Green Infrastructure Investment Opportunities AUSTRALIA &

Sponsors Green Infrastructure Investment Opportunities, Australia & New Zealand

Contents This report highlights green infrastructure investment opportunities in Australia and New Zealand 3 Executive This report highlights green infrastructure superannuation funds and asset summary investment opportunities in Australia and managers and their global counterparts, New Zealand. It has been prepared to potential issuers, infrastructure owners 4 Green help meet the growing demand for green and developers, as well as relevant infrastructure: an investment opportunities – including Government ministries (Finance, Planning, green bonds - as well as to support the Energy, Transport, Environment). It is part opportunity for two countries’ transition to a low-carbon of a research series which commenced growth economy. It aims to facilitate greater with the Green Infrastructure Investment engagement on this topic between Opportunities, Indonesia report in 5 Macroeconomic project owners and developers, and May 2018 and will investigate green institutional investors. infrastructure investment opportunities outlook around the world, initially focusing on the Green finance instruments and trends Asia-Pacific region. 6 Infrastructure are explored in the report, with sector- by-sector options presented. Green In developing this report, the Climate financing infrastructure investment opportunities Bonds Initiative consulted with key are also explored sector-by-sector, with Government bodies, industry, the 8 Green finance projects presented in reference case financial sector, peak bodies, NGOs studies and a sample green pipeline and think tanks – in partnership with 13 Green standards of opportunities. The sample pipeline ANZ, Commonwealth Bank of Australia, is not exhaustive – rather a snap shot Macquarie Group, NAB, Westpac, the 16 Green of the different types of opportunities Clean Energy Finance Corporation infrastructure available in the short and medium-term (CEFC), IFM Investors, the Investor future. A more comprehensive list of over Group on Climate Change, the Principles investment 400 green infrastructure investment for Responsible Investment and RIAA. opportunities opportunities is available on the Climate We would like to thank these partners Bonds Initiative website. along with the other organisations that contributed to the report: Australian 17 Low-carbon The report is intended for a wide Water Association, Green Building Council range of stakeholders in Australia transport of Australia (GBCA), GRESB and New and New Zealand, including domestic 21 Renewable Zealand Green Building Council. energy 24 Sustainable Climate Bonds Initiative water The Climate Bonds Initiative is an Climate Bonds Initiative screens green international investor-focused not-for- finance instruments against its Climate management profit organisation working to mobilise the Bonds Taxonomy to determine alignment USD100tn bond market for climate change and uses sector specific criteria for 27 Green buildings solutions. certification (see Annex 1).

It promotes investment in projects and Climate Bond Partners range from 32 Green investment assets needed for a rapid transition to a investors representing USD14tn of AUM opportunities are low-carbon and climate resilient economy. and the world’s leading investment banks The mission focus is to help drive down to governments like Switzerland and growing the cost of capital for large-scale climate France and include major Australian and and infrastructure projects and to support New Zealand institutions such as ANZ, 33 Annexes governments seeking increased capital Commonwealth Bank of Australia, NAB, markets investment to meet climate goals. CEFC, GBCA, Investor Group on Climate 36 References Change and Westpac. The Climate Bonds The Climate Bonds Initiative carries out Initiative is also the lead partner in the market analysis, policy research, market Green Infrastructure Investment Coalition. development; advises governments and regulators; and administers a global green bond standard and certification scheme.

Australia & New Zealand GIIO Report Climate Bonds Initiative 2 Executive summary

Since the signing of the Paris Agreement This report identifies over 400 projects and there has been an increasing demand assets that could qualify for refinancing, “Climate change is real. It’s from institutional investors for investment additional financing, or new financing in the happening now. This is not opportunities that address environmental near- to long-term. about talking about what we challenges and support sustainable The Climate Bonds Taxonomy1 was used to do in the future, but the action development. Australia and New Zealand identify eligible green projects under four that we have the potential are both characterised by small populations, sectors. To narrow the scope and volume of to carry out as leaders in the high GDP per capita and well-developed projects the following filters were also applied: business community and the capital markets. Australia also benefits from international environment.”3 access to a AUD2.6tn national savings pool. Low carbon transport – mostly projects valued Both nations face challenges in adapting to New Zealand Prime Minister above AUD100m climate impacts and in meeting tightening Jacinda Ardern (Australia) and NZD100m international emissions targets. They also (New Zealand) need to develop sustainable urbanisation models and to address congestion. There Renewable energy - Most Australian and all New Zealand green is a mounting urgency for government only renewable energy bond issues to date have been Certified under and industry to increase their emphasis generation facilities above the Climate Bonds Standard reflecting strong on policies and provision of low-carbon, 50MW adherence to international best practice. The sustainable and climate resilient ‘green’ label of ‘green’ is, however, not widely applied Sustainable water infrastructure. The brown to green to infrastructure. The ‘green’ standards management – mostly transition from emissions intensive brown that do exist are mostly voluntary and projects valued above infrastructure to cleaner assets needs administered by non-government bodies. AUD50m (Australia) and to attract broad-based support and NZD50m (New Zealand) There is an immediate and growing considerable momentum in order to meet opportunity for institutional investors the Paris goals. Low-carbon buildings - to become more active, to expand their Green Star certified projects There is an infrastructure construction boom participation in green infrastructure - mostly 6-star rated underway in Australia and New Zealand. financing, building on the impressive projects Although both nations have traditionally relied foundation established so far. Investing in heavily on high-emission, fossil fuel-powered The report has been prepared to help green infrastructure will ultimately help the transport – there is an increasing focus on (low- meet the growing demand for ‘green’ and governments to reach their climate targets, carbon) and freight rail. There ESG investment opportunities – including spur innovation, broaden the economic base, is a boom in building small- to large-scale green bonds - as well as to support both reduce urban congestion and promote more renewable energy capacity. Green building nations’ respective transitions to a low- sustainable economic and social well-being. certifications have grown significantly, and carbon economy. It aims to identify green The infrastructure pipeline found in this resilient buildings are becoming mainstream. investment projects with investment report is encouraging, but the scale of the potential and explore how investors can gain Almost half the projects included in challenge requires far greater ambition. The exposure to these using innovative green Infrastructure Australia’s Infrastructure Asian Development Bank estimates the finance instruments. Priority List 2018 meet international investor climate-adjusted infrastructure investment definitions of ‘green’, although they are Internationally, growing interest in green needs for Pacific region countries at 9.1% of not always labelled as such. Similarly, just finance has resulted in the development and their GDP between 2016 and 2030.2 With over 40% of New Zealand projects in the growth of dedicated green financial products Australia’s and New Zealand’s GDP totalling Australia and New Zealand Infrastructure including green bonds, green loans, social USD1.5tn, this translates to approximately Pipeline (ANZIP) could be considered ‘green’. and sustainable bonds, green infrastructure USD1.5tn by 2030. There is no time to rest investment trusts and green index products, on laurels - the scale and timeframe is such Green infrastructure development presents which complement opportunities in public that far more needs to happen and quickly. a range of attractive green investment and private equity investments. Green bonds opportunities. There is an increasing Both nations have the potential and have become a popular debt instrument for number of low-carbon transport, renewable economic conditions to develop a well- exposure to green assets and projects. energy, sustainable water management planned sequential pipeline of green and green building projects in the pipeline. A green bond market emerged in Australia investment opportunities. Australia in in 2014 and more recently in New Zealand. particular is also uniquely placed with Australia was the 2nd largest source of superannuation funds and managers having “Our cities are the crucible issuance within the Asia Pacific region for a global presence in infrastructure, debt of innovation, of enterprise – H1 2018 and 12th globally, outpacing green financing and alternative assets. A robust it’s where so much of GDP is issuance from larger bond markets like Japan. green market would see Australia poised created and it’s vital they have Australia has emerged as a best practice model to become a significant source of capital the right infrastructure.”4 of early development with commitment flows and expertise into the region as from the major banks and asset managers, ASEAN nations shift towards green Former Australian Prime providing a sound base for expansion, despite finance to help meet their intertwined Minister Malcolm Turnbull the relatively minor supply of non-bank ASX national-development, energy, emissions 100 green issuance to date. and climate goals.

Australia & New Zealand GIIO Report Climate Bonds Initiative 3 Green infrastructure: an opportunity for growth

International context Australia and New Zealand Zealand Infrastructure Pipeline19 (ANZIP) could be considered ‘green’. However, the budget Globally, the green economy is growing. Since Australia and New Zealand both face allocated to these seemingly ‘green’ projects, the signing of the 2015 Paris Agreement challenges in adapting to climate impacts in each country, is much less than that for all there has been an increasing and publicly and in meeting stricter international other projects. expressed awareness among institutional emissions targets. They also have challenges investors, particularly from OECD nations and in building sustainable urbanisation models With an increasing urgency to respond to the China, of the long-term risks climate change and addressing congestion. Both Australia challenges of climate change, governments, poses to their ability to match assets with and New Zealand have high urban based the financial sector and industry all need liabilities. This has led to growing demand populations of about 90%16 . to increase their emphasis on policies and for investment opportunities that address provision of low-carbon, sustainable and A greater role by the financial sector and environmental challenges and support resilient green infrastructure. The transition in particular private sector investment sustainable development, resulting in the from polluting brown infrastructure to is considered crucial to the successful development and growth of dedicated green cleaner and greener assets needs to gain implementation of policy responses related financial products, including green bonds. momentum with widespread support. to reducing carbon intensity, improving The global green bond market has seen capital allocation, bridging investment gaps, Traditional high-carbon infrastructure exponential growth, exceeding USD161bn accelerating infrastructure provision and investments still dominate in Australia, with of issuance in 2017 up 85% from the year embedding climate resilience. road, rail and ports being built to facilitate before. Milestones5 have been set for annual fossil-fuel industries. Australia’s CO₂ Both countries have ambitious infrastructure issuance of USD1tn in green bonds and loans emissions output on a per capita basis is one and energy development plans. The by 20206 and an Asian market of climate of the highest in the world20. emphasis is on improved connectivity, more related infrastructure in the trillions during reliable service delivery, and enhanced Having ratified the 2015 Paris Agreement, the following decade, according to the Asian productivity growth. The Australian 2017-18 Australia and New Zealand have committed Development Bank7. Federal Budget features an infrastructure to making finance flows consistent with a In Australia, despite a slow response by spending program of AUD75bn from pathway towards low-carbon and climate government, the financial sector is moving 2017-18 to 2026-27, including funding for resilient development. The Australian ahead8 . Australia’s major banks have led critical airport, road, and rail infrastructure government has, however, been criticised21 the way9 by adopting and promoting best projects. Similarly, the Government of for not making stronger emissions reductions practice10 in green bond issuance and New Zealand will focus on road, rail and commitments. After the recent national supporting smaller issuers. The world’s water infrastructure as well as regional elections, New Zealand has been pursuing fourth-largest pool of retirement funds development. It has allocated almost more ambitious climate policies. It has and other institutional investors have NZD1.5bn to these in the 2018 budget17. pledged to reach carbon neutrality by demonstrated an appetite for alternative 2050 and establish the mechanisms to Although both nations have traditionally assets and global presence in infrastructure11. phase out fossil fuels. relied heavily on road and water transport This creates a solid foundation to significantly – using high-emission, fossil fuel-powered Despite their different public approaches, increase investments in green infrastructure vehicles and vessels – there is an increasing both governments have made infrastructure and build a robust and supportive focus on public transport and freight rail. and sustainability commitments. They will environment for green finance. There is a boom in building small- to large- require significant investment, both public The same can be said for New Zealand. Green scale renewable energy capacity. Green and private, underpinned by innovative finance concepts12 are taking hold and green building certifications have significantly finance models. Green finance can play a debt13 and bond issuance14 is appearing15. increased, and resilient buildings are significantly larger role in the future. becoming mainstream. The number of Australia and New Zealand have the The last two decades have been about green infrastructure projects has risen in potential to be global leaders in green making assets work harder. The future will both countries. infrastructure delivery as both governments be about making ‘green’ upgrades to have the capacity and economic conditions Almost half of the projects in Infrastructure existing assets and harnessing the capital to developing a well-planned sequential Australia’s Infrastructure Priority List 201818 required for the delivery of new smart pipeline of green investment opportunities. meet international investor definitions of resilient infrastructure. Infrastructure needs The respective finance sectors are well ‘green’, although they are not always labelled to be fit for purpose over long operating positioned to develop and subsequently as ‘green’. Similarly, just over 40% of New cycles in a carbon-constrained, climate- export green finance expertise. Zealand projects in the Australia and New impacted landscape.

