Close Brothers expands ESG lending into hydrogen sector

Close Brothers has expanded its already strong sustainability funding offering following the decision of its ESG Lending team to broaden its focus to include hydrogen projects and assets, making it among the first lenders to offer asset finance into the hydrogen industry at scale.

Hydrogen is expected to play a critical role in the transition to Net Zero because it enables decarbonisation in sectors where direct electrification is impractical or inefficient, such as heavy industry and transport. It is also able to act as an energy storage solution.

The Close Brothers team has enjoyed considerable early success, providing funding solutions all the way across the supply chain from production to deployment, including electrolysers, multi-element gas containers (MEGC), and Hydrogen Power Units (HPU), which are widely seen as a sustainable replacement for diesel generators and can be used for the supply of on-location, off-grid renewable energy to anything from festivals and TV/film productions to long and short-term construction projects.

“The decision to back hydrogen has not been taken lightly, and – as a funder founded on specialist principles – we understand the importance of doing our research, and have rigorously tested the market for opportunities,” explained John Fawcett, CEO, Close Brothers Asset Finance.

“In the case of hydrogen, we have spent a considerable amount of time understanding the hydrogen value chain to lend against new technology.

“The support we provide comes in the form of funding new-to-market assets, which are contributing to the nascent European green hydrogen market value chain.”

Andrew New, Head of ESG Lending at Close Brothers Asset Finance, added: “Close Brothers recognises that this is a long-term commitment and have put in place the required framework that is laying the foundations of future success.

“We are doing this by actively targeting small to medium sized enterprises and mid-size corporates, which is often an underserved customer segment in energy transition, and can offer multiple forms of finance from different security bases to better reflect market conditions in nascent markets. This includes asset finance, project finance and receivables finance.

“We provide a full value chain solution to customers, from production through to end use.”