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Dominik Thumfart

Global Co-Head of Origination, Transportation, Infrastructure & Energy, Global Credit Trading

Deutsche Bank

September 29, 2021
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Ep 44: Dominik Thumfart - Global Co-Head of Origination, Transportation, Infrastructure & Energy, Global Credit Trading, Deutsche Bank
00:00 / 01:04

Michael Crabb
Well, hi, everyone, and welcome to the next episode of the Energy Impact Podcast. I'm your host Michael Crabb. And I'm really excited to be joined today by Dominik Thumfart, Managing Director and Global Co-Head of Origination for Infrastructure and Energy on Deutsche Bank's Global Credit Financing solutions platform. Dominik, great to have you here.

Dominik Thumfart
Michael, great to be here. Thanks for having me.

Michael Crabb
Yeah, we're very excited. I'm really excited to hear about what all that title really means and how much you're working on. But first, where did you grow up? How did you find yourself in banking? Tell us a little bit about how your path unfolded.

Dominik Thumfart
Happy to do so. As is recognizable from my accent, I grew up in the Germanic area. I grew up in Austria. My parental home actually looks down on the Danube, about a kilometer away from a hydropower station, a 180-megawatt power station for that matter, which supplies about 245,000 households. And my home was also away about an hour driving time from the Austrian Lake District east of Salzburg. And until the 1970s, the water quality in the half a dozen or so lakes there was so poor, because untreated sewage, I meant to say, flowed straight into the lakes from the villages and the towns around that lake. And then a so-called rain drainage system was built, the result of which was that the water from these lakes has had drinking water quality for decades now. And why am I making this point? Because I enjoy the very outdoor lifestyle and with that came an appreciation of nature and of the importance of protecting the environment, which has really accompanied me throughout my personal and my professional life ever since. I took a degree, combined degree, of economics and business in Vienna. And I had an exchange term in Barcelona and Catalonia in Spain. And I then started my career at the Austrian branch of Citi, the American investment and corporate bank, shortly thereafter was given the opportunity to move to London. And here it is where I've been living with my wife and three children ever since for a quarter of a century now.

Michael Crabb
Wow. Obviously infrastructure is sort of in your blood. How did you- maybe talk a little bit about how you chose finance over a number of other careers that sort of support the same underlying mission? What drew you to the capital markets world?

Dominik Thumfart
Well, during my study days, Michael, I very quickly realized that banking, finance, capital markets are really central to all economic activity. In the what's called, in inverted commas, the real economy. Whether it's Greenfield investments or the acquisition of Brownfield assets, financing and managing the risks of these activities is really crucial to the economics and ultimately to the success of putting money to work. And I come back to what I said at the outset. I had an affinity to hydropower plants. A strange hobby, so to say, but financing hydropower plants formed an important part of my early banking career. I did finance a number of hydropower plants using various structured finance techniques. I was at CIti at the time, as I told you. I had a career in the asset finance business. I rose to be the head of the European Asset Finance Group at Citi and then back in 2006 we started to look at renewables. Then an opportunity came up Germany in 2000, in the year 2000 passed the first generation of its so-called Renewable Energy Generation Law, better known under its acronym, the EEG. And Germany was on the cusp of a major wave of investment, both investment into renewable power generation projects, but also investments into industrial equipment, building solar power equipment - solar modules, inverters, wind turbines, and so on and so forth, so forth - and it wasn't surprising that Deutsche Bank wanted to be a major player in that renewable energy wave. I was approached early in 2008 whether I wanted to move over to become Head of Renewable Energy Generation on the financing side of the business, which I did, and we were lucky in being able to pick up a lot of this early business, which benefited from very generous subsidies at the time, so-called feed in tariffs and other forms of promotion of these early investments into wind power and solar power generation. Many other countries followed, as you know well, including the United States and other countries around the globe. And a global renewable energy industry has really emerged over the past two decades, which has added a lot of other technologies to its roster - CO2-low or CO2-free forms of power generation, whether it's concentrating solar power, whether it's offshore wind, biomass, bio gas, geothermal, and other forms of energy. So it's certainly very energizing, I can say, after decades in this business to work in this sector.

