In Europe’s largest ever green loan, J.P. Morgan has co-led a $5 billion debt deal for Swedish battery maker Northvolt, a key supplier to BMW, Volvo and Volkswagen. This comes amid booming investor appetite for green debt and the trend for multinational companies to build components closer to home. Equally, it supports J.P. Morgan’s goal of financing and facilitating $1 trillion of green initiatives by 2030. 

Northvolt, Europe’s only large homegrown electric battery maker, is renowned for its cutting-edge battery technology and green credentials. In November, the company announced a design for a new sodium-ion battery, which could help to reduce the region’s reliance on raw materials sourced from China, including lithium, nickel and graphite. It is believed to be the first battery made completely free from these critical raw materials.

The $5 billion loan, arranged by the firm and a group of other banks, will enable Northvolt to boost battery production at plants in Sweden, Poland, Germany, the U.S. and Canada.

“Northvolt is a great example of a company taking action to address the new demands on industry, with the simultaneous positive impact on employment and development.”

Supporting green technology

Northvolt was founded in 2015 by two former Tesla executives with the ambition to build the world's greenest battery for electric vehicles and “to make oil history.” J.P. Morgan has supported the company for many years, including helping with its latest multibillion convertible bond raise to support factory expansion — the second-largest deal in the climate tech sector in 2023. 

“The amount of capital raised by Northvolt to date accounts for a meaningful part of foreign direct investment into Sweden. It is a great example of a company taking action to address the new demands on industry, with the simultaneous positive impact on employment and development of Northern Sweden,” said Jonas Wikmark, Co-Senior Country Officer & Co-Head of Investment Banking for the Nordics at J.P. Morgan.

Teams across the Commercial & Investment Bank worked on the deal, including Investment Banking, Markets, Global Corporate Banking, Credit, Infrastructure Finance Advisory and the Export Credit Agency team.

“The success of the deal is a testament to the strong interest in the market around energy transition themes and J.P. Morgan’s commitment to advancing sustainable finance,” said Guri Ormonroyd, Head of Corporate Banking for the Nordics and Netherlands at J.P. Morgan.

The appetite among investors for green assets is surging. The Inflation Reduction Act in the U.S. and similar European initiatives are proving to be a catalyst for investment and are easing financing costs for green projects. In 2023, for the second consecutive year, banks’ fees from green deals outstripped those from fossil fuel debt, according to data compiled by Bloomberg.

“The success of the deal is a testament to the strong interest in the market around energy transition themes.”

$2.5 trillion for the transition

Challenges remain in funding the transition to net zero. By 2050, the total amount of capital needed to facilitate the shift is estimated to be around $150 trillion. 

Speaking at J.P. Morgan’s CEO Forum last year, Northvolt Chairman Jim Snabe called on businesses to change their mindset when it comes to tackling climate change. ESG is not a cost but an opportunity for companies to differentiate themselves, he said, adding that “courageous leadership” is needed to bring greater cooperation and scale to innovations.

As one of the world’s leading financiers, J.P Morgan has a major role to play in helping countries and companies to decarbonize.

Among headline targets, the firm aims to finance or facilitate $2.5 trillion of investment toward sustainable development by 2030, including $1 trillion for green initiatives.

Steel production with 95% lower emissions

In another big win for the team in Sweden, J.P. Morgan acted as exclusive financial advisor to Altor on H2 Green Steel’s €1.5 billion capital raise to help finance the world’s first large-scale green steel plant.

The new facility will be capable of producing steel with 95% lower emissions than traditional blast furnace technology. Steelmaking is one of the biggest emitters of CO2 globally, with total greenhouse gas emissions from the sector accounting for 7-9% of fossil fuel emissions.

H2 Green Steel aims to begin production in 2025, with plans to produce 5 million tons of nearly fossil-free steel by 2030.

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