Nationally Determined Contribution under the Paris Agreement in terms of reduction commitments for annual national greenhouse gas emissions: Australia: 26–28% below 2005 levels by 2030 New Zealand: 30% below 2005 levels by 2030 Under the Paris Agreement, contributions must be updated regularly. The next update to Nationally Determined Contributions can be provided in 2020.

Australia & New Zealand GIIO Report Climate Bonds Initiative 4 Macroeconomic outlook

Australia Australia Country Facts New Zealand Country Facts Australia’s real GDP growth is projected to continue at around 3% in 2018 and 201922. Population: 25 million (2018) Population: 4.8 million (2018) Australia has experienced uninterrupted Population growth rate: 1.35% (2017) Population growth rate: 0.97% (2017) economic growth for 26 consecutive Urban population: 90%30 Urban population: 86%33 years. Continued growth will be aided by Rate of urbanisation: 1.37% annual rate Rate of urbanisation: 0.98% annual an improving global outlook, strong public of change (2015-20 est.)31 rate of change (2015-20 est.)34 infrastructure investment, and improved investor sentiment. Increased investment in GDP: USD1,323bn (2017) – 13th largest GDP: USD206bn (2017) housing is also anticipated to provide near- economy in the world Interest rate (cash rate): 1.75% (at end term support to the economy, helping with Interest rate (cash rate): 1.5% of 2017) housing supply and pricing23. Publicly-funded (at end of 2017) Inflation rate: 1.5% (Q2 2018) infrastructure development and private Inflation rate: 2.1% (Q2 2018) Government 10Y, M: 2.76% sector spending on non-residential buildings Government 10Y, M: 2.65% (at July 1st, 2018) will also be key drivers of investment activity (at July 1st, 2018) Balance of trade: -NZD113m (June 2018) and employment over the coming years24. Balance of trade: AUD1873m (June 2018) Government debt to GDP: 22.2 % Government debt to GDP: 41.9 % (2017)32 (2017)35 The economy has adjusted to the recent decline in mining-related investment thanks Moody’s rating: Aaa (stable) Moody’s rating: Aaa (stable) to an accommodative monetary policy, a S&P rating: AAA (stable) S&P rating: AA (stable) flexible labour market, stable rate of inflation, Fitch rating: AAA (stable) Fitch rating: AA (stable) and a lower exchange. Furthermore, non- mining business investment has picked up and is projected to continue with increasing GDP for Australia and New Zealand (2008–2018)36 infrastructure development. Public debt is expected to fall as a proportion 1600 220 of GDP, which should support a positive economic outlook. Government’s goal is to 200 reduce the annual deficit by around half of a 1400 percentage point of GDP per year over the four-year budget horizon25 . 180 New Zealand 1200 New Zealand’s real GDP growth is projected to 160 continue at 3% in 2018 and 201926 . Growth will be aided by anticipated increases in interest 1000 140 rates, strong tax revenue and government spending, particularly on infrastructure. With Australia government debt expected to decline as a New Zealand

Australia GDP (USD bn)Australia 800 120 GDP (USD bn) Zealand New share of GDP, additional spending should not affect fiscal sustainability. 2008 2010 2012 2014 2016 2018 Forecasts show surpluses in the operating balance before gains and losses, reaching Australia and New Zealand Government Bond 10Y (2008-2018)37 NZD7.3bn in 2021-22 or 2.1% of GDP, which means that national net debt falls as a percentage 7 of GDP to 19.1% in 2021-22. This would satisfy the Australia government’s net debt target of 20% by 202227. 6 New Zealand It would also address some of the concerns raised by Fitch Ratings: while they affirmed 5 New Zealand’s rating, the credit rating agency cited high external debt burden and persistent current-account deficits as an issue28. 4 All three ratings agencies found that New Zealand’s ratings were supported by strong 3 governance standards and prudent fiscal management. An example is the goal to keep 2 future annual CPI inflation between 1-3% over the medium term and to avoid unnecessary

% Interest rate % Interest 1 volatility in output, employment, the exchange rate, and interest rates29. 2008 2010 2012 2014 2016 2018

Australia & New Zealand GIIO Report Climate Bonds Initiative 5 Infrastructure financing

Globally, there is a high demonstrable Major publicly-funded works spending trends, need for infrastructure investments. Australia, 2014-202059 Large tax cuts since the 1980s have Metronet (WA) NorthCornex (NSW) led to considerable public-sector 24 Snowy Hydro Expansion (NSW) Sydney Metro Northwest (NSW) underinvestment in infrastructure. This Pacific Highway - Woolgoola to Balina (NSW) WestConnex (NSW) has resulted in a significant gap between Airport Link (WA) NBN public sources of infrastructure finance 20 Melbourne Metro (VIC) available and the levels of infrastructure investment required by global economies Level Crossing Removals (VIC) Western Distributor (VIC) to achieve their sustainable long-term 16 Cranbourne-Pakenham Rail (VIC) economic growth potential37. Western Harbour Tunnel (NSW) Currently about 1.5% (USD2tn) of Sydney Metro and Southwest (NSW) annual global GDP is invested in 12 Badgerys Creek Airport (NSW) infrastructure projects. However, an CBD and South East additional 1.0% (USD1.5tn) of global GDP (NSW) needs to be invested annually to adequately 8 meet infrastructure needs in transport, energy, building, land protection and water 38 through 2030 . Unlike other asset classes, 4 infrastructure investments present a unique risk-return profile. They tend to be less impacted by the business cycle and can

USD Billions 0 provide a hedge to changes in interest rate. Infrastructure financing can provide long- 2014 2015 2016 2017 2018 2019 2020 duration exposures of over 20 years. increase competition and thus drive better and an information portal for market Financing infrastructure in 39 42 Australia and New Zealand value-for-money outcomes for government . intelligence and investment opportunities . With guidance from the government’s Infrastructure Partnerships Australia’s 2017 The Australian and New Zealand Infrastructure and Project Financing Agency Australian Infrastructure Investment Report showed governments have used multiple funding (IPFA), an active investor approach to future a strong appetite for infrastructure opportunities, mechanisms to finance infrastructure infrastructure projects is planned. This will from both local and international investors. development. These include asset sales, deliver a return on taxpayer investments and debt, project financing, Public-Private taps alternate funding40. It is anticipated that Partnerships (PPP), federal grants, value after 2019 public investment would decrease, capture and concessional loans. and other types of financing will facilitate Use of Public Private 41 Australia ongoing infrastructure development . Partnerships There are opportunities for domestic and Australia has adopted long-term PPP While publicly-funded infrastructure international investors to finance, construct, infrastructure for the licensing of social spending continues to increase in Australia, own and refinance Australia’s transport, ventures, which transfer risk to the the government is seeking to attract utilities and social infrastructure. The private sector. However, there continues further private investment in public sector Department of Infrastructure, Regional to be limited long-term debt-financing infrastructure projects. The public sector Development and Cities and the Australian available since the global financial alone cannot meet the increased demand Trade Commission (Austrade) is working to crisis. In New Zealand, the government for infrastructure over the next decade and specifically attract foreign direct investment continues to actively support a small, fill the gaps in Australia’s infrastructure (FDI) in Australian infrastructure, by but innovative and growing PPP capability. There is also the potential to functioning as a focal point for FDI inquiries infrastructure market60.

Examples PPPs – Australia

Project Terms Procuring Industry Value Consortium members included government (AUDm)

Sydney Metro 20 years: operations, NSW Transport 3,700 Northwest Rapid Transit consortium: MTR Northwest trains and systems Corporation (Australia), John Holland, Leighton Contractors, UGL Rail Services, Plenary Group

Gold Coast Light 15 years: design, QLD Transport Stage 1: 1,296 GoldLinQ consortium: McDonnell Dowell Rail (Stage 1 build, finance, operate Stage 2: 420 Constructors, Bombardier Transportation, KDR Gold and Stage 2) and maintain Coast Pty Ltd (Keolis and Downer EDI), Plenary Group