Michael Crabb
I may steal that line. Well, let's put the future technology - really want to get into that, but let's push off for a few minutes, if you'll allow it. Talk a little bit- I mean, 2008, very interesting time to sort of head up a renewable business, right? You had macro crises, you have budding technology. I mean, talk a little bit about stepping into that role, how you grew that business, how you were able to support your clients to achieve their goals on sort of the cutting edge? What was the cutting edge 10, 15 years ago?

Dominik Thumfart
Yeah, no, happy to do that. I mean, I think we'll get to that, probably talking about some of the longer term trends here. But if you're asking, Michael, about what my role implies here at Deutsche, essentially, the role is threefold. It's an origination role. Origination may be quite a technical term. You might also call it sourcing of business opportunities with new clients, building relationships with whoever needs that financing for large-scale power generation projects, and/or acquisitions of companies in these in these sectors, origination sourcing. Then once you have a client, then you want to retain it. We call this coverage. We call this business coverage, relationship management to some degree. And then the third aspect really is more broadly business development where you prepare yourself for market entry into either new countries or into new sectors. And what was originally very much European-centered business then grew into the Americas, both North and Latin America. And in recent years, we've really had a very successful foray into the high growth, high population markets of Asia Pacific. Maybe we can talk about that a little bit later. Also, in terms of sectors, some of these sectors have become very mature, they've come of age. Onshore wind and solar PV are very mainstream. You might also say commoditized by now. We've been spending less and less time in these sectors, because there are enough institutions around to finance power generation projects in these sectors. We've been trying to move away, more towards higher risk, higher return asset classes. That was offshore wind later on and then from there we moved into biomass, into bio gas. And more lately, we've actually tried to broaden the sector definition of the perimeter a little bit from renewables onwards to energy transition. And energy transition may involve assets which are not strictly speaking renewables. We recently financed a CCGT plant here in the UK. We financed the acquisition of a smart metering business. We financed bio gas plants earlier in the year. And those are indications the sector keeps moving, the sector keeps innovating, and the boundaries of what is being done within the energy transition is constantly being pushed out. Who are our clients? I think that's relevant as well for this discussion. It's not typically the utilities. They have their own credit standing. They can use corporate debt. No, our clients are a variety of financial investors, the leading infrastructure funds, equity funds, who raise leverage for their investments. It's renewable energy developers, some of them very small. And we have really nurtured some of these from small 20-people call them startups into very, very sizable and professional companies in their own right. Independent power producers, some of those started as renewables developers and then they became independent power producers by virtue of raising enough cash and generating enough money from their business activities to then staying involved in the actual management and operation of the power plants they developed and generating power themselves and selling power themselves. And then sometimes we are also working with joint ventures, between established corporates, utility companies, and some of these financial investors, because one of the trends we've been seeing is that the projects have gotten larger and larger. But that's already one of the trends in energy finance that you might want to talk about a little bit further.

Michael Crabb
Definitely a lot in there. Really good overview and description. A lot in there that I want to dig into a little bit. Maybe talk about- you talked about kind of staying on the cutting edge and it seems like that's maybe a bit of a differentiator for you and your firm. How do you evaluate- you mentioned 20-person startups and newer technologies, carbon sequestration. How do you screen or filter what companies you choose to work with or decide to sort of bring to your clients on the capital side? How do you kind of work through that?

