BBVA supports its clients in the transition to cleaner and more sustainable energy models

The energy transition is one of the greatest challenges and opportunities of our time. It is not just about reducing emissions. It is about transforming entire economic models and creating new business opportunities and innovation. At BBVA, this process is understood as an opportunity to accompany companies on their path to a cleaner future, helping them adopt technological and financial solutions that allow them to advance in their decarbonization. Today, we talk to Isidoro del Álamo, head of Sustainability & Low Carbon Transition Advisory at BBVA CIB, to find out how the bank is supporting its clients in this transition and what challenges and opportunities he sees in the process.

• Decarbonization follows a different roadmap for each industry. How is BBVA helping its clients in this process, regardless of the industry and geography in which they operate?

Each sector has its own path to decarbonization, but the starting point is common in most industries: maximizing energy efficiency and focusing on electrifying processes using renewable energy. At BBVA, we understand that these first steps are fundamental and applicable to almost all sectors, although each industry must then follow its own roadmap adapted to its specific characteristics and the geography in which it operates.

Our approach is to offer specialized and personalized advice, adjusting to the particularities of each client. For example, in sectors such as oil and gas, the focus is on maximizing efficiency in their operations, and gradually incorporating alternative sustainable products (biofuels, e-fuels) into their fuel offering. However, in industries such as cement, where emissions are largely unavoidable due to the heat treatment of limestone, we work on advanced solutions such as carbon capture and storage.

At BBVA, we have integrated sustainability as a strategic priority. To this end, we have created a global Low Carbon Transition Advisory team that provides sector-by-sector advice. This allows us to ensure that each client receives the necessary support to advance their own roadmap towards decarbonization, starting from a common base and adapting to the particularities of each industry.

• In the debate on sustainability and competitiveness, the 'green premium' is often mentioned. Is it possible that clean technologies can compete on price with traditional options?

The concept of 'green premium' is one of the main challenges facing the energy transition, as many clean technologies are still more expensive than their conventional alternatives. However, we are seeing important advances in certain areas. Technologies such as solar PV and wind have reached, and in many cases exceeded, cost parity with conventional energy sources in many regions, thanks to economies of scale and learning curves that have drastically reduced their costs over the past decade.

Still, there are emerging technologies, such as green hydrogen or carbon capture, that still require greater support to attract more capital and thus be able to drive the economies of scale and learning curves needed to gain competitiveness. At BBVA, we help our clients identify the best opportunities in these areas, supporting them in accessing incentives and new sources of capital. In addition, we advise them on the bankability of the projects, accompanying them from the initial stages so that they can obtain financing under the best conditions.

It is essential that the debate is not just about the immediate costs, but about how these investments will contribute to building a sustainable and globally competitive future. At BBVA, we are committed to mobilizing the resources necessary to make these technologies viable in the long term and for our customers to lead this transformation.

• Financial innovation is key for energy transition projects to move forward. How is BBVA promoting new forms of financing for clean technologies and decarbonization?

At BBVA, we believe that financial innovation is as crucial as technological innovation to advance the energy transition. Many of the clean technologies are still in the early stages of development, which means they require flexible and tailored financial solutions. One of the ways we are supporting our clients is by facilitating access to capital in these early stages, whether it is equity or debt.

Our Low Carbon Transition Advisory team works hand in hand with our clients to design financial solutions that include everything from finding equity partners to creating strategic alliances that can provide key synergies. In addition, we are collaborating with venture capital funds specialized in clean technologies, which allows us to develop a comprehensive offer that goes beyond traditional financing. This approach helps us mobilize the capital necessary for projects to reach a stage of maturity that allows them to access financing on competitive terms.

• The lack of demand for low-carbon fuels is a challenge. How is BBVA supporting its clients in this challenge?

One of the main challenges facing sustainable fuels is the lack of demand due to their higher prices compared to traditional fuels, or the high cost of investments associated with adapting a process to a new fuel. This generates a kind of paradox, since without demand it is difficult to mobilize investment for projects that could improve the competitiveness of these fuels in the long term.

At BBVA, we are helping our clients focus on sectors where there is already a real demand for sustainable fuels. In the chemical and fertilizer industries, for example, the transition to the use of green hydrogen is a reality, with industrial companies committing to purchase the product to pave the way for project investment decisions. In addition, we are seeing the formation of strategic alliances in sectors such as shipping and aviation, where long-term off-take agreements are beginning to generate demand for clean fuel technologies. These initiatives are essential to make the financing of these projects viable and facilitate their development.

• Emerging markets face unique challenges in the energy transition. How is BBVA helping these countries attract sustainable investment and accelerate their transition?

Emerging markets will play a key role in the global energy transition – particularly those with exceptional renewable resources, as is the case with countries in the Andean region – but they face significant barriers, such as limited access to finance and a lack of infrastructure. At BBVA, we are working closely with governments and companies in these markets to help them overcome these challenges, facilitating access to sustainable financing and developing clean energy projects that are tailored to their specific needs.

We have financed projects ranging from charging infrastructure for electric vehicles to renewable energy plants in emerging markets, ensuring that these economies can advance their energy transition in a sustainable way. In addition, we collaborate with multilateral agencies and international funds to mobilize capital to these countries, which is essential to close the technological and financial gap that often limits their ability to adopt clean solutions.

• COP29 is took place in Baku, Azerbaijan, where new climate finance targets were discussed. What can we highlight from this event?

COP29 started with good news. At its first meeting, an agreement was reached on the regulation of voluntary carbon markets, which will allow progress toward a centralized market with quality standards. This is a very important step towards meeting the objectives of the Paris Agreement.

Another key issue at this COP has been the setting of climate finance targets, a critical factor in accelerating transition plans. 

The progress made since COP21 in Paris has been significant, but much remains to be done, especially in sectors that are difficult to decarbonize, such as aviation, shipping, and certain heavy industries. The key for the coming years will be to mobilize the capital needed to scale clean technologies and turn them into viable solutions globally.

At BBVA, we continue to support our clients in the sustainability process, through specific financing solutions, advisory services or the development of sustainable products, among others, and we see that more and more industries are implementing concrete action plans to advance their decarbonization goals. We believe that in the coming years, regulatory momentum will be key to accelerating this transition, as well as active collaboration between the private sector, governments and financial institutions. At BBVA, we are working on clear and measurable strategies for the energy transition, convinced that a low-carbon future is possible if all the actors involved collaborate effectively.