Australia & New Zealand GIIO Report Climate Bonds Initiative 6 “Infrastructure is a key driver for growth, in infrastructure investment. For example, IFM The need for green employment, and better quality of life Investors was established 28 years ago to infrastructure is growing in emerging markets and developing manage infrastructure investments on behalf About 70% of global greenhouse gas emissions economies (EMDEs). But this comes of Australian industry superannuation funds. It come from infrastructure construction and at a cost. Approximately 70% of is owned by 27 major not-for-profit Australian operations such as power plants, buildings, and global greenhouse gas emissions come pension funds and manages the retirement transport53. To overcome this global challenge from infrastructure construction and savings of over 11 million Australians47. IFM and meet the goals of the Paris Agreement, operations such as power plants, Investors currently manage AUD48bn in the OECD believes about USD100tn in climate buildings, and transport. The Overseas infrastructure in developed markets, with compatible infrastructure investment will be Development Institute estimates that interests in 30 investments across Australia, needed between 2016 and 203054. over 720 million people could be pushed North America and Europe48. back into extreme poverty by 2050 as In Australia, infrastructure-related emissions As the interest of Australian superannuation a result of climate impacts, while the account for more than half of the country’s funds in infrastructure is growing, so too are World Health Organization projects that total greenhouse gas emissions: 35% from innovations for investment. In order to close the number of deaths attributable to the the electricity sector and 18% from the the infrastructure gap, innovative finance harmful effects of emissions from key transport sector55. In New Zealand, energy products are required along with enhanced infrastructure industries will rise from and transport contribute just over 30% of planning and regulatory development. the current 150,000 per year to 250,000 total greenhouse gas emissions56. To reduce by 2030. [...] Crucially, in EMDEs with New Zealand these emissions, climate compatible, green disproportionate exposure to climate infrastructure is required, including low- change impacts, low-carbon infrastructure New Zealand has historically experienced an carbon and less polluting assets which are can help prevent a climate-related reversal underinvestment in infrastructure and there is also climate resilient. of development gains.”61 a great demand for brownfield and greenfield The Australian Infrastructure Plan (2016) infrastructure development. The central and Deblina Saha, co-author of Private emphasises that sustainability and resilience local governments in New Zealand own over Participation in Low-Carbon Infrastructure should not be seen as fringe concepts, but as NZD200bn of infrastructure assets and the Investment,62 The World Bank good economic practice, and that sustainable forecast is that infrastructure spend will be and resilient infrastructure can support over NZD110bn by 202549. growth and a higher standard of living57. With An investor survey43 showed that 70% of The government understands that traditional the onset of climate change, the capacity participating investors would be highly likely to infrastructure funding and PPPs are no longer of infrastructure to operate through minor invest in Australian infrastructure. The survey adequate and is seeking innovative means disruptions, and recover quickly from major indicated that investors were attracted by the of funding infrastructure. The New Zealand disruptions, will be critical to supporting people increased visibility of transactions and projects, Trade and Enterprise agency is working and businesses over the coming decades58. specifically citing the Australia & New Zealand on behalf of the government to connect There is an immediate and growing Infrastructure Pipeline (ANZIP) as a useful tool. investors with opportunities, including opportunity for investors to participate in green infrastructure investment. ANZIP is a joint initiative between the infrastructure financing in Australia and New Australian and New Zealand governments The government has previously set up funds Zealand. At the same time, investing in green and independent think tank Infrastructure that promote infrastructure development, infrastructure will ultimately help the Australian Partnerships Australia. It provides a detailed list such as the Future Investment Fund and New Zealand governments to reach their of likely and confirmed infrastructure investment established in 2012. It has provided almost climate targets, spur innovation, broaden the or major development opportunities and is NZD5bn of new capital spending including economic base, and promote more sustainable aimed at investors and contractors44. NZD1bn for transport50. economic and social well-being. There are many Australian infrastructure In 2018, the government will launch two assets which are currently held by local further funds. The Provincial Growth Fund “There is increasing focus in and international funds. These range will have NZD3bn to invest over three years from regulated assets such as water and in regional economic development, including the infrastructure investment sewerage utilities to distribution pipelines regional infrastructure51. community on the opportunities and transmission wires. They include user- that green investment brings. The Green Investment Fund will focus more fee assets like toll roads, airports, ports and Across renewable energy, on promoting sustainable development, railways, as well as commercial operations specifically aimed at supporting the new sustainable transport, green like communications, power generation and government-wide mission to transition buildings and sustainable energy providers45. towards a net-zero-emissions economy by communities; financial investors, The government has a number of funds 2050. This fund takes the new approach of corporates and governments are for infrastructure. For example, the Urban co-investing alongside private capital. It aims all looking for ways to facilitate Congestion Fund (AUD1bn) established by to stimulate the inflow of additional private and participate in the transition the Australian Federal Government to address capital once it demonstrates the commercial to a low-carbon economy.” urban congestion in cities by investing in benefits of investing in green projects52. This projects that remove bottlenecks, improve model recognises that there is both the need John Pickhaver, Co-Head traffic safety and increase network efficiency and demand for more low-carbon green of Macquarie Capital, for both commuter and freight mobility46. infrastructure and less of the traditional, Australia and New Zealand, high-carbon infrastructure. Australia’s superannuation funds are also active Macquarie Group

Australia & New Zealand GIIO Report Climate Bonds Initiative 7 Green finance

Demand for sustainable investments is increasing Key global sustainable finance initiatives also illustrate the growing popularity of green finance and investment in Since the signing of the Paris Agreement sustainable development: demand has increased from institutional investors, particularly from OECD nations • The Principles for Responsible • The One Planet Sovereign Wealth and China, for investment opportunities that Investment: 2000 signatories from 67 Fund Working Group: comprising address environmental challenges and support countries, representing over 50%, or six major sovereign wealth funds, sustainable development. This has resulted over USD80tn of global assets under including the New Zealand in the development and growth of dedicated management (AUM). Superannuation Fund, who collectively green financial products including green bonds, manage over USD3tn in assets66. • The Principles for Sustainable green loans, social and sustainable bonds, Insurance: adopted by insurers • Climate Action 100+ initiative: 289 green infrastructure investment trusts and representing over 20% of the global investors with nearly USD30tn AUM green index products (see Annex 1 and 2 for insurance market by premium volume have signed on, including Australian descriptions of debt and equity instruments). and USD14tn in AUM. funds with more than AUD1tn under Green bonds63 are currently the most developed management67 68. • The Principles for Responsible Banking: segment of thematic instruments, carrying 26 leading banks from 5 continents • The UN Environment Finance Initiative a great recognition from the investor base. representing USD16tn in AUM65. (UNEP FI): 92% of the world’s 25 The ‘green’ label is a discovery mechanism largest banks are members - 120 that enables bond issuers, governments, • The Equator Principles: commitment leading banks across the world. investors and the financial markets to prioritise from 94 financial institutions in 37 investments, which genuinely contribute to countries, covering the majority • The Investor Group on Climate addressing climate change. of international project finance in Change: represents Australian and New developed and emerging markets. Zealand institutional investors with The demand for ‘green’ instruments continues total funds under management of over to rise. For example, the green bond market has • The Climate Bonds Initiative partners AUD2tn69. seen exponential growth - exceeding USD161bn represent USD13tn AUM and USD70trn of issuance in 2017, up from USD87bn in 2016. AUM represented on its Standards Board. This demand for green instruments comes from:

- Mainstream asset managers (e.g. Aviva, Innovative financial instruments have been investors with unique risk exposure to the BlackRock, State Street); developed in order to mobilise capital markets Australian energy market. Westpac has also - Specialist ESG and green bond fund to fund green infrastructure projects. Green taken an innovative approach, by issuing managers (e.g. Amundi, Natixis/Mirova); debt instruments include green bonds, an AUD117.3m climate bond in 2018 to securitisation and other structured finance, Japanese retail investors, in the Uridashi - Sovereign and municipal governments commercial paper, bank credit facilities, bond market, to support the bank’s funding (e.g. Chinese SOEs through their Belt and retail bonds, secured and unsecured notes. for climate change solutions. Road Initiative); Institutional investors have invested in equity - Supranationals, i.e. multi-lateral funds, REITs, syndicated loans, and co- banks (e.g. World Bank, ADB, Asian investment vehicles. For investors with limited Infrastructure Investment Bank); and ability to manage their own green projects, a “Our goal is to make a positive variety of corporate bonds, securitisation and and lasting impact on the - Retail investors (e.g. World Bank green syndicated loans are available. lives of our customers, people, bonds and US municipality bonds). shareholders, communities, In Australia and New Zealand, green With investors increasingly looking for ways bonds continue to be the primary means of and our environment – and our to address ESG and climate change in their gaining exposure to green finance. Financial customers are telling us they want investment processes, green bonds, along with institutions are increasingly entering the to participate in the transition other green financing tools, present a useful market to refinance pools of existing eligible to a low carbon economy. We’re opportunity to meet environmental objectives assets. Green bond issuers – particularly and deliver on their fixed income mandates. continually developing and large banks and State Governments – offering innovative green finance Green finance instruments in can also use green bonds as a signalling tools that enable investors to back Australia and New Zealand mechanism around ‘green’ policy. major renewable energy projects Innovative structures have emerged in This increasing demand and innovation of the alongside NAB, and we find the local green bond market to provide market has seen the creation of new, ‘green’ new ways to support companies a diversity of investment options. For investment products designed to appeal that deliver green infrastructure example, National Australia Bank recently to investors with different risk appetites. projects around the world.” placed AUD200m of 10-year Low Carbon There are growing opportunities to mobilise Portfolio Notes, which are backed by a private capital to support green infrastructure Mike Baird, NAB Chief portfolio of loans to Australian renewable by investing in debt, funds, equity-linked Customer Officer, Corporate energy developers. The structure mimics products and listed companies. and Institutional Banking, NAB a loan portfolio syndication and provides

Australia & New Zealand GIIO Report Climate Bonds Initiative 8 Macquarie Group green loan Clean Energy Finance “Westpac recognises Corporation (CEFC) that climate change is an In 2018, Macquarie Group issued a four-tranche GBP2bn loan facility that The CEFC, established by the Australian economic issue as well as an includes GBP500m green tranches: a Government, is an independent environmental issue, and banks 3-year revolving facility and a 5-year term entity investing in renewable energy, have an important role to play tranche. The green tranches will be used energy efficiency and low emissions in assisting the Australian to support renewable energy projects technologies. It has access to AUD10bn and New Zealand economies, initially and energy efficiency, waste in capital. At 30 June 2018, the CEFC’s transition to net zero emissions. management, green buildings and clean portfolio stood at AUD5.3bn. Increasing green bonds, green transport projects in the future. The The CEFC is required to target an loans and green underwriting green loan facility is one of the first such average return of the five–year Australian facilities issued under the Green Loan is a vital part of the mix, as is Government bond rate +3% to +4% per Principles of the Asia Pacific Loan Market supporting new issuers to come annum over the medium to long term Association (APLMA), which seek to to market.” (or +1% per annum for investments establish a set of best practice guidelines made via the AUD200m Clean Energy Lyn Cobley, Chief Executive, for green lending. The Macquarie Group Innovation Fund). The CEFC works to Green Loan received considerable Westpac Institutional Bank. catalyse or ‘crowd in’ additional private interest from Asian market investors. sector investment in clean energy NAB RMBS projects. Portfolio leverage at 30 June 2018 FlexiGroup, an Australian retail lender, exceeded AUD1.80 from the private sector issued its first loan receivables ABS with a In 2018, the NAB, through National for each dollar committed by the CEFC. green tranche in 2016. In 2018 it introduced RMBS Trust 2018-1, issued a AUD2bn a subordinated green tranche, in addition The CEFC directly finances large-scale RMBS in a multi-tranche issue that to the usual senior green tranche seen in projects, particularly in renewable energy, included a AUD300m green tranche, previous deals. and delivers finance for smaller-scale earmarked against AUD525m of prime projects through aggregation programs Non-financial corporates are also innovating. residential mortgages. The underlying with established co-financiers. The CEFC In 2017 , the New Zealand residential properties were assessed is also a substantial investor in Australia’s energy provider, had the majority of its against the Residential Building Criteria emerging climate bonds market, and has outstanding debt certified as ‘green’ when of the Climate Bonds Standard. The invested in several large-scale equity it created its Green Borrowing Programme. tranche was priced at 0.85% over the funds targeting clean energy gains across The unique feature is that the programme one-month BBSW and was close to infrastructure, property and agriculture. includes wholesale and retail bonds, private two times oversubscribed. Inclusion of Through its Sustainable Cities Investment placements, credit facilities, an export credit the green tranche increased demand Program, the CEFC further encourages line and commercial paper. Contact Energy and investor diversity, attracting investment in renewable energy, energy obtained programmatic certification under socially responsible funds as well as efficiency and low emissions technologies the Climate Bonds Standard. The certified mainstream investors from Australia70. across the built environment. debt facilities are backed by a pool of geothermal energy assets64.

