National Australia Bank (NAB) has launched first certified Climate Bond in Australia, with an aim to fund a portfolio of seventeen wind and solar energy farms.
The bond has raised $300 million, according to NAB.
The assets financed by the climate bond are expected to have an installed capacity of over 1.5 gigawatts of electricity in total, enough to neutralize 3.9 million tons of CO2 emissions. All of these are project finance facilities originated and serviced by NAB.
Almost fourteen among them are already operational and three are under construction.
The Climate Bonds Standard; a FairTrade-like labeling scheme for bonds, has certified and approved the bonds, permitting investors to prioritize climate-smart investments that reduce carbon reduction.
This is the first green bond release from an Australian issuer with an expectation to raise around $150 million of investments, according to NAB officials.
Antony Cahil, group executive, Product & Markets, NAB, said the deal reinforces NAB’s position as the largest debt financier of renewable energy in Australia, provides the sector with a new funding source, and highlights the firm’s market-leading environmental solutions credentials.
Recent trends show that investment demands to tackle climate change issues have increased, escalating the rapid growth of the green bonds market, which has trebled from $34bn in 2014 reaching $100bn in 2015.
Through independent certification, investors gain confidence that money is not being wasted and the bond proceeds are spent on projects or assets that address climate change.
Meanwhile, in another development, the Abbott government has been accused of making impossible demands for Australia’s participation in any global climate change agreement, planned in Paris next year.
Australia is insisting that the Summit must include legally binding emissions targets.
According to experts, the Paris agreement needs countries to protect their new post-2020 greenhouse emission reduction targets in domestic law.
However, an attempt to legalize the agreement may drive away the world’s two biggest emitters, the US and China, which will make the process fail.