15 September 2021

A new phase in the green stock market boom

Earlier this year a flood of small green companies were listed on the Euronext Growth stock exchange, but now the stage is set for major industrial investments, according to Christian Jomaas, CEO Norwegian investment bank, Pareto. Many of the new companies listed, which were hot last year, struggled this spring. The largest share fall came in green growth companies. According to Jomaas, this has "had something to say" for investors' appetite.

We are now entering an industrialization from a partly euphoric entrepreneurial phase, to where investors have become more "selective". In the last year, many green companies were listed on the stock exchange at an early stage. But, investor appetite has shifted more in the direction that "we believe in the green shift, but we will go more towards the larger industrialized companies". We [Pareto] think that will be a trend.

He points out that the share of a wind company like Danish Ørsted is priced at 44 times net earnings, while the oil giant Exxon is priced much lower at 13 times net earnings and the figure for the general market is 23.

The story is similar, but a little different in Sweden, where the finance industry expects huge inflows. According to Viktor Lindroth, who works with sustainable finances at accountants PwC "It is likely that significant amounts of capital will be channeled, or almost forced, into more sustainable assets," noting that the amount of capital that goes to climate companies has grown five times faster than the risk capital volume as a whole in recent years. The market thus appears to have regained its appetite for risk after the cleantech boom in the late 00s and early 10s when some investors got burned.

Meanwhile, Marie Baumgarts, a sustainability expert at SEB says that “With the taxonomy and the rule packages, we go from night to day. It becomes much more formalized, comparable and transparent. It should benefit start-up companies that are really climate-strong and do not engage in greenwashing." Since large companies must report according to the taxonomy, the effects will be felt on all types of goods and services.

Lindroth points out a detail in the EU's package of rules that may be of great importance. Advisors in, for example, pensions and wealth management will no longer be allowed to sell products with lower sustainability performance than the customer's preference when the new rules are introduced in the autumn of 2022.

Vattenfall planning new investments in Germany

The German electricity market is the largest in Europe, with an electricity production amounting to 502 TWh 2020. Comparatively, Sweden’s production the same year was 159 TWh. Vattenfall’s decades-long expansion into Germany has been rocky with SEK 88 billion of losses, mainly due to a national political instability. However, with an increased demand for sustainably produced energy in the country, Vattenfall is now planning to invest further in their German branch, with its 4,000 employees, 3,5 million electricity customers and 600,000 gas customers. The ambition is to invest several billion SEK in wind- and solar energy as well as energy storage and district heating, according to Anna Borg, the President and CEO of Vattenfall (Dagens Industri). 

New loan guarantees to amplify Swedish climate export

The Swedish Export Credit Agency (EKN) launched a new loan guarantee targeting environmentally driven export companies in Sweden that pursue sustainable investments and activities. Swedish technology exports are already contributing to the green transition, according to Anna-Karin Jatko, General Director at EKN. She continues that the loan guarantee aims to spur small- and middle-sized export companies and subcontractors to invest even more and accelerate their contribution efforts towards the transition in Sweden. The guarantee applies to loans capped at 500 million SEK during a 10-year credit period, where EKN takes on 80% of the lending bank’s loan risk. The qualification process for receiving the guarantee is determined by companies’ adherence to sustainable investments set by the EU taxonomy which takes effect in 2022. EKN’s goal is to process the guarantees speedily, where smaller loan applications (10-20 million SEK) are to be processed in 2-3 weeks (Dagens Industri).

Norwegian electrolysis company set to start hydrogen production in Denmark 

Norwegian electrolysis company, HydrogenPro has acquired Advanced Surface Plating (ASP) in Denmark in order to improve the efficiency of electrolysers through optimised electrodes. With the new electrode technology provided by ASP, the high-pressure electrolysers are optimised by 14%. While the current electrolysers use approximately 4,4 MW to produce 90 kilograms of hydrogen per hour, HydrogenPro aims to produce the same volume by using 3,8 MW when using the newly acquired technology. These efficiency improvements help make the cost of green hydrogen competitive compared to blue- and grey hydrogen that currently relies on fossil fuels (Energiwatch).  

World premier for hydrogen powered yacht at the Cannes Yachting Festival

The 40-foot hydrogen-powered yacht, Hynova 40, was hosted in the Cannes Yachting Festival 2021 which focused on sustainability this year. For the first time since the creation of the festival, an entire exhibition port was exclusively dedicated to electric- and hybrid boats showcasing innovative sustainability solutions, such as the Hynova 40. Hydrogen as a fuel solely emits oxygen and water vapour, thus enabling the yacht to operate without sound pollution or emissions of CO2 and NOx. As the volume and fueling time of hydrogen are comparable to conventional petrol- and diesel tanks, hydrogen and fuel cell technology are a feasible pathway for the future of the leisure boat segment globally. For instance, the Norwegian HyCruiser 28, a hybrid boat under development that offers a flexible solution for short- and long-range trips by combining hydrogen and batteries. However, the hydrogen pathway has its challenges. There are significant energy losses in the production-to-use of both hydrogen- and fuel cell technology. Additionally, there is an absence of fuelling infrastructure which inhibits commercialisation efforts (Båtmagasinet, Boatingbusiness).

What we’re reading

• NYSE to list NAC companies that produce $125 trillion in ecosystem services (Financial Assets)
• Chevron to spend $10bn on clean energy push (Financial Times)
• Iberdrola warns of ‘protectionist’ risk to US offshore wind sector (Financial Times)
• Widespread lapses in climate risk reporting found in company accounts (Financial Times)

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