“As a core investor in National and regional green bond guidance is being adopted across Australia’s green bond market, the world to support market growth we are seeing growing interest Regulation & official guidelines Listing requirements from superannuation funds and managers who want to deepen Private initiatives In the pipeline their exposure to sustainable assets. This is essential if we are to achieve our national emissions reduction goals in the infrastructure sector and beyond. We are confident an increasing focus from underlying investors, along with improved sophistication and understanding of fund managers, and increased diversity of supply, can attract more investor support for this critical investment class.” Ian Learmonth, CEO, CEFC

Australia & New Zealand GIIO Report Climate Bonds Initiative 9 International best practices and Global certification domestic guidelines for green instruments No external review CB Certified Rating

The global green bond market is witnessing 100 exponential growth, benefitting both issuers and investors. With the growth of the market, best practices have been developed 80 at the international level to guide issuers, maintain investor confidence and avoid the risk of ‘greenwashing’. At the international level, two main voluntary processes for green 60 issuance have emerged:

• the Green Bond Principles (GBPs), 40 coordinated by the International Climate Markets Association (ICMA), and the Green Loan Principles (GLPs), developed by the Loan Market Association (LMA), provide 20 process guidance around transparency on the use of proceeds, project selection process, 72 73 management of proceeds and reporting . % 0

• the Climate Bonds Standard & UK USA Italy

Certification Scheme, managed by the India Spain China Brazil Japan France Poland Mexico Austria Canada Norway Sweden

Climate Bonds Initiative and developed by Belgium Germany Denmark Australia Indonesia a network of technical experts, with input China_HK South Korea Netherlands South Africa New Zealand New

from industry players and investors, builds Supranational on the GBPs and adds green asset criteria which are aligned with achieving the goals of the Paris Agreement. Australia and New Zealand are important green bond issuers At a regional level, the Association of Cumulative issuance up to end H1 2018 Southeast Asian Nations (ASEAN) Capital Markets Forum has provided green bond guidelines for adoption throughout the region while financial services regulators in China and India have their own green bond regulations. All are broadly consistent with Japan USD6.8bn international standards. China USD59.1bn Governments, regulators and stock exchanges have started developing South Korea USD3.0bn guidelines and regulations. These generally India Taiwan USD804m include guidance for issuance and disclosure USD6.6bn in line with the GBPs and are mostly aligned with the Climate Bonds Taxonomy and Vietnam USD27m Standard (see Annex 1). Philippines USD226m Green bond issuance in Australia and New Zealand Malaysia USD979m Australian issuance features a diverse Singapore USD611m range of bonds, with multiple deals from Indonesia USD1.9bn the four biggest Australian banks, two state governments (so far), a commercial property fund, a leading university and several Top issuer green ABS bonds. Most Australian and Fiji USD49m New Zealand green bond issues have been USD1-10bn Australia certified under the Climate Bonds Standard,

Australia & New Zealand GIIO Report Climate Bonds Initiative 10 commitment to ESG principles and Australian use of proceeds sustainable investing as well as increased awareness of climate impacts has become Renewable Energy Low Carbon Transport Waste one of the drivers behind the current demand Low Carbon Buildings Water for quality green debt issuance. The latest 3.0 Responsible Investment Association of Australasia (RIAA) report notes that funds 2.5 raised through green bonds are financing renewable energy assets, energy efficiency 2.0 initiatives and low-carbon public transport. 1.5

The following are examples of different types 1.0 of issuers, instruments and sectors of green bonds that have been issued in Australia and 0.5 New Zealand. For more information, please AUD Billions AUD 0 see our report Australia & New Zealand Green financing country briefing (August 2018). 2014 2015 2016 2017 2018

Australia Australia

Instrument: Use of proceeds bond Instrument: Green senior and subordinated tranches in a Issuer: Westpac receivables ABS Issuer type: Commercial bank Issuer: Flexi ABS Trust 2018-1 Amount: AUD500m Issuer type: Non-bank lender Date issued: May 2016 Amount: AUD81.3m (total for green tranches) Maturity: 5 years Date issued: May 2018 External review: CBI certified, verified by EY Asia Pacific Maturity: Multiple Use of proceeds: Wind, Low Carbon Buildings (Commercial) External review: CBI certified, verified by DNV GL Use of proceeds: Rooftop Solar PV and Solar Hot Water Loans

Australia Australia

Instrument: Use of proceeds bond Instrument: Use of proceeds bond Issuer: Treasury Corporation Issuer: Investa Commercial Property Fund Issuer type: Government Issuer type: Property asset manager Amount: AUD750m Amount: AUD100m Date issued: March 2017 Date issued: April 2017 Maturity: 7 years Maturity: 10 years External review: CBI certified, verified by DNV GL External review: CBI certified, verified by EY Asia Pacific Use of proceeds: Solar, Low Carbon Transport Use of proceeds: Low Carbon Buildings (Commercial)

New Zealand New Zealand

Instrument: Use of proceeds bond Instrument: Green borrowing programme Issuer: Auckland Council Issuer: Contact Energy Limited Issuer type: Municipality Issuer type: Non-financial corporate Amount: NZD200m Amount: NZD1.88bn Date issued: June 2018 Date certified: August 2017 Maturity: 5 years Maturity: Multiple tenors External review: CBI Certified, pre-issuance report by EY External review: CBI Certified, verified by EY Asia Pacific Use of proceeds: To refinance existing debt used to buy electric Use of proceeds: The programme finances only geothermal trains and equipment as well as to help finance the purchase of assets. Eligible projects must have an emission intensity more. lower than 100gCO2e/kWh to be in line with Climate Bonds Geothermal Criteria.

Australia & New Zealand GIIO Report Climate Bonds Initiative 11 The future role of Achieving the Sustainable Development Goals superannuation in Australia’s infrastructure In September 2015, 193 nations came SDGs is in the range of USD2tn to 3tn per together to support the United Nations’ year. The growth of the green bond market Both the Australian and New Zealand Sustainable Development Goals (SDGs) provides an excellent foundation to raise governments are developing policy - a collection of 17 global goals with 169 capital for bridging this gap76. interventions to further support their targets addressing social and economic green finance sectors including green In Australia, ANZ raised an EUR750m development. Climate Bonds has investment banks, carbon markets, green SDG Bond in the European market to fund identified six SDGs where increased green certification mechanisms and renewable loans related to 9 SDGs.77 NAB’s novel investment and green bonds provide energy incentives71. SDG Green Bond combines SDG goals direct benefits: SDG 6, 7, 9, 11, 13 and 15.74 and Climate Bonds certification criteria as Australia’s employment-based compulsory For example, SDG 9 aims to build resilient eligibility requirements.78 Green bonds and superannuation contribution system has infrastructure, promote inclusive and SDG bonds are not separate streams. They been an underlying driver of national savings. sustainable industrialisation and foster aim to finance many of the same assets, Coupled with strong banks that are prepared innovation75. Realising SDG 9 by 2030 will and deliver economically, socially and to be early movers and adhere to best require significant resources, in both the environmentally resilient societies. practice in green bond issuance, Australia developing and developed world context. now has the foundations for green finance It is estimated that the funding gap for to expand into infrastructure projects. This achieving all 17 of the United Nations’ patient retirement capital is willing and able to make large-scale investments and can be deployed to improve deal flow and scale up corporate green bond issuance. “The Australian and New Zealand green bond markets are The large industry superannuation funds representative of global best practice. The markets are underpinned have led on infrastructure and clean energy by a diversity of issuance and innovation in use of proceeds, a strong investment since the mid 1990s. This is commitment towards transparency, with high levels of international partly a result of investment beliefs, a certification. ANZ is working with investors to build confidence in bias towards alternative investments and market fundamentals and directions. The scale of green infrastructure the ability to make direct equity-based investments. Over time, equity investments investments expected to be made in Australia, coupled with strong have increased through a mix of wholly investor demand, make the prospects for growth in green bonds bright.” owned specialist managers, joint ventures Christina Tonkin, Managing Director, Loans & Specialised Finance, and other co-ownership models. ANZ

Specialist funds Key specialist funds in the infrastructure and businesses which invest in renewable Green Investment Fund financing space include Australia’s energy, energy efficiency and low emissions As part of a wider suite being spearheaded Clean Energy Innovation Fund and IFM’s technologies. The fund’s investments are by the new government, the Green Australian Infrastructure Fund. In New recognised as potentially carrying a higher Investment Fund will be established to Zealand, the Green Investment Fund will risk profile, given the start-up nature of the make investments in New Zealand that provide a boost to green infrastructure investee companies and technologies. reduce greenhouse gas emissions and funding when it becomes operational at provide a financial return. The fund will the end of 2018. IFM Australian Infrastructure Fund receive a NZD100m capital injection Clean Energy Innovation Fund from the government and will operate Australia’s largest infrastructure fund, the independently, supporting the nation’s The CEFC operates the Clean Energy AUD12bn IFM Australian Infrastructure transition towards a net-zero-emissions Innovation Fund, the largest dedicated Fund is collaborating with CEFC to reduce economy by 2050. It will work with Australian investor of its kind. It was carbon emissions. The CEFC is investing businesses, infrastructure owners and created in 2016 as a specialist financier AUD150m into the fund, which will be investors to bring forward emissions to invest AUD200m in early-stage used to target emissions reduction and reduction projects and draw in private clean energy companies. The fund energy efficiency initiatives across some of investment for these projects. The fund targets technologies and businesses the nation’s largest infrastructure assets, will co-invest alongside private capital. It that have passed beyond the research including ports, airports and electricity is anticipated that once it demonstrates and development stage and which can infrastructure79. This initiative supports investment and commercial success then benefit from early stage seed or growth IFM investors’ commitment to work other private investment will follow. capital to help them progress to the next with asset management teams to deliver stage of their development. It draws on sustainable ESG outcomes that benefit the CEFC finance to primarily provide equity communities they serve, the environment finance to innovative clean energy projects and superannuation member returns.

