Note on Securitization

The document defines traditional and synthetic securitization and analyzes how these mechanisms can be used by fossil fuel companies to diversify funding and manage balance sheets. It critiques current 'green' securitization definitions for being too broad and proposes a three-dimensional framework—focusing on use of proceeds, asset character, and company commitment—to prevent the mechanism from indirectly financing fossil fuel expansion. Reclaim Finance advocates for a regulatory framework that ensures transparency and restricts securitization to sustainable energy activities.

• The European securitization market is significantly smaller than the US market; in 2022, issuance was 147 billion euros in Europe compared to 2,439 billion euros in the United States.
• Fossil fuel companies can use securitization to maintain financing levels without balance sheet penalties, obtain lower-cost funding than bonds, and achieve higher credit ratings for securitized products through collateralized cash flows.
• Historical examples of oil and gas securitization include Qatar Petroleum raising $1.2 billion in 2003 by securitizing LNG revenues, as well as operations by Petrobras in Brazil and PDVSA in Venezuela.
• Current 'green' securitization definitions are criticized for being imprecise, potentially allowing the financing of fossil assets if the transaction is based on green underlying assets or vice versa.
• The document highlights a lack of transparency in securitization transactions, noting that it is often impossible to determine the composition of underlying assets or the specific use of proceeds.

APA

Reclaim Finance (2024). Note on Securitization. https://reclaimfinance.org/site/wp-content/uploads/2024/10/Reclaim-Finance-Securitization-September-2024.pdf

Chicago

Reclaim Finance. Note on Securitization. 2024. https://reclaimfinance.org/site/wp-content/uploads/2024/10/Reclaim-Finance-Securitization-September-2024.pdf.

Wikipedia

{{cite report |author=Reclaim Finance |title=Note on Securitization |date=September 2024 |url=https://reclaimfinance.org/site/wp-content/uploads/2024/10/Reclaim-Finance-Securitization-September-2024.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{reclaimfinance2024note, author = {{Reclaim Finance}}, title = {{Note on Securitization}}, institution = {Reclaim Finance}, year = {2024}, month = sep, url = {https://reclaimfinance.org/site/wp-content/uploads/2024/10/Reclaim-Finance-Securitization-September-2024.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }