BNP PARIBAS SPECIALIZED TRADE SOLUTIONS FINANCE INDUSTRY THE
BNP PARIBAS SPECIALIZED TRADE SOLUTIONS FINANCE INDUSTRY & THE UPSCALING OF THE HYDROGEN VALUE CHAINS HYDROGEN DAYS Praga, June 2018
CONTEXT GLOBAL WARMING • How to remain within the limit of 2° Celsius set by the COP 21? • By decreasing GHG by 60% until 2050, from 34 GT in 2015 to 13 GT in 2050 ENERGY NEEDS & CONSUMPTION INCREASE • With expected global population growth • Growing need for access to water, sanitation, nutrition, health care and education • New energy-hungry services that will develop exponentially DEMOGRAPHY DEVELOPMENT & • During the 20 th Century, population more than tripled and global energy demand increased ten-folds • Economic growth and development surged, increasing energy needs (mobility, connectivity, etc. ) RENEWABLE ENERGIES • The share of renewable energies must triple to reach 2/3 rd of the power generation (vs. 23% today) • Such a level of renewables will create major challenges in matching power supply and demand • This must be accompanied by other aggressive measures 2
CHALLENGE – NEED FOR A CARRIER RENEWABLES CHALLENGES THE HYDROGEN SOLUTION • Intermittency & Storage • acts as a buffer and bridges the gap between intermittent renewable power supplies and demand • Transport & Distribution • Electrical batteries limitations • enables large-scale renewable “electrons” integration in the transportation, buildings and industrial sectors • permits distribution of renewable energy across production and consumption regions • can be used to decarbonize natural gas grids An energy of the future that never comes… A PARADIGM SHIFT …the future has arrived • “Raw material” (i. e. renewable energy power) is now cheap and available at scale • Technology (i. e. electrolysis) is mature and allow large-scale production of clean H 2 • As a result, H 2 may end up representing a substantial portion of the fuel mix 3
AN EMERGING VALUE CHAIN – CHICKEN & EGG ACCELERATING EMERGENCE OF AN ENTIRELY NEW SUPPLY HYDROGEN COINED AS ”THE CHAIN NEW OIL” THE QUESTION IS NOT IF, BUT AT WHICH PACE INDUSTRY WILL SCALE UP Source: EIA, Bloomberg SCALING UP • Widely available cheap raw material CHICKEN & EGG • Hydrogen production and usage technologies are very versatile • Customers wait until hydrogen is available and costs competitive • Can already be implemented with corporate fleets of truck or cars • investors wait to invest in production, storage and distribution capacity until sufficient demand is there and risks are lower • Governments’ incentives and regulations (sufficient CO 2 price, subsidies) FINANCE LEVERAGE INDUSTRY • All the main conditions for a faster emergence of the industry are accelerating in the right direction. • Reaching climate objectives requires the mobilisation of the entire society and in that aspect the finance industry has a big role to play • So what do financial actors need to do to help move ahead? 4
THE ROLE OF STRUCTURED FINANCING IN UPSCALLING OF H 2 CAPITAL STACK ENABLERS COMMON EQUITY PREFERRED EQUITY RISK HYBRID DEBT SUBORDINATED DEBT SENIOR DEBT Enabling policies & tools • • Policies®ulations Industry standards Technical assistance Grants & convertible grants • Government Guarantees • …. Financial risk mitigation instruments • • • Partial risk guarantee Partial credit guarantee Export credit guarantee Liquidity guarantee Put option Insurance Guarantee funds Convertible loans B-loan structures On-lending structures Mezzanine financing … SCALABILITY INVESTOR TYPES Structured finance mechanisms & tools • Standardised contracts • Liquidity tools (DSRA, excess spread accounts, contingent equity, overcollateralization, …. ) • Aggregation • Subordinated debt • Loan Syndication • Yield cos • … PRIVATE EQUITY FUNDS INTERNATIONAL FINANCIAL INSTITUTIONS BANKS CAPITAL MARKETS INSTITUTIONAL INVESTORS 5
BNPPARIBAS PRESENCE & PRODUCTS COVERAGE : MATCHING HYDROGEN SUPPLY CHAINS PRODUCTION LOGISTICS IFS USAGES CORPORATE COVERAGE STS PRINCIPAL INVESTMENT Supply chain financing Project Financing Equity participation in start-ups ARVAL Leasing solutions Car fleet management CIB WM HNWI Yacht & Jet H 2 PROJECT FINANCING Wind & solar farms Electrolysor Power plants DCM Green bonds CIT SHIPPING Price risk management Ferries Container carrier Cargos GTS Cars manufacturers PERSONAL FINANCE REAL ESTATE Property development DM Heat & power domestic system Car financing 6
BNPPARIBAS POLICY TOWARDS ENERGY TRANSITION “WE ASSUME OUR ROLE OF A RESPONSIBLE BANK BY SUPPORTING COMPANIES AND STATES WORKING TOWARDS THE ENERGY TRANSITION”, JEAN-LAURENT BONNAFÉ, CEO To support the financing of the energy transition, we commit to the following actions: #1 – RENEWABLE ENERGY FINANCING Support the strong growth of renewable energies by more than doubling our financing in this area from € 6. 9 billion in 2014 to € 15 billion in 2020 #2 – GREEN BONDS Continue to promote green bonds among institutional investors #3 – CARBON RISK MANAGEMENT Reinforce our efforts in carbon risk management: stop financing coal-fired power plants in high-revenue countries and reinforce the selection criteria in other countries, finance companies which are committed to diminishing the share of coal in their production, stop financing coal mines #4 – SUPPORT COMPANIES COMMITTED TO ENERGY TRANSITION Support our clients as they work towards the energy transition support companies which devote a significant share of their activity to developing solutions aimed at reducing energy consumption, support start-ups which combat climate issues: € 100 million between now and 2020 7
GREEN BONDS: BNP PARIBAS #1 IN THE LEAGUE TABLES $ 500, 000 3. 048 due 2021 $500, 000 3. 148 due 2023 € 500, 000 1. 375 due 2028 € 750, 000 2. 000 due 2034 € 4, 500, 000 1. 250% due 2033 € 750, 000 0. 643% due 2023 Feb 2018 May 2018 € 500, 000 0. 680% due 2023 Jan 2018 $ 300, 000 $ 525, 000 3. 875% due 2023 4. 050% due 2048 May 2018 Apr 2018 € 500, 000 1. 000% due 2024 € 700, 000 2. 625% PNC 6 € 575 m 4. 000% 7 NC 3 € 225 m E+3. 500% 7 NC 1 Apr 2018 Mar 2018 May 2018 € 95, 000 8. 375% due 2023 8. 875% due 2025 9. 000%, 4. 136% & 2. 000 due 2023 Jan 2018 € 275, 000 6. 500% due 2023 Jan 2018 € 1, 000, 000 $ 700, 000 1. 125% due 2026 3. 65% due 2048 Jan 2018 € 1, 250, 000 1. 125% due 2026 Jan 2018 Lead Manager of the Year Corporates $500 m FRN due 2022 $ 600, 000 € 700 m FRN due 2020 € 1, 000, 000 € 500, 000, 000 € 500 m 2. 250% PNC 7 1. 625% due 2024 € 750 m 1. 500% due 20290. 625% due 2024 3. 150% due 2024 CNY 1 bn 4. 500% 2020 1. 875% PNC 5. 5 Dec 2017 € 600, 000 $ 500, 000 0. 000% due 2021 2. 750% due 2022 Nov 2017 € 400, 000 € 1. 1 bn FRN due 2020 € 500, 000 Multiple tranches $400 m FRN due 2020 $300, 000 6 to 10 y 0. 956% due 2024 $450 m 2. 875% due 2022 FRN due 2027 FXD & FRN Sept 2017 Oct 2017 Nov 2017 € 500, 000 0. 750% due 2027 Sept 2017 Nov 2017 € 600, 000 1. 5% due 2027 $400, 900, 000 3. 85% due 2041 £ 250, 000 1. 625% due 2025 € 300, 000 2. 0% due 2027 € 600, 000 0. 8% due 2023 $ 450, 000 3. 875% due 2027 € 1, 000, 000 1. 5% due 2047 Sept 2017 Aug 2017 July 2017 June 2017 EUR Green Bonds – 2018 YTD Rank Bookrunner 1 2 3 4 5 6 7 8 9 10 BNP Paribas Credit Agricole ING JP Morgan Barclays Natixis Uni. Credit SG CB HSBC Commerzabank Amount No. of (EUR equiv. Issues mn) 2, 277. 78 1, 903. 41 1, 670. 08 1, 665. 91 990. 91 904. 17 782. 58 770. 83 673. 81 603. 41 8 9 6 7 2 6 6 5 Share (%) 12. 07 10. 08 8. 85 8. 83 5. 25 4. 79 4. 15 4. 08 3. 57 3. 20 Source: Dealogic as of 04 th June 2018 8
THANK YOU! BNP PARIBAS (SUISSE) SA Place de Hollande, 2 1204 Genève Tel. : +41 (0)58 212 21 11 Fax: +41 (0)58 212 22 22 bnpparibas. ch
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