Australia & New Zealand GIIO Report Climate Bonds Initiative 12 Green standards

A large segment of institutional ISCA Infrastructure Sustainability Rating The ISCA is a member-based, not-for- investors has shown support to address Scheme is a third-party rating system for profit peak body. It administers a third- climate change. However, when it comes evaluating sustainability across the planning, party rating program, provides training to environmental criteria, investors design, construction and operation of all and knowledge sharing and creates a currently have too few tools to ensure phases of infrastructure programs, projects, community of practice around sustainable that their investments are making a networks and assets in Australia and New infrastructure83. significant impact. Having common Zealand. definitions of ‘green’ across global markets, allows investors, potential issuers and policy makers to identify Green Star is an internationally- community-wide - helping to improve green assets and attract investment recognised rating system for the design, environmental sustainability, boosting more easily. construction and operation of buildings, productivity, creating jobs and improving In Australia and New Zealand there are fit-out and communities. To rate a building the health and well-being of place for a number of bodies that have developed or a fit-outs overall environmental impact, people, and results in money savings. definitions and standards for green assets Green Star rating tools award points Green Star was launched by the Green and infrastructure projects: across nine categories: Energy, Water, Building Council of Australia in 2003 Materials, Indoor Environment Quality • The Infrastructure Sustainability Council and remains Australia’s only national (IEQ), Transport, Land Use & Ecology, of Australia’s (ISCA’s) Infrastructure and voluntary rating system for buildings Management, Emissions, and Innovation. Sustainability Rating Scheme and communities. New Zealand now covers all infrastructure types in Australia This helps to support stakeholders in has similar tools for design, construction and New Zealand80. the property and construction sectors to and operation of buildings, fit-out and design, construct and operate projects in a communities. These tools were adapted • The Green Star certification, more sustainable, efficient and productive for New Zealand. In both countries, Green administered by the Australian Green way, and provides tenants with a trusted Star can be used as a proxy for Climate Buildings Council and the New Zealand mark of independent verification to Bonds Certification84. Green Buildings Council, and the National support decision making. It has benefits Australian Building Environmental Rating System (NABERS) and NABERS New Zealand cover buildings. New Zealand also NABERS is a national rating system the building or tenancy has considerable has Homestar, an independent national that measures the environmental scope for improvement. Ideally it helps rating tool that measures the health, performance of buildings, tenancies and property owners, managers and tenants to warmth and efficiency of houses81. homes assessing energy efficiency, water improve their sustainability performance, usage, waste management and indoor reaping financial benefits and building • For renewable energy generation facilities, environment quality of a building or their reputation. guidance on development in Australia tenancy and its impact on the environment. and New Zealand can be sought from In Australia it is run by a government This is done by using measured and local standards, regulation and industry authority. In New Zealand the Energy verified performance information, such associations. Efficiency Conservation Authority has the as utility bills, and converting them into license for NABERSNZ in New Zealand. • The Climate Bonds Taxonomy is used to an easy to understand star rating scale The NZGBC administer NABERSNZ, which identify green projects and assets which from one to six stars. For example, a 6-star in New Zealand is primarily focused on a are aligned with achieving the goals of the rating demonstrates market-leading building’s energy performancee85. Paris Agreement. This excludes fossil fuel performance, while a 1-star rating means power generation, internal combustion engine personal vehicles and new roads and infrastructure that facilitate their movement, and freight rail that is primarily Climate Bonds Taxonomy and • Uses best practices for internal controls, used for fossil fuel transportation. the Climate Bonds Standard & tracking, reporting and external review. Certification Scheme In 2017, a survey by the Investor Group • Finances assets consistent with achieving on Climate Change of Australian and The Climate Bonds Taxonomy features eight the goals of the Paris Climate Agreement. New Zealand investors - with funds climate-aligned sectors (see Annex 1). The The certification of eligible projects and representing over AUD328bn in AUM - purpose of the Taxonomy is to encourage assets requires independent verification found that for setting strategy and common broad ‘green’ definitions across of the assets’ climate credentials against pursuing low-carbon investment, over global markets in a way that supports the the Climate Bonds Standard and relevant half of all participants in the Australian growth of a cohesive green bond market. Sector Criteria. The Criteria provide eligibility survey indicated that they were using The Climate Bonds Standard & Certification conditions or thresholds which must be met their own methodology for defining Scheme is used to provide a Fairtrade-like for assets to be in line with a rapid trajectory green investments, followed by the Low labelling scheme for bonds and other debt towards a 2050 zero-carbon future. The Carbon Investment (LCI) Registry (24%) instruments. Certification means that the deal: criteria are developed based on climate standards and the Climate Bonds Initiative science by technical expert groups with input standard at 11%82. • Is fully aligned with the Green Bond from industry. Principles or the Green Loan Principles.

Australia & New Zealand GIIO Report Climate Bonds Initiative 13 What’s green?

+ –

+ –

+ –

Geothermal: Solar: Hydropower: According to the The world installed a record Hydropower is the largest Geothermal Energy number of new solar power source of renewable Association, 39 countries projects in 2017, more than electricity in the world, could supply 100% of their electricity net additions of , gas and nuclear producing around 17% of the world’s needs from geothermal energy, yet plants put together87. electricity from over 1 200 GW of installed only 6% to 7% of the world’s potential capacity, and is expected to remain UNFCCC has been tapped86. the world’s largest source of renewable electricity generation by 202288. Drawdown Agenda International Energy Agency

Australia & New Zealand GIIO Report Climate Bonds Initiative 14 Transport (rail): Water: Buildings: 75% of the world’s countries The UN says the planet Building-related emissions have established strategies is facing a 40% shortfall account for about one-third and targets to improve the in water supply by 2030, of global GHG emissions and environmental performance of their transport unless the world dramatically improves the could double by 2050, making building sector within their Intended Nationally management of this precious resource90. efficiency a critical part of the COP21 Determined Contributions (INDCs). agenda91. UNFCCC One-fifth of the transport-related (I)NDCs GreenBiz include measures in the railway sector89.

UNFCCC

Australia & New Zealand GIIO Report Climate Bonds Initiative 15 Green infrastructure investment opportunities

Within each sector, further metrics were used Methodology Low-carbon to classify the green infrastructure investment The following section provides an transport opportunities by status: exploration of green infrastructure Transportation • Completed projects - high profile, recently investment opportunities in Australia and modes and ancillary completed projects; New Zealand in four key sectors: low-carbon infrastructure that transport, renewable energy, sustainable • Projects under construction – major projects produce low or zero direct carbon water management and green buildings. For from national, state and local government emissions. This can include national each sector there is an overview, funding pipelines that are under construction; and urban passenger rail and freight options and potential investment pathways, rail networks; Bus Rapid Transit (BRT) • Planned projects - major projects from reference case studies, information on key systems; electric vehicles; and, bicycle national, state and local government trends as well as ideas for the future. At transport systems. pipelines that had not yet begun the end there is a sample pipeline of green construction and/or had been announced infrastructure investment opportunities and had undergone business case planning across Australia and New Zealand. and/or had been allocated budget; Renewable Sample pipeline and reference energy • Potential projects – projects included in case studies mid- to long-term plans or strategies as Energy generation, well as featured in media announcements The sample pipeline at the end of this transmission or storage or speculation. report is not exhaustive – rather a snapshot technology that has of the different types of opportunities low or zero carbon emissions. This Funding options and investment available in the short- and medium-term can include solar energy, wind energy, pathways future. A more comprehensive list of over bioenergy, hydropower, geothermal 400 green infrastructure investment There are different types of funding options energy, marine energy or any other opportunities is available on the Climate for ‘green’ labelled investments depending renewable energy source. Bonds Initiative website. on the sector and the project timeframe. The sector determines the types of funding The projects and assets in the sample sources and risk profile, while the timeframe pipeline have been drawn from government Sustainable determines if there might be financing or plans, consultation with key stakeholders water refinancing opportunities, namely: and through extensive research of each management sector. They were selected based on their • Complete projects may offer refinancing green credentials as well as their investment Assets that do not opportunities depending on circumstances potential – whereby an investor would most increase greenhouse • Projects under construction could offer likely be able to gain exposure directly or gas emissions or aim at emission equity and debt funding opportunities, indirectly to the project or asset. reductions over the operational lifetime and potentially refinancing (e.g. secured of the asset, address adaptation, and The reference case studies were chosen from financing with a take-out option) increase the resilience of surrounding the sample pipeline and illustrate the different environments. This could include: • Planned projects might have funding in types of green infrastructure opportunities water capture and collection, water place, but could also be seeking co- available in each sector in different locations storage, water treatment (with investment (e.g. private investment to in Australia and New Zealand. methane emissions treatment), flood complement public funding) defence, drought defence, stormwater Green credentials • Potential projects present an opportunity management, and ecological restoration/ for investment in the future with the The Climate Bonds Taxonomy was used to management. This covers built as well as potential to define the funding structure. identify eligible green projects under the nature-based water infrastructure. four sectors92. To narrow the scope and There are various ways for an investor to gain volume of projects the following filters were exposure to a specific project, asset or portfolio. also applied: Green buildings The possible investment pathways will vary depending on the asset ownership structure, the • For low-carbon transport – mostly Commercial and stage in the asset’s financing lifecycle, and the projects valued above AUD100m residential buildings, investor’s mandate. This can also vary between (Australia) and NZD100m (New Zealand) new or upgraded, projects with public and private funding. • For renewable energy - only renewable operating with low- The ‘green’ credentials, funding options, energy generation facilities above 50MW carbon emissions. The timing, financial structures and possible low-carbon credentials and emissions • For sustainable water management – investment pathways for each of the performance of the buildings are mostly projects valued above AUD50m reference case studies are provided for demonstrated through an accepted (Australia) and NZD50m (New Zealand) the four sectors which follow: low-carbon rating or ‘green’ assessment process, for transport, renewable energy, sustainable • For low-carbon buildings - Green Star example, Green Star certification. water management, and green buildings. certified projects - mostly 6-star

Australia & New Zealand GIIO Report Climate Bonds Initiative 16 Low-carbon transport

Public transport and freight rail networks Funding options and investment are expected to see increased investment pathways “With record levels of transport as governments aim to address population infrastructure investment, it is In addition to public funding for transport growth, increased urbanisation and worsening infrastructure, the private sector has a strong often overlooked, the importance congestion in major cities as well as growing pipeline of projects including PPPs, operating of the role this new infrastructure inter-city freight in both Australia and New franchises and rolling stock leases94. Capital plays in reducing emissions and Zealand. There is currently a rush by all states mobilisation for low-carbon transport creating a more sustainable to meet the demands of growing cities, with continues to be targeted towards encouraging upgrades of existing assets and development environment. Commonwealth the use of energy-efficient transportation of new urban rail and bus projects. Bank recognises this and is proud and the development of green infrastructure of its record in financing modern, Strong State and Federal Government support projects that reduce carbon emissions. future-proofed, transport for these has been shown through policy Government-backed concessional loans are a commitments and increased funding for infrastructure that promotes new structure which provides greater leverage future transport infrastructure. This emphasis energy efficiency at its very core. against the revenue streams of transport on transport can be seen in ANZIP’s list of Green bonds, working alongside (i.e. fares). Another innovative mechanism projects across Australia and New Zealand. traditional forms of finance, will is ‘value capture’, which refers to the value Around 60% of the projects listed relate to that is generated for private landowners from ensure the continued funding of transport, and almost half of these could be infrastructure and surrounding business energy efficient infrastructure.” considered low-carbon transport projects. operations. As private sector appetite Andrew Hinchliff, Group Infrastructure and rolling stock upgrades for rail increases, funding sources will continue to Executive, Institutional Banking and busways will continue to be a priority. The diversify, and investment will accelerate. transition to electric and other low- to zero- and Markets, Commonwealth Investors seeking exposure to low-carbon emission vehicles and the development of the Bank of Australia transport projects and assets have a range of necessary charging infrastructure will impact investment pathways to consider. Government- private vehicle transportation. owned low-carbon transport assets are often More direct investment pathways In New Zealand, the transition of public identified in their green bond offerings, such as include participation in consortium debt vehicles, like postal vans and garbage trucks, with the Certified Climate Bonds issued by the arrangements and/or equity stakes in has already begun. In Queensland, Australia, Victorian and Queensland governments and the individual projects via PPPs or other public- the government has established an Electric Auckland Council. This pathway provides indirect private ownership and financing structures. Super Highway from Coolangatta to Cairns with exposure for investors to specific projects recharging points for all electric vehicles at key and assets and provides attractive credit and tourism nodes along the nearly 1,800km route93. liquidity credentials for institutional investors.

