Sustainable Energy: Decarbonisation Requires Capital

Time is of the essence. Achieving global climate targets and gradually steering the economy towards net-zero emissions will require enormous investment worldwide. In Germany alone, the Federation of German Industries (BDI) estimates additional annual investment needs of around €100 billion through to 2030. As a leading global bank, ING aims to play a key role in financing the technologies and solutions needed for a low-carbon future. This makes now the ideal time to take a closer look at the sustainable financing models that will help make that transition possible.

Sustainable Finance: A Resilient Start Despite Headwinds

Despite a challenging economic environment, the global sustainable finance market has started 2026 on a solid footing. In the first quarter, issuance volumes for sustainable bonds reached USD 387 billion, around eight percent lower than during the same period last year. However, developments varied considerably across both financing instruments and issuer groups. While corporate issuance and lending activity softened, sovereign and quasi-sovereign issuers moved in the opposite direction, delivering a remarkably strong performance. Government-related issuance nearly doubled year-on-year to USD 99 billion, marking the strongest first-quarter result in six years. Sovereign issuance also increased from USD 40 billion to USD 55 billion.

The corporate bond market, meanwhile, remained particularly resilient. Green bonds continue to play a central role, reaching a volume of USD 175 billion. That represents an increase of 11 percent compared with the previous year and accounts for around 45 percent of the overall sustainable finance market. For the full year 2026, ING expects green bond issuance to reach USD 700 billion, within a total sustainable finance market of approximately USD 1.621 trillion. Sustainability bond volumes also edged higher to USD 94 billion, while social bonds rose by 20 percent, increasing from USD 45 billion to USD 54 billion.

This picture is consistent with the findings of ING’s latest Sustainability and Green Finance Study 2026. Although ESG-linked loans remain the most widely used instrument in Germany, with a market share of 19 percent, green bonds have steadily gained momentum in recent years. One reason is that companies increasingly favour use-of-proceeds instruments, where capital raised is earmarked for specific sustainable projects, over performance-linked financing structures.

Sustainable financing instruments have also become a reputational asset, attracting greater investor interest and often benefiting from stronger market liquidity. As a result, 53 percent of surveyed finance decision-makers plan to use green bonds over the next three to five years, while 51 percent intend to make use of green loans. Almost one in three respondents is even considering adoption of the EU Green Bond Standard, despite the framework’s significantly stricter requirements regarding the use of proceeds.

Overall, the survey shows that sustainability remains highly relevant for businesses despite regulatory, political and economic challenges. Seventy-seven percent of finance decision-makers surveyed stated that they had already actively engaged with sustainable financing instruments, representing a new record high. Nearly three-quarters also view ESG as an integral component of their corporate strategy, despite geopolitical uncertainty and economic pressure.

This commitment is reflected in ING’s own business performance. In 2025, the bank facilitated €166 billion in sustainable investments for its clients, up from €130 billion in the previous year. 

Hydrogen: The Technology Is Not the Problem

Even though sustainable finance volumes have increased significantly in recent years, substantial funding gaps remain. Hydrogen provides a prime example. The technology itself is largely proven, and green hydrogen is widely regarded as a critical enabler for decarbonising industrial sectors that are difficult to electrify directly. These include steelmaking, the chemical industry, ammonia production, as well as parts of heavy road transport and shipping.

Beyond its decarbonisation potential, hydrogen can also strengthen energy sovereignty and contribute to greater security of supply. In an era marked by geopolitical tensions and fragile global supply chains, these advantages are becoming increasingly important.

While the potential of green hydrogen is broadly acknowledged, deployment has so far progressed only slowly. Numerous projects have been announced, but only a relatively small number have reached a final investment decision. One of the main obstacles is the lack of planning certainty. Many projects still do not have long-term offtake agreements with creditworthy customers. Without reliable demand forecasts, future revenues remain difficult to predict.

This increases risk for banks and investors alike, making financing more difficult to secure. The challenge, therefore, lies less in advancing the technology itself and more in creating commercially viable framework conditions. The immediate priority is to establish bankable projects and ensure credible demand. This requires anchor customers, robust revenue-certainty mechanisms, and financing structures that distribute risks realistically among project developers, offtakers, governments and lenders.

A similar pattern emerged during the financing of renewable energy projects such as wind and solar. There, too, market growth was supported by long-term contracts, policy support and early flagship projects. 

Biogas: The Overlooked Bridging Solution

While hydrogen still needs to scale significantly, biogas is already available today as a practical transitional solution. At present, only around one-fifth of Europe’s total energy consumption is supplied by electricity generated from sustainable sources. The remaining 80 percent continues to rely on fossil fuels such as oil and natural gas.

Since the energy crisis of 2022, Europe has reduced annual gas consumption from around 540 billion cubic metres to 430 billion cubic metres, a decline of approximately 20 percent. Nevertheless, around 70 percent of gas demand is still met through imports. Biogas could help close part of this gap.

If sustainable feedstocks such as manure, agricultural residues and organic waste were utilised more systematically, biogas could potentially meet around one-third of Europe’s gas demand. Denmark already demonstrates what is possible. Biogas currently supplies around 40 percent of the country’s gas consumption. Because it can be produced and used locally within a circular economy, it does not require the development of entirely new global infrastructure.

ING is actively supporting this transition. Among other initiatives, the bank is financing the Norwegian company Vireo, enabling the production of LNG from agricultural waste, fish sludge and silage for use in heavy transport and maritime shipping.

The Transition Will Not Succeed Without Capital

There is still a long road ahead before net-zero targets can be achieved. Scaling sustainable energy carriers and securing adequate financing remain major challenges. Recent developments show that sustainable finance is becoming increasingly important. At the same time, it is becoming clear that the success of emerging energy technologies will depend largely on whether investors can be provided with sufficient certainty and predictability.

In the end, the success of the transition will not be determined by technology alone. It will also depend on the availability of capital.