Climate Bonds Blog
(In case you're wondering, EE means Energy Efficiency!)
> A £10 million bond issue by independent energy company Ecotricity has been oversubscribed by 62 per cent. The firm will leverage the money raised and use it to finance more wind farms, green gas and alternative energy projects. The bond pays 6 per cent, but Ecotricity customers receive an extra half a per cent. They key to success: having a happy retail customer base to market to, and of course doing it well.
> The European Investment Bank (EIB) lends more to clean energy than any other bank in the world. That’s something for Europe to be proud of. But CEE Bankwatch has just shown how, in a way that undermines the EU’s emission reduction targets, the EIB also continues to lend to coal-fired power stations. In fact they lent more this year than last. It’s policy lunacy that when global emissions have just gone up 6% in one year the EU, through its development bank arm, continues to provide subsided financing that locks in new coal power plants - €5bn in 2010. Europe, get your act together.
In a Statement headed "Creating long term value – Insurers ask for action so they can contribute to new growth", Swiss Re, Allianz, Legal & General, Aviva and Aon Benfield yesterday said:
"We support the objectives of the Climate Bonds Initiative which aims to provide assurance for investors regarding the environmental integrity of climate bonds. This will help to address concerns around reputational risk."
The insurers say they could help the global economy fight back to growth, and tackle climate change if issuers and regulators increased opportunities to make low carbon fixed income investments.
California State Treasurer (and Climate Bond Standards Board member) Bill Lockyer today announced the State has completed a deal to buy $400 million of World Bank green bonds.
Proceeds of bonds issued under the World Bank program finance renewable energy and other, non-nuclear, projects around the globe to fight climate change. The State will get a 0.51 percent yield on the two-year bonds - roughly double this week’s rate on two-year US Treasuries.
This is Lockyer’s second deal to buy World Bank green bonds. In April 2009, the State became the first US buyer of the bonds when it made a $300 million investment.
> Negotiations briefing by an insider (our own mole): “The US is arguing for 4 years ‘reflection’, and then restarting the negotiations. (Yet the IEA says we have to have emissions going down by 2017. Yech.) Our insider is depressed – says it feels like the whole negotiations are back where they were five years ago. The US is trying to trap China into being part of the Emission Trading Scheme, but everyone knows the US can’t deliver on their own involvement. China is willing, but doesn’t want to move ahead of the US. India is making mad demands, but will probably flip and agree if it gets to the last minute. Venezuela and Brazil are playing a blocking game but can be turned. Russia and Japan will go with the flow once everyone else has agreed.
We've been pressing governments - and the UNFCCC's Green Climate Fund - to use public finance mechanisms (PFMs) to support low-carbon investments. Yet not enough work has been done on evaluating the relative efficiency of PFMs.
We've just completed this (quick) report for the UNEP SEF Alliance, working with consultancy Irbaris. There are eight case studies - Germany, France, Canada, Ireland, the UK, China, Chile and Brazil - evaluated against a developed methodology, with "best" practices identified.
> The World Bank is exploring issuing the first Green Sukuk to fund low carbon development or environmental projects. They’re collaborating with the Islamic Financial Service Board (IFSB) to work out a framework to identify issues involved for Islamic financial institutions in the event of insolvency.