Canberra Light Rail – Stage 1 Canberra Light Rail Stage 1 route map

Proponent: ACT Government Cost: AUD707m (Stage 1 - infrastructure), this is included in the total PPP cost of Location: Canberra, ACT AUD1.3bn (for design, construct, operate, Status: Under construction finance and maintain over 20 years). The financing arrangements for Stage 2 and 3 are Classification: Public Passenger Transport, to be determined. Rail, Infrastructure Financial structure: PPP + Federal Description: Stage 1 is a light rail line Government funding from the northern suburb of Gungahlin to the CBD. Canberra’s light rail will Potential investment pathways: Stage 1 is have overhead wires along its full 12km being completed as a PPP. The operating length. Stage one will have 13 stops and phase starts in 2018-2019. Stages 2 and enhancements to the Civic Plaza. Stage 2 3 could also be PPPs to involve private will expand the network, connecting the partners and finance. Equity, mezzanine and City to Woden - connecting employment subordinated debt are part of the financing hubs, community services and commuters structures available to the special purpose

from south to north95 . Further stages companies involved. The local government 2018 Government, ACT Source: could see network extensions to the west, will be providing direct funding with an south and east of Stage 1 and 2 routes. AUD67m annual contribution to Stage 1. Stages 2 and 3 will require increased funding Output: Increased accessibility, and could be financed or refinanced via the sustainability and employment. capital markets.

Australia & New Zealand GIIO Report Climate Bonds Initiative 17 Melbourne Metro Rail Project Melbourne Metro Rail Project map

Proponent: VIC Government + Melbourne Metro Rail Authority Location: Melbourne, VIC Status: Under construction, to be fully operational in 2026 Classification: Public Passenger Transport, Rail, Infrastructure Description: The construction of CBD North and CBD South stations; twin 9km rail tunnels between South Kensington and South Yarra, the alignment of Swanston Street through Melbourne’s CBD and links with existing train and lines. There will also be additional 33 high-capacity trains, which will accommodate approximately 1,100 passengers in the initial stages96.

Output: Increase capacity (facilitating more trains to be operated 2018 Government, State Victoria Source: on the Sunbury, Craigieburn, Williamstown, Werribee, Frankston, Upfield and Sandringham railway routes) supporting more than of the PPPs involve the Tunnel and Stations of the Metro Tunnel 20,000 passengers an hour; providing improved intermodal Project. The other PPP covers the new rolling stock. Mezzanine and connectivity; less crowded and more reliable train network97. subordinated debt as well as equity stakes could be used to finance Cost: AUD10.9bn the different PPPs. The initial investment funding is provided by the Victorian Government. The Treasury Corporation of Victoria Financial structure: Funding from the VIC Government plus PPP is already a green bond issuer with 78% of its Certified Climate arrangements Bond allocated to low-carbon transport, including the Melbourne Potential investment pathways: The Melbourne Metro Rail Project Metro Rail Project. Further issuance of green bonds by the Victorian is being executed through a PPP model with 3 consortia. Two government could provide an excellent investment pathway for institutional investors.

Auckland’s electric trains Auckland Electric Construcciones y Auxiliar de Ferrocarriles trains

Proponent: Auckland Transport/Auckland Council Location: Auckland, New Zealand Status: Under construction Classification: Public Passenger Transport, Rail, Rolling stock and Infrastructure

Description: The Auckland rail network has been undergoing

a process of electrification since 2011, with more than 34,000 2018 Transport, Auckland Source: construction hours to install 3,500 foundations and masts, carrying 560km of overhead lines across 175km of railway tracks. In 2015, 57 three-car trains (carrying up to 232 seated passengers Potential investment pathways: The original funding and each) were added to the fleet and, in 2018, the Auckland Council ownership package comprises NZD500m Crown (national committed to procuring a further 15 three-car electric trains, government) loan to Auckland Council for infrastructure increasing Auckland’s electric fleet to 7298 99. upgrades and electric train procurement and a NZD90m Crown Output: Faster, more frequent service, greater capacity per train grant to procure additional trains101. Auckland Council has since and reduced emissions100 announced that new trains will cost NZD133m, and that they will cover the additional NZD43m. Auckland Council released an Cost: Est. NZD500m (infrastructure upgrades and electric train inaugural green bond of NZD200m in 2018. The proceeds of the procurement) + NZD133m (new electric train fleet) Certified Climate Bond are allocated to refinance existing debt Financial structure: NZD500m via Auckland Council via Crown used to buy electric trains and equipment and help finance the loan; NZD133m via Auckland Council and Crown grant purchase of the new trains102.

Australia & New Zealand GIIO Report Climate Bonds Initiative 18 Brisbane Metro Brisbane Metro map

Proponent: QLD Government/ Brisbane Cost: Est. AUD944m City Council Financial structure: Government funds Location: Brisbane, QLD committed (AUD300m Federal Government + AUD644m Local Government) Status: Planned – with metro services commencing in 2023 Potential investment pathways: The Queensland Government provides the Local Classification: Public Passenger Transport,

Government funding component and the 2018 Council, Brisbane City Source: Bus, Infrastructure Queensland Treasury Corporation (QTC) is Description: A high-frequency public already a green bond issuer104. Its inaugural transport Bus Rapid Transit system with AUD750m Certified Climate Bond in 2017 2 routes along 21km of existing busways has 85% of proceeds allocated to fund that connect the north and south of low-carbon transport projects and assets, Brisbane. The new fleet of 60 specialty including AUD324m to the Gold Coast vehicles, each with capacity for up to Light Rail stage 1 & 2. The Queensland 150 people, will provide a turn-up-and- Government intends to issue more green go service, with buses arriving every 3 bonds with allocations to low-carbon minutes in peak periods, every 5 minutes transport, such as the Brisbane Metro105. at all other times and with 24-hour service on weekends.

Output: Cut travel times, reduce CBD bus congestion and improve services to the suburbs103

Inland Rail Inland Rail – Net Tonne Kilometres by market - 2050108

Proponent: Australian Government, cost savings for producers; and improve Assuming completion of Inland Rail in through the Australian Rail Track economic development overall, with an 2024-2025 Corporation (ARTC) estimated increase to Australia’s GDP of AUD16bn during its construction and first 50 Location: VIC to QLD Agricultural 9% Interstate/ years of operation106. Intermodal 67% Status: Planned - the first train is expected Cost: Est. AUD10.7bn over 10 years to operate in 2024-25

Financial structure: Federal government 2018 Rail Track, Australian Source: Classification: Freight rail, Infrastructure AUD8.4bn of equity into ARTC on top of Description: A new 1,700km dedicated previously funded AUD900m. freight rail line running between Coal Potential investment pathways: ARTC is Melbourne and Brisbane via regional 25% owned by the Federal Government which is Victoria, and Melbourne providing equity and direct grants. Through Queensland. Double-stacked, 1,800m - Brisbane ARTC, the use of a PPP and green bond long trains with a 21-tonne axle load will 54% issuance could be relevant, whereby ARTC be able to use the tracks at a maximum might want to get private partners involved speed of 115km/h. Each train carrying in the project (complexity and risk sharing). the equivalent freight volume of 110 ARTC is already a bond issuer although B-double trucks. these have not been labelled green107. At Output: Connect regional Australia to the Federal Government level, it could be Brisbane - Adelaide 6% domestic and international markets; possible to restructure ARTC’s debt and Brisbane - Perth 7% increase volume of freight per trip; reduce equity via green finance instruments in later congestion on highways; transform stages of the project’s financing life cycle. national freight movements; provide supply chain benefits and substantial

Australia & New Zealand GIIO Report Climate Bonds Initiative 19 The LRT + BRT boom the potential for electric vehicles to provide support for the grid through smart charging, “The reality is that the Almost every major city in Australia either as a distributed network of batteries which transition to EVs is inevitable. has, is developing or is planning to develop can respond quickly. a light rail transit system (LRT) and/or bus We’re already seeing vehicle rapid transit system (BRT). This is also a Making ports and airports climate resilient makers confirm they will trend in New Zealand and around the world. stop producing pure internal Australia and New Zealand are planning the This is because these systems provide combustion engines over the development and upgrade of several ports and many benefits: reduced congestion and the airports and there is the potential for these coming years. At the same smoothing of traffic flows, improvement of to include measures that mitigate against time, we’re seeing dramatic travel speeds and reliability, greater mode and adapt to the effects of climate change. improvements in vehicle shifting and reduced greenhouse gas (GHG) For example, on-site electricity production, charging networks, creating emissions. Their infrastructure development energy efficiency measures for indoor and costs and times are also much less than the essential infrastructure outdoor lighting as well as integration with developing an underground rail system. to support electric vehicles. public transport and freight rail infrastructure. Overall, they are efficient and cost-effective These measures can deliver a It is also important for ports and airports to mass-transit systems. material improvement on our protect themselves and the cities they support greenhouse gas emissions, as Ongoing developments in low- from the impacts of climate change by building adaptive features like reinforced sea-defences well as take our vehicle fleet carbon transport investment into the 21st century.”109 opportunities and improved drainage systems. Ian Learmonth, CEO, CEFC The upgrade of all bus and public vehicle fleets and all rail rolling stock to electric Electric and plug-in hybrid vehicles are set to experience high growth over the next two decades in Australia, according to a report released by the Australian Renewable Energy Agency (ARENA) and CEFC110. There is also

