Mobilising UK Pension & Insurance Capital; the Opportunity
As governments and industries confront the enormous cost of retiring ageing infrastructure, a new investment frontier is beginning to emerge. In this timely white paper, Julien Halfon of BNP Paribas Asset Management argues that decommissioning should no longer be viewed simply as a stranded liability, but as a long-term productive finance opportunity capable of mobilising institutional capital at scale.
Focusing on the UK’s estimated £240 billion decommissioning challenge, the paper explores how pension funds and insurers could play a pivotal role in financing the closure, remediation and redevelopment of legacy energy and industrial assets through structured, revenue-backed investment vehicles. It also examines the policy reforms, governance structures and regulatory clarity needed to unlock private capital for what could become one of the defining infrastructure transition themes of the coming decade. (uksif.org)
The UK Government’s Modern Industrial Strategy1 , published in June 2025, sets out a 10-year plan to boost investment, productivity and economic resilience by targeting growth in key sectors. It builds on the Invest 2035 green paper and forms part of the government’s broader growth mission to raise living standards. The strategy identifies eight priority “IS-8” sectors including advanced manufacturing, clean energy, digital and technology and seeks to support them through improved business conditions, enhanced access to finance and skills, and strengthened regional development.
Within this context, the UK faces a complex industrial transition from legacy energy, manufacturing, and infrastructure to a Net Zero economy. Closure, decommissioning, and environmental remediation are costly, but they present a unique opportunity to channel long-term institutional capital into sustainable projects. The UK’s nuclear, oil and gas, and heavy industrial sectors collectively carry around £240 billion in end-of-life liabilities. These are currently financed primarily by corporate balance sheets and the public sector, but represent the same duration, inflation linkage, and cashflow characteristics sought by pension funds and insurance portfolios.
This paper outlines how UK pension and insurance capital can fund decommissioning and redevelopment, generate stable, inflation-linked returns and support environmental and regional regeneration. We argue that:
Decommissioning and redevelopment are two sides of the same lifecycle: one releases capital, the other redeploys it.
Institutional investors, particularly pension schemes and insurers, are natural partners in financing this lifecycle.
The UK government can catalyse investment by legislating for the provision of Decommissioning Reserve Funds (DRFs), Transition Bonds, and Redevelopment Trusts, classifying them under “productive finance” reforms.
Early pilot programmes - in nuclear, North Sea oil & gas, and coal-to-renewables conversions - demonstrate the feasibility of structured, revenue-backed investment vehicles.
Targeted regulatory clarity and co-investment guarantees could unlock billions of private pension capital for decommissioning-linked projects by 2035.
Download the full white paper here
