The success

Nordea has removed fossil-based hydrogen production with carbon capture and storage (CCS) from its green funding framework. This is a positive step. It is essential that banks direct green financing toward real climate solutions such as wind, solar, electricity grids, and energy storage.

BankTrack's role

Last year, BankTrack published its position on a just energy transition, categorizing energy technologies into real and false solutions. In addition, BankTrack launched a False Solutions Tracker, which exposes banks that label false solutions as "green" in their financing frameworks. Over the past year, BankTrack has engaged with all 30 banks featured in the tracker — including Nordea.

The policy change

On April 3, 2025, Nordea (Finland) updated its Green Funding Framework, excluding some “false solutions” from its green finance framework. The previous version of this policy document was from December 2023.

Why this is important

The first UN global stocktake on progress towards the goals of the Paris Agreement was concluded during COP28 in 2023, emphasising the urgent need to rapidly reduce greenhouse gas emissions in line with pathways that limit global warming to 1.5°C. It called on Parties to contribute to global efforts, including:

Tripling global renewable energy capacity and doubling the average annual rate of energy efficiency improvements by 2030.
Transitioning away from fossil fuels in energy systems in a just, orderly, and equitable manner, with acceleration during this critical decade, to achieve net zero by 2050, in accordance with scientific recommendations.

Despite their net-zero commitments, most commercial banks continue to finance fossil fuel expansion. At the same time, their definitions of sustainable finance are often inadequate, as they often include so-called “false solutions” – technologies and mechanisms that may appear effective but fail to address the root causes of the climate crisis and perpetuate environmental and social injustices. Many banks, for instance, categorize Carbon Capture, Utilisation and Storage (CCUS), solid biomass, biofuels, fossil-based hydrogen and nuclear power as sustainable – technologies that often delay the transition and can negatively impact nature and human rights.

Therefore, it is critical that banks exclude false solutions from their sustainable finance targets and focus exclusively on financing real solutions aligned with a just energy transition – such as renewable energy, grids, and storage.

Scope of this scan

This policy scan will focus on the modifications introduced by Nordea in the renewable energy section of its Green Funding Framework update from April 2025, compared to the previous version from December 2023. It will not include a full analysis of Nordea’s policy.

Key changes

1. Nordea no longer considers hydrogen production with carbon capture and storage as a renewable energy.

The new version of the policy no longer classifies the production of hydrogen with carbon capture and storage as renewable energy. Indeed, the new version of the framework explicitly states that “hydrogen production based on fossil fuels utilising carbon capture and storage (CCS) is not eligible.”

Reasons this key change is positive

Hydrogen production based on fossil fuels is a false solution. While green hydrogen (produced using renewable electricity) has the potential to decarbonise hard-to-abate sectors such as ammonia production or steelmaking, it currently represents only a small fraction of global hydrogen production. According to the IEA’s Global Hydrogen Review 2025, low-emissions hydrogen made up less than 1% of total hydrogen supply in 2025. This means that almost all current hydrogen production still relies on unabated fossil fuels, and even the majority of “low-emissions” hydrogen is produced from fossil fuels using CCUS. Banks must therefore clearly distinguish between genuinely sustainable solutions like green hydrogen (generated with renewable electricity) and fossil-based hydrogen with CCUS, which relies on a polluting input and an imperfect mitigation technology. According to the Institute for Energy Economics and Financial Analysis (IEEFA), fossil hydrogen with CCUS is not clean, not low-carbon and not a solution to the global climate crisis.
Carbon capture, utilisation and storage is a false solution. Today, more than 80% of hydrogen production comes from coal, oil and gas, with less than 1% of this output equipped with CCUS. The technology remains unproven at scale, is expensive, has low efficiency and faces significant technical challenges. Given these limitations, CCUS cannot be considered a viable climate solution, nor can hydrogen production that depends on it.
It shows that sustainable finance definition frameworks can be adapted. Prior to Nordea’s move, other banks – including CaixaBank, Commonwealth Bank of Australia and ING – had already excluded fossil-based hydrogen with CCUS from their sustainable finance criteria. However, Nordea’s decision is particularly noteworthy because it demonstrates that a bank’s definition of “sustainable” can evolve over time to reflect scientific evidence and reject previously accepted false solutions. This change should encourage other banks to review and tighten their sustainable finance frameworks, excluding problematic technologies such as fossil-based hydrogen (with or without CCUS), CCUS, solid biomass, biofuels and nuclear power.

2. Nordea explicitly includes bioenergy as a renewable energy despite adverse impacts

In its updated policy, Nordea explicitly classifies “bioenergy (heat and heat & power (co) generation, production of biogas and biofuels” as renewable energy. In its previous policy document, Nordea included bioenergy in the “waste management activities”.

Reasons this key change is negative

Solid biomass and biofuels are false solutions. While biofuels may have a limited role in specific sectors where alternatives are not yet viable, their overall climate benefits don’t outweigh their disadvantages. The biofuels value chain often causes negative environmental and land-use impacts, and its actual CO₂ emissions reduction potential is unclear. Similarly, solid biomass is far from being “carbon-neutral,” despite frequent industry claims. When accounting for forest degradation, carbon debt, and combustion emissions, solid biomass often fails to deliver meaningful climate benefits. As such, neither biofuels nor solid biomass contribute to a just or effective energy transition and should not be included in banks’ sustainable finance frameworks.
Nordea sets guardrails – but they remain insufficient. Nordea has introduced important limitations for bioenergy to qualify as green. It refers to criteria from the EU Renewable Energy Directive (EU 2018/2001), while explicitly excluding certain controversial feedstocks like cultivated algae and mixed municipal waste. Nordea also states that food- and feed-based crops will not be used for biofuel production and supply chain sustainability must be verified through certification systems. These restrictions are welcome, especially considering bioenergy’s potential to compete with food crops and threaten food security. However, the effectiveness of these guardrails depends heavily on rigorous implementation and case-by-case assessment. Most importantly, these safeguards do not address the core issue: the carbon emissions inherent to bioenergy production and combustion. Therefore, even with strict criteria, bioenergy cannot be considered a truly sustainable energy source.

Conclusion: A step forward, but more is needed

Nordea’s move to exclude fossil-based hydrogen with CCS from its green finance framework is a positive step. It shows that banks can evolve their sustainability criteria and reject false solutions.

But by still classifying bioenergy like solid biomass and biofuels as renewable, Nordea risks undermining this progress. These technologies come with significant emissions and environmental harm, and should not be part of banks’sustainable finance definitions.

BankTrack therefore continues to urge Nordea to exclude all false solutions from their green funding frameworks, and other banks to follow Nordea’s example and review their sustainable finance definitions to ensure they are science-based. It's time to redirect green finance toward real climate solutions: wind, solar, storage and grids.