Dominik Thumfart
I mean, there is a very established methodology of analyzing deals. You look, first and foremost, I would say you look at the identity of the sponsor. And I think it's very important, first of all, that you form a view about the integrity of the people you're dealing with and whether people have the very same code of conduct and the very same values that you yourself live by in your professional life. That's maybe the starting point. You want to make sure that the business practices of the people you finance coincide with your own business practices. And, you know, you might be very diligent in your project analysis and you might have read all the various due diligence reports from legal advisors, technical advisors, market advisors. You might have very carefully looked at the construction concept, whether you get a big certain fixed-price EPC contract, you have a very sound operation and management concept. You have long term power offtakes in place when you talk about the generation project. There is still always the chance that you have some major market disruption, as a result of geopolitical events or what have you. And those are the cases where you then may need to find out what the quality, the standing and the integrity of your counterparty and the sponsor behind your counterparty is really about. I think that's a very important consideration in our overall project analysis. I think the one thing which has become ever more important over the past few years is that the people you are working with have a similar commitment to ESG. That's another one of these magic acronyms: Environmental and Social Governance. And I think that's become more important over the years that people, really- it's a substance over form analysis that you really form a view on how people behave, how people conduct their business, how people run their companies. And a very interesting development, Michael, has been the evolvement, or the rise of what we call ESG-linked financings - which is something that we at Deutsche try to excel at - where, essentially, you agree with a borrower on a certain set of key performance indicators, KPIs in short, along the spectrum of environmental and social governance criteria, and the client will then commit themselves to comply with these KPIs. And then you can form an ESG-linked financing around that. So either you create an incentive in the sense that if the client needs those key performance indicators, he gets a slight reduction, slight but noticeable risk reduction in the cost of their financing. Or you create it the other way around, you do it as more of a sanction. If they do not comply with those criteria, then the financing cost goes up. We've been ESG arranger. We've been working with a number of our sponsor clients lately in agreeing on such KPIs and they really give you a good idea about the diverse set of criteria that clients use in running the business. Those can be about gender diversity. They can be about massively - not massively, but ambitiously, I think ambitious is a very important term here - ambitiously reducing their CO2 emissions in their day-to-day operations, for example, making their fleet of company cars more fuel efficient and less CO2 emission-intensive. Those can be criteria when we are talking about building new power plants that you build accident free.

Michael Crabb
I was just gonna ask, you talked a lot about project finance and then a lot of the KPIs you were describing seem to be sort of corporate-focused, until the end here. So there are maybe different KPIs for project versus corporate green funding or ESG-linked funding?

Dominik Thumfart
Yeah, but they are, ultimately - you're right, Michael - but there is a nexus to the corporate nature of the sponsor that's behind the particular project. Because you can have a power generation or solar project, ultimately behind that is a corporate. It can be an infrastructure fund. It can be a Renewable Energy Fund. It can be an independent power producer. And those criteria can be translated one-to-one to the project. Is the project being built accident-free? Because you have very high standards of health and safety in place. Do you staff the management of the project company by diversity criteria? I think those are translatable and transferable one-to-one, really?

Michael Crabb
Yeah, that makes a lot of sense. Super interesting. Have you seen any that- well, yeah, I guess you just tie it in directly to the project and then the sponsor has to behave accordingly, so that's really interesting. Have you seen that- over the last two, three years, I feel like that sort of concept has really started to take off. Could you talk about do you see that more from new capital entering the space trying to sort of disrupt the model? Or was it more of an evolution of your existing funds that have been in energy and infrastructure for decades, they were really saying, hey, look, this is the next step in our in our business? Or maybe some combination of both?

Dominik Thumfart
Yeah, it's been a general sort of, say, evolution in society that it's no longer acceptable for society to not strive towards what may be best summarized in the 17 Sustainable Development Goals. So the broad public, but certainly also financial investors, institutional investors, are expected or are expecting these days to deploy money and to be active in areas where they can see genuine efforts to do something towards reaching those Sustainable Development Goals, which are very diverse, which, again, straddle both environmental targets we can all agree with and societal targets, we can, I think all very much identify ourselves with. And the interesting thing is, a lot of this has been happening in the power sector. I mean, my colleagues in Deutsche Bank who published a research report recently used a very interesting image when they were saying, When you look at what's been happening in the power sector - which is ultimately what we are talking about on this podcast - we found out over the past 20 or 25 years that there are more intelligent power generation technologies around than coal, oil and gas. They use this beautiful term that society has been evolving from being fire burners to electron movers. And I think we're gonna see more and more of that as electrification of our societies takes hold. And as we are moving beyond that, even to making other sectors which do not lend themselves to electrification, CO2-free in the form of molecules, green gases and other things.

Michael Crabb
I really love that fire burners to electron movers. Makes it sound so, I don't know, sort of grand, right? I really love that. Well, maybe that's a perfect transition to these future technologies, decarbonizing hard to decarbonize industries. You've mentioned a handful of different technologies so far on the podcast. I mean, talk about sort of the trends you're seeing right over the hood in the next 12 to 24 or 36 months. What are the next big technologies that you guys see coming to really commercialize?

Dominik Thumfart
Yeah, happy to do so, Michael. As I indicated before, we started out in renewable power generation 12, 13 years ago. Wind and solar are the most efficient and most cost-effective power generation technologies in a number of jurisdictions around the world now, particularly those in emerging markets. But the more and more so-called intermittent energy, renewable power, comes online, the more you need supportive technologies in order to make sure that the lights don't go out and your transmission grids don't break down. And we've taken this - you kindly alluded to our ambition of always being cutting edge before that led us to sort of say more broadly define the scope of what we're doing as energy transition as one step beyond renewables, which can also include financing power plants. Which may not strictly be power plants or other technologies, other energy technologies. Which may not strictly speaking be renewables, but which are absolutely critical for a functioning of the energy market. And maybe three examples from our recent financing. Early in the year we financed debt related to the refinancing of the acquisition by an innovative European infrastructure fund manager for bio ethanol plants in southern Europe. What's the connection here in the energy transition? Well, there is a very important regulation in place in the European Union called RED 2, the Renewable Energy Directive number two, which requires increasing blending of bio ethanol or other similar substances into gasoline in order to make to make the European transportation sector cleaner than it was before. So that was bioethanol. Then the next deal we did earlier this year was a smart meter acquisition where a leading European infrastructure fund manager bought a UK-based smart meter asset provider with about 1.6 million smart electricity and gas meters installed. What does that do? How does that serve the energy transition? Well, what are smart meters? They are electronic devices, ultimately, informing consumers about their consumption behavior and enabling them to use maybe more energy-intensive tools, household gadgets, when electricity is cheaper at night or at some other time of the day. But equally, it also enables the utility companies to very effectively monitor the user of power and also facilitating the correct and timely billing on the part of the electricity suppliers. And finally, another quick example, we - just a few weeks ago now - were the so-called underwriter of 50% of the debt related to the acquisition of one of the largest CCGT combined cycle gas turbine, gas-fired power plants. A 1.3-gigawatt facility and related 49-megawatt battery storage here in the UK by a leading global energy infrastructure provider. Obviously, that's got gas-fired power generation, so it's not strictly speaking renewables. But this asset, which is a very efficient asset, a very efficient power plant is absolutely critical for the power market. It provides capacity, fixed power generation capacity, flexibility, at a time when there is, as I said before, an increased penetration of intermittent renewables, while nuclear power plants have been closed, coal plants have been closed and less efficient thermal power plants have been closed. And those are three examples. They are very diverse assets, very diverse so to say technologies, which are important for the overall function of the electricity market. We obviously work closely- that's the benefit of being on the platform of a leading investment and corporate bank that also has an asset management business and has a research business in-house. Colleagues on the DB research side recently published a very interesting and insightful piece of research where they asked the question, Should gas be viewed as a vital energy transition fuel? And the answer was, they answered this in the affirmative. Gas is about 42% less carbon-intensive than coal. Gas power plants give the flexibility required to allow faster penetration by renewables of national grid. And finally, the gas infrastructure today that's built today can be re-tasked to handle hydrogen and other green gases tomorrow. And that is one area where we are spending a lot of time at the moment, green hydrogen and green gases as a future energy storage and as a mandated lead arranger.

Michael Crabb
Really interesting. Maybe for our listeners, before we kind of keep going down the technology path, maybe explain a little bit about the various aspects of a bank. We've had a couple other investment bankers on from different verticals. Maybe describe underwriting versus syndicating versus, really, how do you bring all of those things together across that global platform to find the right solution for for your clients?