LRT and BRT developments – Australia and New Zealand

Subsector Project name Location Status Subsector Project name Location Status

Sydney Light Rail NSW Under Sydney: B-Line, NSW Complete construction Liverpool- Parramatta T-way, Parramatta Light NSW Planned Metrobus: North- Rail LRT: A public BRT: A public West T-way and transportation Newcastle Light NSW Under transportation M2 bus corridor system operating Rail construction system using Smart bus VIC Complete on exclusive, dedicated lanes Yarra VIC Complete right-of-way rail and stations South-East, QLD Complete lines that are Gold Coast Light QLD Complete (separated Northern and generally above Rail - Stage 1 + from traffic) to Eastern Busways Referenceground and case studiesStage 2 Referenceallow for rapid case studies Brisbane Metro QLD Planned sometimes on a and frequent Gold Coast Light - QLD Planned shared roadway, operation by O-Bahn Busway - SA Complete Rail Stage 3 + 3A with a frequent buses (that City Access Project service of Sunshine Coast QLD Planned ideally have Canberra’s Rapid ACT Planned electrified trains Light Rail no direct Bus Network or trams. emissions - such Rockingham Light WA Planned as hydrogen, Auckland: Northern NZ Complete Rail biogas electric Busway, Central Adelaide Trams SA Complete or electrified Connector buses). () TAS Planned AMETI (Auckland NZ Under Manukau Eastern construction ACT Light Rail ACT Under Transport Initiative) construction

Auckland Light Rail NZ Planned

Australia & New Zealand GIIO Report Climate Bonds Initiative 20 Renewable energy

Over 85% of New Zealand’s energy is Renewables accounted for 17% of New Zealand supplied by renewable energy resources. Australian electricity generation Currently, New Zealand is powered by a range Australia is currently at 17% and growing111. in 2017119 of renewable energy technologies including In terms of the proportion of gross domestic Renewable Generation by Technology Type hydro, geothermal, wind and solar. Fossil fuel product per capita investment in ‘green’ (gas) power generation represents a relatively energy, both countries continue to lag Large-scale Solar thermal 0.1% small share of the power generation fleet. relative to other OECD member countries112. solar PV 1.8% Medium-scale This trend is set to change, with 2017 solar PV 0.5% New Zealand hopes to increase the share a milestone year for renewable energy of renewable energy generation to at least investment and development. Bioenergy 90% by 2025 with further expansion in 9.7% geothermal generation; investment in Hydro Australia generation from wind; and continued growth 33.9% Small-scale of the residential solar PV market117. In 2017, approximately 700 MW of renewable solar PV energy projects were completed and began 20.3% Funding options and generation, with seven times that amount investment pathways either under construction or with financial support113. This investment was dominated Renewable energy project developers and Wind by large-scale wind and solar developments, asset owners have access to a wide variety 33.8% which represented around AUD12bn. of funding options, including banks, project financiers, debt clubs, investment funds, In 2018, the Clean Energy Regulator announced direct investors and the capital markets. that the volume of projects currently Australian energy storage 2017121 committed to could adequately meet the Green bonds are best suited to large renewable Residential energy storage system installations existing Large-scale Renewable Energy Target energy projects or portfolios of assets and can for 2020 and 2030114. Another outcome 25 be structured in a number of ways, including from this renewable energy boom is the covered bonds, ABS, corporate use of proceeds anticipated decrease in residential electricity 20 bonds, and project bonds. Aggregation of prices predicted by the Australian Electricity smaller projects can be done through green 15 Market Commission, expected to fall by securitisation or through banks originating green 115 6.2% on average over the next two years . 10 loans and refinancing in the green bond market. Looking forward, solar and wind energy Renewable energy funds are also being used to generation continue to have the greatest 5 support greenfield renewable energy projects potential for investment. There will also be and stimulate innovation. In addition to publicly

Installations (000) 0 an increase in battery storage and pumped- backed funds, like the Clean Energy Innovation hydro projects. In the last two years there 2015 2016 2017 Fund, there are private sector funds like the has been a significant increase in the Powering Australian Renewables Fund, which is number of residential and large-scale battery bringing the total number of residential a AUD2-3bn fund created by AGL to develop storages facilities installed. In 2017, 12% of battery systems installed across Australia up and own approximately 1,000 MW of large- solar PV installations included a battery, to 28,000116. scale renewable generation projects118.

Te Mihi Geothermal power Te Mihi Geothermal power plant plant aerial view

Proponent: Contact Energy Output: Safe and reliable low-carbon energy, Location: New Zealand powering more than 160,000 homes.

Status: Complete Cost: NZD623m

Classification: Geothermal, Generation Financial structure: Private equity and green

facilities debt funding 2013 Magazine, Power Source:

Description: A two-unit 166MW geothermal Potential investment pathways: The includes all of Contact’s wholesale bonds plant on the geothermal steam field geothermal plant was privately funded by maturing after 2018 as well as various private in Taupo; includes a bioreactor that reduces Contact Energy. Contact Energy then issued a placement and bank debt arrangements. All the amount of hydrogen sulphide entering Climate Bonds Certified green bond to refinance of these instruments have been certified, the Waikato River; 2015 Energy Project of some of its debt for geothermal assets. giving investors a number of pathways. the Year in the Deloitte Energy Excellence Through Contact Energy’s Green Borrowing Further funds raised via the Green Borrowing Awards, recognising excellence in project Programme, investors have the opportunity Programme will be certified as green debt planning and execution and in delivering to invest in certified green debt instruments. instruments, providing primary market community benefits120. The NZD1.8bn Green Borrowing Program opportunities for potential investors.

Australia & New Zealand GIIO Report Climate Bonds Initiative 21 Kidston Solar Project Kidston Solar Project aerial photo

Proponent: Genex Power Ltd Location: Far-North Queensland, QLD Status: Phase 1 complete, Phase 2 planned Classification: Solar, Generation facilities Description: The Kidston Solar Project involves the development of a 320 MW solar farm, in two phases, starting with 50 MW in Stage 1. It is located on the historical Kidston Gold Mine and is part of Genex’s plans to build a AUD1bn renewable energy hub 400km west of Townsville. This will include a 250 MW pumped-hydro

project with 1500 MW hours storage capacity, the 270 MW Phase 2018 Technology, Power Source: 2 solar project and a 150 MW wind farm.

Output: Phase 1 of the Solar Project is expected to generate Potential investment pathways: Genex is listed on the Australian 145GWh of renewable electricity per year, powering around 26,000 Stock Exchange providing investors with direct equity in the parent 122 Australian homes and avoiding 120,000 tonnes of CO2 emissions . company. Phase 1 funding included an ARENA Grant for AUD8.9m and debt finance of AUD54m from the CEFC123. The Northern Cost: Phase 1 AUD126m, with Phase 2 estimated at AUD420m Australia Infrastructure Facility has supported the development Financial structure: Equity + green loans + Federal Government of the financing structure for the Stage 2 project through the funding provision of an indicative term sheet for a long-term concessional debt facility. Further funding will be sought via the banks.

Snowy 2.0 Map of the Snowy Scheme

and stable low-carbon electricity. Proponent: Snowy Hydro Ltd + Australian Government Cost: Est. AUD3.8bn - AUD4.5bn (potentially an additional AUD2bn for Location: Regional, NSW transmission grid upgrades) Status: Planned Financial structure: Equity from the Federal Classification: Hydropower, Generation Government + other debt financing 2018 Hydro, Snowy Source: facilities, Pumped Storage Potential investment pathways: The original Description: Snowy 2.0 is a proposed equity structure for the existing snowy pumped-hydro expansion of the Snowy hydro facility was 13% Federal Government Mountains Scheme which will supercharge and 87% NSW and VIC governments. its existing hydro-electric generation and The Federal Government bought the State large-scale storage capabilities. It will link Government stakes in 2018, making it the the two existing Snowy Scheme reservoirs sole owner of Snowy Hydro and the project. of Tantangara and Talbingo through With this new equity structure, the federal underground tunnels and an underground government has the opportunity to fund power station with pumping capabilities. the project with green finance products. Instead of releasing the water after energy Snowy Hydro has a BBB+ rating from S&P has been generated, a pumped hydro and could be a green bond issuer with scheme recycles or pumps water back to allocation of proceeds to Snowy 2.0. It could the upper reservoir to be used again124. also use other green debt instruments to secure adequate finance as the project is Output: The expansion is expected to constructed. The CEFC may also provide increase the capacity of the Snowy Hydro capital to Snowy 2.0. scheme by 50%.125 It will provide reliable

Australia & New Zealand GIIO Report Climate Bonds Initiative 22 Dundonnell Wind Farm Dundonnell Wind Farm map

Proponent: Tilt Renewables Ltd Location: Regional, VIC Status: Under construction Classification: Wind, Generation facilities Description: The wind farm will have up to 88 wind turbines, hosted by 12 host landholders over approximately 4500ha. The wind farm will be connected to the National Electricity Market

(NEM) via a 38km 220kV transmission line.126 2018 Renewables, Tilt Source:

Output: Proposed maximum capacity of 350 MW and New Zealand stock exchanges and was previously part of Cost: Est. AUD600m Trustpower. Exposure to this project and other parts of the growing Tilt portfolio is possible with equity, debt and potentially bonds Financial structure: Equity plus debt from local and international for financing and refinancing. Tilt Renewables was recently in the banks market with an AUD300m equity raising linked to the Dundonnell Potential investment pathways: The Dundonnell farm is fully project, with strong interest from institutional investors. owned by Tilt Renewables Ltd, which is listed on the Australian

SA - NSW Interconnector Map of indicative SA – NSW Interconnector route

Proponent: ElectraNet Location: SA to NSW Status: Potential Classification: Transmission Infrastructure Description: A high-capacity 330 kV interconnector between SA and NSW, to be delivered by 2021-2022127

Output: More reliable and affordable power as well as improved 2018 Solar Quotes, Source: electricity security to SA, and greater integration of renewables in the NEM.

Cost: AUD1.5bn issuer and will likely to continue issuing green bonds, 33% by YTL Financial structure: AU200m State Government + private and Power, which is listed on the Malaysian stock exchange, and 20% trustee ownership by a fund manager128. Gaining exposure to SA-NW Interconnector Potential investment pathways: ElectraNet is owned 46% by could be possible via the fund manager, equity in YTL Power, or State Grid Corporation of China, which is already a green bond green bond issuance by State Grid.

