Climate Week 2025 Event Recap
Reaching decarbonization goals in hard-to-abate sectors requires capital investments in the trillions of dollars, with individual projects often surpassing a billion-dollar price tag. Governments have often stepped up to assume the risk that comes with developing low-carbon technologies. But as government funding becomes less accessible, the need is growing to mobilize capital elsewhere for decarbonization infrastructure.
During this year’s New York Climate Week, World Energy convened a panel of experts from Bank of America, Microsoft, New Energy Risk, and RMI to explore financing innovations in development to bridge that government funding gap. Specifically, the panel dove into current and nascent financing innovations, such as bankability, technology performance insurance, criteria for de-risking projects, blended finance structures, and new sustainability tools to recognize market acceleration commitments for projects to demonstrate commercial viability.
Here’s a recap of the conversation.*
- The discussion began with what we mean by “bankability” which, at its most basic level, is about making sure lenders feel confident their debts will be repaid. The panel addressed the need for credit worthy offtake to secure long-term, stable cash flow as well as the need for clear recourse provisions. Forthcoming guidance and standards from the Round Table on Sustainable Biomaterials (RSB), relating to market acceleration and bankability, will provide more clarity in the near term.
- From there, the panel explored the role of technology performance insurance in supporting and accelerating hard-to-abate projects, although insurance is not a panacea for all risk. Beyond insurance, lending and risk assessment practices for emerging, higher-risk projects differ from more traditional lending practices. Panelists discussed how lenders need to consider the ways a bank can deploy its capital in a risk framework, how that fits withing a client’s risk framework, and where there are gaps between the two. They stressed the importance of blended finance solutions, where the risk is shared across parties.
- When it comes to green lighting investment, companies are looking at the incremental value of the long-term partnership and noted that we’re seeing more willingness to lean in on from those in engineering, procurement, and construction (EPC) due to the growing understanding of how the supply chain is de-risked with some of these investments, and that there are benefits beyond just the tech itself. Environmental Attribute Certificates (EACs) such as Sustainable Aviation Fuel Certificates (SAFc) are a great example of this.
- It’s important to note that EACs can’t exist without a tracking system that’s trustworthy, traceable, and credible. That’s where the Book and Claim mechanism comes in. The panel talked about the success of Book and Claim in aviation, and how it helps overcome geographic and operational barriers. The panel discussed how Book and Claim has helped create a credible framework in aviation, which has led to confidence in the market, and how this model is replicable across other hard-to-abate sectors. However, there isn’t going to be one framework that applies across all sectors. It’s important to have a shared foundation, but with the ability to adjust for the unique conditions of each sector.
- Each panelist wrapped up by sharing their take on the one financing innovation most likely to accelerate investment into hard-to-abate projects over the next five years. The most popular answer, by far, was environmental attribute certificates like SAFc, but panelists also touched on the topics of market diversity, blended finance mechanisms, and the importance of expanding feedstock supply options for SAF.
At the end of the day, it’s about partnership. We might be on a small dance floor right now, but it’s a crowded dance floor and it’s great that so many people want to dance. We have, are, and will continue to make progress together.
* The event took place under Chatham House Rules
