The Asian Development Bank (ADB) has sold US$232.2 million worth of Clean Energy Bonds in the Japanese retail market to support its renewable energy and energy efficiency projects in Asia and the Pacific. Lead manager was HSBC.
This is an escalation in the issuance of environment-themed bonds. The largest issuer of environment-themed bonds remains the World Bank, with $1.3 billion, although the ADB has said that it expects to issue more climate and green-themed bonds.
The new edition of Carbon Management journal, published today, includes an Editorial by Prof. John Mathews and Sean Kidney on "Climate bonds: mobilizing private financing for carbon management".
Responsible Investor journal reported last week that Alain Dromer, the new chairman of the the Association of British Insurers Investment Committee, had called for the re-activation of the securitisation markets to help develop environmental investment opportunities. Absolutely right.
“We want to work with the government to develop the right kind of environmental investment opportunities” he said. You can read the full speech here: Alain Dromer ABI speech. Note page 4 in particular.
The PACE (Property Assessed Clean Energy) program, strongly pushed by the US Department of Energy as the ideal financing model for residential solar panels and energy efficiency, is in trouble. It may have implications for the UK's PAYS scheme. The bonds are candidates to be called climate bonds.
PACE involves local authorities raising funds with special-purpose Municipal bonds, guaranteed by the federal government, to on-lend to households. Capital is provided to fund projects on demand. Climate Bonds Advisory Panel member Christoph Harwood calls this “buying a bond in tiny pieces”.
A senior provincial official recently told China Daily that Chinese financing for clean energy may reach 8 trillion yuan, and China may issue yuan-denominated "green bonds" to meet financing demands.
Gao Cailin, director general of the Office of Financial Affairs of Jilin Province, said that "The soaring demand would create huge space for development of 'green finance'."
"The soaring demand would create huge space for development of 'green finance'," he said.
Green finance refers to credit aimed to support low-carbon green sectors, such as new energy.
The UK Government yesterday held an investor and financier forum to launch it's new Capital Markets Climate Initiative to unlock new investment in low-carbon technologies - as well as make London a global hub for green finance. There was a special emphasis on financing climate change mitigation activities in developing nations.
Environment Business Australia (EBA) has put forward six key climate change recommendations to the new Australian Government, including climate bonds and a Green Investment Bank. EBA's Fiona Wain was first briefed on the Climate Bonds Initiative at the Copenhagen Conference last December.
In a chapter for a new IFR Intelligence Report on Sustainable Banking, Sean Kidney, Christopher Flensborg, Alex Veys and Bryn Jones argue that the nascent environmental theme bond market heralds the arrival of a major class of theme bonds (climate bonds), as institutional investors and governments devote capital to a product which both fulfils risk/reward expectations and signals their de-carbonisation efforts to their member and voter stakeholders.
True! See for yourself. OK, it's only $1 mil and backed by Lafarge and it's a bit publicity stunt; but it's an entertaining one.
The issuer is Novacem, a spin-out from Imperial College London that has developed a "carbon negative cement" that they claim will offer cost and performance parity with Portland cement.
(Thanks to Christoph Harwood for spotting it.)
A discussion paper released today by the Climate Bonds Initiative reviews experiences with State infrastructure banks in Europe and the US. The paper says that there are a wide range of financial engineering options that a Green Infrastructure Bank could use to to leverage public funds to support an increased flow of private investment into clean energy and climate change mitigation projects.