Dominik Thumfart
Happy to. So we are, Michael, we are a primary market bank which means we have the ambition and basically the mandate to participate in the structuring and arranging of our facilities. We typically will act as a structuring and arranging bank and as an amended lead arranger. Our ambition is to deploy capital. And that's our own capital. We don't have a fiduciary duty to any debt investors. No. We are using Deutsche Bank's money, so we are acting as a principal. And we have our own balance sheet here, quite a sizable balance sheet, in the infrastructure and energy financing business, on the road this year substantially north of 2 billion euros in new transactions across a variety of different sectors and jurisdictions. Underwriting means we are offering a placement guarantee. Basically we are offering transaction execution certainty to our borrower clients. We can do this entirely on our own if the transaction size allows it or we'll be doing this as a group of underwriting banks who together then give the client certainty that the amount of debt sold by the client can actually be raised. And then, as you indicated before, the larger deals then require syndication. They require that the underwriting banks de-risk part of their overall exposure. Not everything can be booked on our own balance sheets and on our own lending books. Part of that then goes into the syndication market. The syndication market has broadened substantially over the past few years. It's no longer just commercial lenders. Other banks who are participating in these structured financings, you've had the merchants of a number of credit funds which do act in fiduciary duties towards their investors. And the interesting thing about the power sector, about the broader infrastructure sector is that we are financing long-lived assets. And a lot of these investors who commit- these institutional investors who commit that to power energy, to the broader infrastructure sector, they love the long asset life of these underlying assets. They love what we call in financial markets, the duration, the long tenor of some of these financings, because it matches very well with the long duration, the long tenor of their liabilities - when you talk about life insurance companies, pension funds, for example. So the interesting thing here is you have a much more diverse and a much more global syndication market available now. In a lot of deals, we are actively involved in the structuring syndication that involves American credit funds. It may involve banks from the Middle East, or from the broader Asia Pacific region. And that has certainly enabled us, the fact that we've got relationships through our many offices around the world. We have 14, fully operational offices in Asia, in the Asia Pacific region alone that has enabled us to underwrite larger and larger deals, in which we take an initial underwriting role and then we bring in syndication partners later on. But to finish off, I said we are a primary market bank, which means that we do not usually buy in hold positions - so debt positions, lending tickets, whatever you want to call it - in the secondary markets from banks who have structured these which we weren't originally part of.

Michael Crabb
Got it. So you're kind of on the front end. Someone says, Hey, I have a project and you kind of give feedback and say, Okay, if it's in this check size, we can do it. If it's in that check size times 10, this is what we think it looks like, but let us go talk to some other partners and kind of work through the deal that way.

Dominik Thumfart
And I mean, Michael, it's one of the things. When you started earlier in our conversation, you started talking a little bit about what are the trends in energy finance that we've seen since 2008. And I think we could do an entire podcast, but that would go beyond the scope of what of the time budget available, but-

Michael Crabb
We'll have to have you back.

Dominik Thumfart
One thing I want to mention is there's been a massive scale up of the size of projects. Early wind and solar projects were in the double-digit megawatt scale. And we at Deutsche Bank, our team, we participated in the first commercial debt financing of an offshore wind farm to be built in Germany. That was back in 2011. And that was the Borkum 2 project that was a 200 megawatt wind farm at the time. Well, there is now a very large series of offshore wind projects here in the UK which are being developed step by step and are also being financed step by step and we are talking about three different but related development zones of 1200 megawatts each. So in total, we are talking 3.6 gigawatts. And that's one of the sectors as I said. I mean, you have similar developments in other sectors, very large solar PV farms, very large concentrating solar power plants. We financed one in in Chile a couple of years back. And we will be seeing some very large combined offshore wind and electrolyzer project, which brings us back to the budding green hydrogen sector around the world.

Michael Crabb
Is that a nature of the wind and solar expansion or increase in size, is that just a nature of sort of the technology learning curve that people talk about? That people are able to take more risk or feel more comfortable that they can execute larger and larger projects? Or is it a broader trend? Are you seeing electrolyzers and green or blue hydrogen projects and other newer technologies starting out at that larger scale? Or maybe-

Dominik Thumfart
You're absolutely right. I mean, cost degression, what you just said, learning effects cost degression have been important features. One other trend since 2008 is the construction cost of what we call in financial jargon, the CapEx, the capital expenditure per megawatt built, now is a fraction of the first few projects. I remember back a decade ago in 2011, the UK Crown Estate, which owns the seabed around the British Isles, commissioned what they call the pathway study, where the ambition was to get the cost of offshore wind to below 100 pound sterling per megawatt hour by 2020. Well, let me give you one data point. The 2019 round of auctions of contracts for difference here in the UK, led to an outcome where the strike prices came in as low as 40 pound sterling per megawatt hour, below the wholesale market price in the first subsidy. So in other words, those were projects without subsidies, substantially below the 2011 ambition. And similarly, the first subsidy-free offshore wind projects were awarded in Germany in 2017 and in the Netherlands in 2018. The cost of power generation, the CapEx has gone down per megawatt, but also the cost of capital has gone down. Because not only have equipment suppliers and project developers and EPC contractors become more comfortable with building large-scale projects, also the capital providers have become more comfortable. I should probably also acknowledge that there have been more market entrants, both among equity investors and banks alike, which has put some additional competitive pressure on the cost of capital available to sponsors. Cost degression is a result of learning effects. It's a result of innovation. It's a result of economies of scale, and also a result of optimized supply chains. And we've had the scale up of renewables. We've also had - I alluded to that earlier in our conversation, Michael - we've had this globalization of the renewables industry. We've been very active in recent years in financing solar in different parts of the world, from Chile to South Africa to lately, Japan, Australia. We just did our first solar power project in India earlier this year, and also a globalization of the wind industry. I mean, offshore wind, the latest frontier market in the global offshore wind industry of markets are now out in in Asia Pacific: Taiwan, Korea, Australia. The last one of these is still very much a development market, but a number of deals have closed in Taiwan. And there are other trends. Subsidies have been disappearing, as we said. There are more and more renewables projects where you now have power purchase agreements with private sector operators, sometimes corporates. American tech companies have been super active in taking off renewable power of wind farms and solar farms. Sometimes they are even investing in those power generation projects. Or they are investing equity in them, or they are the tenants of the data centers, the very power intensive data centers that have been built and continue to be built next to onshore wind farms where the data center is basically the offtaker of 100% of the power generated in the wind farm. Exciting developments. We are seeing more and more technologies being financed. We did energy efficient lighting. I alluded to that before. We did bio gas deals, biomass deals, and so on and so forth. The thing that keeps evolving.

Michael Crabb
It must be very different across those different geographies, right? I mean, maybe can you talk a little bit about how you, as a platform, manage and are able to execute development in Taiwan and UK and Germany and South Africa. I mean, you're doing all of these different things and they all must have their unique quirks and risks.

Dominik Thumfart
Yeah, and the magic word here is you joint venture internally. And in the case of Asia Pacific, to which we've really pivoted in recent years, one cannot discount the fact that 50% of the global population and about two-thirds of global economic growth are happening in the APEC region. What we do is we are taking, we are harnessing the full potential of having, as I alluded to before, 14 fully operational offices out there in some of the key OECD and also some of the other markets in the region. And there are people on the ground in our offices, whether it's Sydney, Hong Kong, Beijing, Mumbai, Taipei, and in a lot of the other markets out there, who have in-depth, working knowledge of the regulatory legal environment in their respective jurisdictions. And one shouldn't forget, I mean, this is a massive region with some very heterogeneous, legal and regulatory environment. You need that specific local know-how. What we bring to the table when we joint venture from our team here from our infrastructure and energy finance team in London, we've got the structuring know-how and we've got some of these institutional investor relationships around the world. We follow our clients. A lot of the infrastructure funds and renewable energy funds that I cover on a regular basis have been branching out, have been expanding into the Asia Pacific region over the past few years. And some of them, they have realized that they are not the same household names among Asian Pacific banks as they may be in their American or their European home markets. And they've been quite happy if somebody like ourselves comes along and offers financing assistance. And so we bundle resources internally between our colleagues in the offices on the ground. We've also had some very successful cross sell between different teams within the bank. We've got some cutting edge derivatives expertise residing out in various of our offices in in the Asia Pacific region. On some of the offshore wind financings, we participated in Taiwan over the past three years, our colleagues in the region fronted so called deal contingent interest rate hedges, which enabled the project sponsors to lock in their interest rate risk, mitigate their interest rate risk on this project early on several months, half a year before the actual project financial close, which was obviously very important of a point in de-risking the construction of their projects early on, and also sort of securing the end locking in the targeted equity returns on these on these investments.

