Net zero: catalysts for decarbonisation across energy and infrastructure 

Decarbonising infrastructure across the energy and transport sectors is critical to achieving net zero.


It is widely acknowledged that decarbonising infrastructure across the energy, transport and built environment sectors is critical to achieving net zero.

The recent Intergovernmental Panel on Climate Change (IPCC)’s sixth assessment report emphasises the urgency of transition to clean energy across all sectors to reduce greenhouse (GHG) emissions. To limit warming to 1.5°C, total global emissions need to be reduced by 43% in the next seven years and by at least 60% by 2035.  

Among mitigating options, clean energy supply, especially wind and solar, and green infrastructure are critical to reduce emissions by 2030. According to the IEA’s Tracking Clean Energy Progress (TCEP) assessment – which tracks the progress of 55 components of the energy system across energy, buildings, power, cross-cutting technologies and infrastructure – only two components of electrical vehicles (EV) and lighting remain on track to reach net zero by 2050.  

Renewables momentum expected      

Addressing this gap is essential. The urgency to pivot energy towards cleaner sources and scale up renewable technologies has become central to the transition debate.   

The International Energy Agency (IEA) predicts a mass acceleration in renewable capacity in the coming years. Its latest report expects renewables to account for 90% of global electricity expansion over the next five years, overtaking coal to become the largest source of global electricity by early 2025.  

Policy has a critical role to play in supporting momentum on renewables, and recent developments in the US and Europe on the Inflation Reduction Act (IRA) and the Europe’s Green Deal Industrial Plan act as key fiscal transition tools to spur clean energy investment. Many also hope that these measures will help to create a more level playing field on both sides of the Atlantic. The subsidies across the policy space in terms of wind, solar and hydrogen are also useful supply side levers, whilst the demand side is increasingly supported by investments and finance. 

Recent analysis by BNP Paribas Exane has shown that European industries may face higher energy and carbon costs than US peers to the tune of €100 billion per year. Therefore, support for existing EU industries in the form of policy and private sector investment will be essential for companies to develop EU taxonomy-aligned capex. 

As a long-standing leader in energy transition, BNP Paribas has been mobilising its resources and teams to drive capital towards low-carbon solutions. In the renewables space, the Bank’s Low-Carbon Transition Group and Real Asset teams have been harnessing their expertise to support several key transactions on renewables including: 

  • Solar & onshore wind: BNP Paribas was Mandated Lead Arranger and Hedge Provider in Aquila Clean Energy’s €1 billion financing for the construction of a pipeline of over 50 renewable energy projects of predominately solar PV and onshore wind assets with total electricity capacity generation of 2.6 GW in Portugal and Spain. This transaction was recognised as Renewable Energy Solar Deal of the Year by Infrastructure Journal Global (IJGlobal) Awards.
  • Offshore Wind: Last year the 600MW Gemini Offshore Wind Farm, Netherlands, reached a key refinancing milestone by amending its senior and subordinated debt, whilst undertaking a competitive repricing on the hedge, and fully replacing all reserve accounts to debt service reserve facilities. BNP Paribas acted as Mandated Lead Arranger on the transaction. The Gemini project will support the avoidance of 1.25 million tonnes of CO₂ emissions per year. This transaction was recognised as refinance Offshore Wind Deal of the Year by IJGlobal.

BNP Paribas recently accelerated its low-carbon transition trajectory with new targets on oil and gas phasedown. The Group’s credit exposure to low-carbon energy production was already close to 20% higher than that for fossil fuel production in September 2022. Scaling up clean energies remains vital in this pivot, and the Bank is targeting €40 billion in outstanding financing for the production of low-carbon, primarily renewable energies by 2030. 

Tackling transition tech challenges  

While many renewable energy technologies are robust and will appeal to investors through capital markets, others, such as Carbon Capture Utilisation and Storage (CCUS), hydrogen and synthetic fuels still require de-risking and support to scale up for commercial use. The major energy sector players have a critical role to play in accelerating the development and deployment of these transition technologies given steady cash flows, proven energy engineering expertise, and the R&D potential to scale up clean technologies. 

