million for the Operations Guarantee Fund (FGO) to guarantee loans for family agriculture through the Pronaf program, supporting sustainable rural development and food security. Brazil Government
Brazil's President Lula has signed a Provisional Measure to provide extraordinary aid of R$ 2,824 to artisanal fishers in the Northern Region affected by severe drought in the Amazon region, extending support to municipalities not covered by previous measures. Brazil Government
Brazil's BNDES has announced R$10.65 billion in infrastructure investments for São Paulo, including R$2.5 billion for 1,300 electric buses, metro line expansion, North Rodoanel extension, and an intercity train project between São Paulo and Campinas. The electric buses will be manufactured locally, marking a significant shift from diesel to electric public transport. Brazil Government
Africa
South Africa has received $9.3bn from International Partners Group for Just Energy Transition implementation. Major developments include energy market reforms, renewable energy projects, and transmission grid expansion. UK Government
North America
The US Department of Energy has announced upto $30 million for the the new Artificial Intelligence for Interconnection (AI4IX) program that
will develop partnerships between software developers, grid operators (including Regional Transmission Operators (RTOs) and Power Marketing Administrations), and energy project developers to modernize the interconnection application process and significantly reduce the time required to review, approve, and commission new generation interconnections across the country.
The US Department of Energy has announced $70.8 million in funding to help small and medium manufacturers “upgrade manufacturing facilities to support advanced vehicles, increase the efficiency of battery recycling programs, and support state-level efforts to modernize their manufacturing base.” DoE Press Release
Rivian Automotive has received a $6.6B conditional loan commitment from DOE for its Georgia EV plant, which will produce 200,000 units starting 2028, and further scale to a capacity of 400,000 units annually. Rivian Press Release
Canada’s bilateral Development Finance Institution, FinDev Canada, and MUFG Bank and Green Climate Fund have together announced GAIA, a new $1.48 billion initiative to support Climate adaptation and mitigation projects in emerging countries. The blended finance platform will fund projects in water and sanitation, energy generation and access, low-carbon transport, and green buildings FinDev Canada
More News & Reports
Leapfrog Investments, which makes private equity investments in healthcare, financial services and Climate across Asia and Africa, has raised $808 million in primary commitments for its fourth fund. Initial investments from the fund include Redcliffe Labs, Sun King, bolttech (previously AVA Singapore), Electronica Finance and Auxilio. LeapFrog Press Release
Global biodiversity framework faces implementation challenges as less than 20% of 196 nations, including Sweden, Finland, and Germany, have submitted their National Biodiversity Strategy and Action Plans ahead of COP16 in Colombia. The World Economic Forum projects biodiversity credits demand to reach USD 2 billion by 2030 and USD 69 billion by 2050. Nordea | World Economic Forum - Nature Finance and Biodiversity Credits, October 2024 (PDF)
CareEdge Ratings estimates that the levelized cost of Green Hydrogen could fall to $2.1/kg (from $3.74 in 2023) with - fall in electrolyzer and renewable energy prices, better electrolyser efficiency, reduced opex, and production linked incentives.
Germany's Federal Association of Energy Storage Systems (BVES) hosted its 2nd Investor Summit in Berlin, bringing together over 300 international investors to discuss battery energy storage systems (BESS). BVES Investor Summit
To achieve UK’s NDC target, Barclays has released a report outlining five strategic recommendations for the UK Government, including - a clear roadmap with tax incentives, establishing a Retrofitting Delivery Authority, data reforms, safety standards, and public education. The UK has set a target of achieving 81% emissions reduction below 1990 levels by 2035. Barclays Press Release | Electrifying the Future Report (PDF)
UK-based Startup Coalition has released a report titled 'More than Hot Air' urging the UK government to position itself as a global hub for high-tech carbon markets, highlighting the country's $2.1 billion carbon markets startup ecosystem and calling for expedited consultations on voluntary carbon markets' role in achieving net zero. Here are key recommendations from the Startup Coalition Report (PDF)
To achieve this, the UK Government should:
1. Publish a voluntary carbon market consultation as soon as possible. This is our most important recommendation.
2. Create a “claims sandbox” to enable firms to collaborate with regulators in making high-integrity claims about their use of novel carbon credits.
3. Subsidise access to tools that enable small businesses to quantify their emissions, enabling them to take the first step in accessing the VCM.
4. Use the Smart Data Bill to unlock data sets that increase integrity in the VCM.
5. Fund Greenhouse Gas removals through the UK Emissions Trading Scheme.
Note: We use the latest AI models to translate announcements not originally in English, but cannot claim accuracy in this.