Michael Crabb
Yeah. You talked about the cost of capital declining, right? And that should be- you can lock that in. It probably was fairly advantageous. Super exciting. Maybe zoom even further out. We talked a lot about different technologies. I mean, in a perfect world, what does 2030 look like, for you, for Deutsche Bank, for our sort of green energy ecosystem? And can you- if I can push you to extrapolate to 2040 and 2050, I mean, what should we be expecting?

Dominik Thumfart
Well, we'll hopefully have made massive progress towards our collective goal of achieving net-zero. And I think what we will be seeing - I don't have a crystal ball, but if I can make some attempt to to say, to anticipate what we're going to be seeing - I think overall, we will be seeing the deployment of a lot of different technologies in the broader energy sector. And I think that's a great thing. It would be a misguided, futile attempt to pick technologies. I think we need a diversification of different technologies. And what we are seeing is a lot of innovation at different stages of the risk return curve, in venture capital, in private equity, but also in the infrastructure sector, which our team is playing in. We're seeing a lot of different money flowing in diverse power and energy technologies. I mean, that can be in the smart grids, smart meters, storage, energy, efficient lighting. A lot of effort, collective effort in industry, and in academia, and in finance is going into basically a build-out of the green hydrogen sector around the world. Us here at Deutsche, we are one of the leading sponsors of the German Green Hydrogen Foundation which will be organizing auctions of CFDs, of Contracts for Differences for green electrolyzer projects starting in the next few months. So that's a that's an exciting development. A lot of companies around the world - I meant to say countries around the world - have roadmaps to green hydrogen in-place. The United States has a national hydrogen strategy. The European Union has a hydrogen strategy, and so on and so forth. We'll be seeing more money going into energy from waste, more money into geothermal, heat pumps. Then there is the whole big question of sustainable water, fresh water provision, but also wastewater treatment, effective irrigation, desalination. The more and more the global population rises, the more that will come to the fore. And then, in the broader context of a circular economy, we will be seeing more focus on sustainable waste and on recycling. And that's just so to say, now in these sectors, then take a long, we haven't spoken a lot about that sustainable transport. We will need more, we will be seeing more electric vehicles, obviously, on our streets and our roads, which requires a lot of investment into charging infrastructure. Fuel cells will play a role and so on and so forth. I think it's a great thing. Innovation will continue and I think we're all hoping that, out of these efforts to develop new technologies, a few cutting edge technologies will emerge which will turn out to be game changers supporting our trajectory towards net-zero.

Michael Crabb
Awesome. Oh, yeah. I mean, we're gonna need a couple more podcasts to dig into all those different aspects that you described. Really great, though, a lot of activity. Before we wrap up here, anything else that you want to share? You want to make sure our listeners kind of hear about anything we've talked about or anything we have?

Dominik Thumfart
Well, maybe I should just say, because that's maybe an addendum to your question about what if I made a forecast, what will we be seeing? Certainly I can say, as a proud employee of this institution, we will be working very hard towards making our contribution here as well in deploying capital into sustainable projects. And this is not narrowly defined. This is not just renewable power or energy transition assets. This encompasses the broader range of sectors that are considered environmentally and socially benign under a broader concept of ESG. We've got a target, which was passed in May 2020, of basically deploying 200 billion euros of sustainable financing and investments until the end of 2025 across our businesses. And that excludes the asset management business, they have their own ambitious target. But we will be deploying 200 billion euros in financing projects, financing companies, arranging bonds, and other transactions in other financing transactions in the capital markets and making actual investments through various parts of the bank. And we are well on our trajectory. I checked the numbers ahead of this podcast. In July 2021, we had deployed 71 billion euros already, and I think that will continue to be one of the guiding principles here. We have a sustainable finance framework in place at the bank. And I can tell you, there is not a single investment committee in which I've been part of in the last two years where ESG hasn't played a major role. And I can tell you also that even our compensation is tied these days to ESG relevant sectors.

Michael Crabb
Yeah, really putting your money where your mouth is. I love it.

Dominik Thumfart
Exactly. And I think that's a good thing.

Michael Crabb
Well, what a great way to sort of tie it off. Dominik, thanks again so much for your time. It was fascinating and looking forward to keeping an eye on everything that you guys do over the next few years.

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