Similar to the renewables space, policy can also be supportive for scaling up these technologies. In March 2023, the EU announced new measures on hydrogen, CO₂ capture and other transition technology areas such as batteries, heat pumps, sustainable alternative fuels and grid technologies. Hydrogen enjoys significant support with the announcement of the European Hydrogen Bank. The European Hydrogen Bank will support the scale-up of renewable hydrogen across the EU, and the European Commission has dedicated €800 million to the first Hydrogen Bank auctions, which will be launched under the Innovation Fund later this year. 

In addition to policy, finance will be critical in the months ahead to incubate transition technologies across the value chain. On hydrogen specifically, helping finance several aspects of the value chain is important for scalability, and BNP Paribas’ Low-Carbon Transition Group teams are active in this area, supporting as Market Pathfinder Bank & Mandated Lead Arranger for a €3.5 billion financing of the first large-scale integrated hydrogen-based green steel facilities for H2 Green Steel. 

What about net zero sustainable transport? 

When it comes to assessing other technologies to accelerate net zero, tackling the transport sector’s emissions is vital. Currently transport accounts for 37% of CO2 emissions and is highly reliant on fossil fuels.  

According to the IEA, rail is the least emissions-intensive passenger transportation mode and the IEA sees value in its expansion in the net-zero scenario. Currently the rail energy mix is split roughly equally between diesel and electricity. In the IEA’s net zero 2050 scenario, electrification of trains increases, and it is forecast that electricity will provide two-thirds of total final energy demand, with diesel around a quarter and biodiesel the rest. 

In terms of accelerating the electrification of the transport rail sector, BNP Paribas’ Real Asset teams have been leading in supporting clients across the EMEA region, with several notable transactions: 

  • Heavy Rail: Ankara Izmir High Speed Rail. Last year, BNP Paribas acted as Mandated Lead Arranger in a €2.1 billion, 18-year tenor, fully covered UK Export Finance Buyer Credit Facility to the Ministry of Finance of Turkey, which is part of the country’s high-speed rail transport ambitions. This transaction was recognised by IJGlobal as Transport Deal of the Year for Heavy Rail.
  • Electric locomotives: Railpool Refinance 2022, Germany. In 2022, Railpool – one of Europe’s largest rolling stock lessors, which operates more than 400 electric locomotives and 148 passenger vehicles across 17 European countries – secured a €1.07 billion loan to refinance existing debt and fund expansion plans, with BNP Paribas’ assistance as Mandated Lead Arranger. This transaction was recognised as refinance Deal of the Year, Rolling Stock by IJGlobal.
  • Alpha Trains, Luxembourg. This Green Loan, for which BNP Paribas acted as Arranger and Lender, was a €348 million Green Senior Secured Facility closed in favour of Alpha Trains, a leading rolling stock lessor in the passenger and freight market in Continental Europe. It consisted on refinancing part of Alpha Trains’ senior financial indebtedness and funding up to 118 new locomotives, most of which are electric. This transaction was recognised as refinance Deal of the Year for Transport by IJGlobal.

Infrastructure Journal Global Awards

Seven deals led by BNP Paribas (from a total of 27 awarded) were recognised by IJGlobal in its annual awards ceremony, which took place in London in March 2023. The publication, which provides market intelligence on the global infrastructure and energy finance markets, highlights best-in-class transactions and organisations across the energy and infrastructure sectors.  

In other sectors the Bank was also recognised by IJGlobal: 

  • BNP Paribas teams won PPP Deal of the Year for supporting CEGeLog PPP in France. The project is aimed at building, renovating and operating about 15 000 residential buildings, according to best standards of technical quality, environmental and energy performance.   
  • The project in which BNP Paribas supported DigitalBridge in the €745 million acquisition of Telenet’s mobile telecommunications tower business in Germany was recognised as the Telecoms Deal of the Year.   

These awards highlight BNP Paribas’ Low-Carbon Transition Group and Real Asset teams’ commitment to supporting clients across capabilities, and innovating on complex operations across the industry.