The energy transition landscape is witnessing a significant shift as Close Brothers Asset Finance announces its strategic expansion into hydrogen project funding. This move signals growing confidence in hydrogen’s role in the global push toward decarbonization, with financial institutions increasingly viewing green hydrogen as a bankable asset class worthy of dedicated investment structures.
The specialist lender has established a dedicated clean energy team to oversee this initiative, which will provide tailored financing solutions for businesses developing hydrogen technologies and infrastructure. This expansion comes at a crucial juncture, as hydrogen projects worldwide struggle to secure the necessary capital to scale operations despite substantial government support programs.
“The hydrogen economy represents one of the most promising frontiers in our transition away from carbon-intensive energy systems,” notes Richard Baker, managing director of transport at Close Brothers Asset Finance. “Our decision to create specialized financial instruments for this sector reflects our belief that hydrogen will play a pivotal role in industrial decarbonization efforts through 2025 and beyond.”
Industry analysts at BloombergNEF estimate that hydrogen investments need to reach approximately $700 billion by 2030 to meet global climate targets. However, current investment trajectories fall significantly short, with only about $240 billion projected based on announced projects. This financing gap underscores the importance of private financial institutions stepping into the space.
The timing of Close Brothers’ entry aligns with several market factors that make 2025 a potentially watershed year for hydrogen project development. The European Hydrogen Bank is expected to complete its first auction rounds, distributing €800 million in subsidies by mid-2025. Meanwhile, the U.S. Treasury Department will likely finalize implementation guidelines for the Inflation Reduction Act’s hydrogen production tax credits, which could provide up to $3 per kilogram for green hydrogen producers.
Close Brothers’ hydrogen financing initiative will cover various project components, including electrolyzers, storage facilities, refueling infrastructure, and hydrogen-powered transport fleets. The company emphasizes that its funding models will be adaptable to both large-scale industrial applications and smaller, localized hydrogen ecosystems.
Financial experts from Goldman Sachs’ sustainable investment group suggest that traditional project finance models often fail to address the unique characteristics of hydrogen investments. “Hydrogen projects face a chicken-and-egg dilemma,” explains Maria Reeves, senior analyst at Goldman Sachs. “Production facilities need guaranteed offtakers, while potential consumers need reliable supply infrastructure. Financial solutions that bridge this gap will be crucial for market development.”
Close Brothers’ approach appears designed to address these structural challenges by offering flexible financing terms that account for the extended development timelines and revenue uncertainty typical in emerging energy markets. The firm indicates it will consider various financial structures, including operating leases, hire purchase agreements, and refinancing options for existing assets.
This development comes amid growing competition in the green financing space. Major banks including HSBC and BNP Paribas have announced similar initiatives targeting clean energy infrastructure, though few have created dedicated hydrogen-specific programs. Close Brothers’ specialized approach may give it a competitive advantage in what remains a highly technical and complex sector.
Industry data from the Hydrogen Council indicates that approximately 680 large-scale hydrogen projects have been announced globally, representing potential investments of $240 billion through 2030. However, less than 10% of these projects have reached final investment decision, highlighting the financing bottleneck that initiatives like Close Brothers’ could help address.
The UK market presents particularly fertile ground for hydrogen project development, with the government’s Hydrogen Strategy targeting 5GW of low-carbon hydrogen production capacity by 2030. This policy framework, combined with established industrial clusters in regions like Teesside and Humber, creates natural demand centers for hydrogen applications.
According to McKinsey research, hydrogen could meet up to 24% of global energy demand by 2050, representing a $700 billion annual market. The research suggests early movers in hydrogen financing will develop expertise and risk assessment capabilities that could prove valuable as the market matures.
For businesses considering hydrogen projects, Close Brothers’ entry into the market provides another financing option beyond government grants and traditional corporate finance. The firm’s experience in asset-backed lending could prove particularly relevant for hydrogen applications, where physical infrastructure represents a significant portion of project costs.
As 2025 approaches, the hydrogen financing landscape will likely continue evolving, with more financial institutions developing specialized products to serve this emerging market. Close Brothers’ early move positions it to build expertise in risk assessment and valuation methodologies specific to hydrogen assets, potentially creating competitive advantages as the sector expands.
The road to commercial-scale hydrogen deployment remains challenging, with technological, regulatory, and economic hurdles to overcome. However, specialized financing initiatives like Close Brothers’ represent an important step toward addressing the capital formation challenges that have limited hydrogen’s growth potential despite its promising role in decarbonization efforts.