Ongoing developments in Renewables to power heavy industry renewable energy investment opportunities According to ARENA, the mining sector accounts for roughly 10% of Australia’s Recycling and waste-to-energy total energy use, with less than 5% of the mining sector’s energy coming from In Australia, 23 million tonnes of urban waste renewable energy sources.130 There is a go to landfill each year. This represents huge opportunity for the share of renewable a significant opportunity for recycling or energy supply to increase, with the mining re-purposing waste, including via waste- and metals industry already investing in to-energy generation facilities. Waste-to- large-scale integrated renewable energy energy electricity production is considered and storage systems to reduce their energy low-emissions technology when the waste costs. Co-generation is also an option for used has been sorted and does not include the metals industry – with the international plastics or metals. The CEFC estimates that giant GFG Alliance planning upgrades at the there is a AUD2.2bn - AUD3.3bn market for steelworks in Whyalla, SA, to capture and waste-to-energy generation.129 utilise heat output.131

Australia & New Zealand GIIO Report Climate Bonds Initiative 23 Sustainable water management

In both Australia and New Zealand, water AWA alternative models for financing water infrastructure133 projects and assets can include dams, desalination plants and wastewater treatment Type of arrangement Investment Source plants, components of distribution networks, including pipes and pumping stations. They Government Banks Investors also include projects to harvest storm water and recycled water, mitigate floods and RAB Model support local biodiversity. The ownership and Green Bonds regulation of these assets varies between the jurisdictions and so does the urgency to PPP upgrade and replace aging infrastructure and Value Capture respond to the needs of a growing population and the challenge of climate change. Conessional loans In Australia and New Zealand, water Grants infrastructure, climate change and economic Long Term Lease performance are closely related. The Reference case studies Millennium drought in Australia and the water Direct Structured Lease contamination incidents in New Zealand Indirect Structured Financing have highlighted the need for reliable and resilient water infrastructure to withstand stressors like drought and flood conditions. respective State treasuries. This is unlikely to Zealand). Further investment pathways Enhanced planning processes and increased change in the medium-term. exist in the construction, ownership and upfront investment will be required for water refinancing of new types of infrastructure In New Zealand, a recent focus on the resilience infrastructure to meet the challenges of climate such as water desalination assets and of the nation’s water infrastructure has drawn change and rapid urbanisation. Particularly as commercial/industrial water infrastructure. attention to the potential for aggregation of Australia’s major cities are forecast to need water assets from council-by-council ownership The Australian Water Association (AWA) has 73% more than the current supply by 2050.132 into regional business models. This would assist also undertaken research showing there are a Funding options and with consolidating investment opportunities range of alternative financing options available investment pathways across New Zealand’s water sector. for water infrastructure projects from a variety of investment sources. In identifying the The majority of water-related infrastructure Similar to the investment pathways for low- most appropriate arrangement, the various in Australia and New Zealand continues to carbon transport, the primary investment considerations include: the funding source, be publicly owned. In Australia, the urban pathway for sustainable water infrastructure ownership, risks as well as the project type and rural water corporations are owned by is through green bonds issued by State (greenfield or brownfield), size, age, capital the State Government and funded by the Governments (Australia) and Councils (New profile, demand profile and operational control.

Long section of proposed Central Central Interceptor Interceptor route

Proponent: Government of New Zealand + Auckland Council

Location: Auckland, New Zealand

Status: Planned

Classification: Water infrastructure, Water Storage, Distribution

Description: The construction of a new wastewater tunnel Source: Watercare, 2018 Watercare, Source: between Western Springs and the Mangere wastewater treatment plant in Auckland and sewers conveying wastewater to the tunnel. The main tunnel will be approximately 13km long, situated Financial structure: Local council funding between 15 and 110 metres below the surface.134 Potential investment pathways: Auckland Council will fund the Output: Provides additional capacity to the network to interceptor. Auckland Council released an inaugural green bond accommodate population growth in Auckland and in 2018. According to the council’s green bond framework135 reduces overflows to the Waitemata and Manukau Harbours proceeds from future green bonds could be used to finance during wet weather. assets and projects for sustainable water management, and investors could target new green bond issuance as their premier Cost: NZD1.2bn issuance was oversubscribed.

Australia & New Zealand GIIO Report Climate Bonds Initiative 24 Shoalhaven Water’s Reclaimed Water Shoalhaven Water’s REMS construction image Management Scheme (REMS) – Stage 1b

Proponent: Shoalhaven City Council Location: NSW Status: Under construction Classification: Water infrastructure, Water treatment, Water recycling system

Description: Stage 1A cost AUD34m, was commissioned in 2002 Source: NSW Government Water, 2018 Water, Government NSW Source: and has since irrigated over 500ha of land including 14 dairy Potential investment pathways: The funding arrangement was signed farms, a golf course and sporting grounds, using over 20,000 ML in the early stage of Phase 1 with NSW government and local council through the REMS, and 70% of reclaimed water produced. Stage funding. The NSW Government confirmed AUD10.8m funding for 1b will include reclaimed water from the Nowra and Bomaderry REMS 1b. In 2018, the NSW Government138 will, for the first time, Wastewater treatment plants, both of which will be upgraded.136 issue sustainability bonds, which according to announcements Output: Reduced water use and increased water security. could include financing for sustainable water infrastructure. The local council is planning to absorb the project139 in its budget with Cost: AUD130m137 increasing CPI for future years and through bank lending. Exposure Financial structure: Local council funding + could be possible through the NSW Government green bond, should State Government funding the project meet their sustainable program requirements.

Wyaralong Water Treatment Plant SEQ Water – water treatment plant

Proponent: QLD Government + SEQ Water Location: QLD Status: Planned Classification: Water infrastructure, Water treatment Description: A staged water treatment plant, located adjacent to the Cedar Grove Weir, with an initial capacity of 30 megalitres per day. Additional stages will increase the capacity of the plant to not less than 100 megalitres per day, with construction timeframes 2018 Water, SEQ Source: dependent on growth in demand.140 Potential investment pathways: The Queensland Government Output: Meet growing demand for potable water in Beaudesert provides the funding for SEQ Water and the Queensland and the South Logan area and reducing the draw from the Southern Treasury Corporation (QTC)141 is already a green bond issuer. Regional Water Pipeline. Its inaugural AUD750m Certified Climate Bond in 2017 was a success and the Queensland Government intends to issue Cost: AUD50m more green bonds with allocations to sustainable water and Financial structure: State Government funding wastewater infrastructure.142

Ongoing developments in Australia, providing 484 to 674 GL/year of resources, including 38 dams across NSW – sustainable water investment additional water. With the potential for major envisioning the potential for further pumped- opportunities improvements to their efficiency and cost, hydro, floating solar and other technologies, desalination plants present a significant future that can use WaterNSW assets.145 Improving alternative water sources investment opportunity.144 In a different example, desalination plants Alternative water sources can include recycled Promoting the water/ energy nexus (normally high energy consumers) are water, desalinated water, rainwater collection, using renewable energy to reduce their storm-water harvesting or groundwater. They Government and industry are increasingly emissions whilst increasing water supply. In supplement traditional water supply sources, thinking of innovative ways to use water South Australia, a concentrated solar power such as dams and reservoirs, which diversifies supply and energy generation together to tower plant has been developed to supply the supply and improves the sustainability result in efficiencies for both. The increased electricity, heat and desalinated seawater to and resilience of urban water supplies and uptake of pumped-storage grow 15 million kg of tomatoes per year in increases water security.143 This is particularly shows how existing water sources can be the Australian desert. The greenhouses at important in drought prone Australia. In used (without being depleted) to generate the Sundrop tomato farm will also produce New Zealand, this approach could allow for electricity. The NSW Government is over 450,000m3 of freshwater per year and more isolated rural communities to have a investigating the opportunity for private displace the use of about 2 million litres of stable and clean water supply. Desalination developers to make energy investments in diesel per year.146 is the most adopted of these technologies in existing state-owned water infrastructure and

Australia & New Zealand GIIO Report Climate Bonds Initiative 25 Myalup-Wellington Water Myalup-Wellington Water Project Project map

Proponent: WA Government + Cost: AUD349m Collie Water Financial structure: State Government + Location: WA Federal Government + private funding Status: Planned Potential investment pathways: Collie Water, a private water company was 2018 Water, Collie Source: Classification: Water infrastructure, established to manage the Myalup- Water Storage, Distribution Wellington Water Project. The WA Description: The project comprises Government has allocated AUD37m. The integrated above and below dam Federal Government will provide AUD140m infrastructure components, aimed at in funding as well as a concessional loan reducing salinity in the Wellington Dam of up to AUD50m, and Collie Water will and surrounding area. The project is a provide an estimated AUD169m to the response to the increased salinity and project. Collie Water’s contribution will be reduced reliability of groundwater that has facilitated by the sale of at least 10GL per reduced the yield of fruit and vegetable year of desalinated potable water to Water agricultural activity and abandonment of Corporation.151 152 Exposure to this project agricultural activity in the region.149 could be possible should the Western Australian Government join its east-coast Output: By diverting high saline inflows State Government counterparts in issuing upstream from Wellington Dam for green bonds that include funding for desalination the quality of water stored sustainable water management projects. in and released from the Wellington Dam for agriculture would improve and overall agricultural productively could increase.150

Victorian Desalination Plant Victorian Desalination Plant schematic

Proponent: Victorian Government + Melbourne and Geelong area, and the AquaSure capability to expand to 200 billion litres a year.

Location: VIC Cost: AUD4bn

Status: Complete Financial structure: PPP (fully funded by the 2018 AquaSure, Source: private sector) Classification: Water infrastructure, Water treatment, Desalination Potential investment pathways: The project was built as a PPP through the AquaSure Description: Located in Wonthaggi, consortium, comprising Degrémont SA, Suez for an initial bank syndication process. This the desalination plant includes reverse Environnement, Thiess Pty Ltd and Macquarie was to enable AquaSure to seek additional osmosis facilities, two underground Group, in partnership with the Capital Projects long-term investors for AUD1.7bn of tunnels and an 84km water transfer Division of the Department of Sustainability debt funding, which proved successful.148 pipeline that provides desalinated water and Environment, Victoria. Watersure Degrémont is a specialised water treatment or catchment supplies to communities is responsible for the operations and subsidiary of Suez, and Suez is a listed throughout Melbourne, South Gippsland maintenance of the Victorian Desalination company that has also issued green bonds. and Westernport.147 The facility has been Project through September 2039 under Exposure to the project could be possible designed to integrate into the landscape contract to AquaSure. Watersure comprises via equities and through investment in and reduce the amount of energy required SUEZ and Ventia (formerly Thiess Services). green bond issuance. to draw the seawater into the plant. The bank group originally committed to Output: Capable of supplying up to 150 seven-to ten-year funding, with the State billion litres of water a year to the greater Government acting as the lender of last resort

Australia & New Zealand GIIO Report Climate Bonds Initiative 26 Green buildings

Globally, the building sector has the GRESB (Global Real Estate “GRESB can help investors understand largest potential to significantly reduce greenhouse gas emissions compared to Sustainability Benchmark) important non-financial metrics that 153 are influencing the value of buildings other major emitting sectors. Green Star As the global ESG benchmark for across global markets. Leading certified buildings in Australia have been real assets, GRESB assesses the shown to produce 62% less GHG emissions companies understand this, which is sustainability performance of real than average Australian buildings and why 20% more Australian companies estate and infrastructure portfolios consume 51% less potable water than are now reporting to GRESB than a and assets worldwide.157 GRESB’s if they had been built to meet minimum year ago.“159 industry requirements.154 annual Real Estate Assessment evaluates performance against seven Romilly Madew, CEO, Green Green building certification programs are now institutionalised in mature real estate sustainability aspects and indicators. In Building Council of Australia markets like Australia.155 There are currently 2017, a record 850 property companies 1,986 (August 2018). Green Star-rated and real estate funds, representing projects in Australia and 153 Green Star- 77,000 assets and over USD3.7tn in rated projects in New Zealand. 25,000 value, completed the Assessment. homes are going through Homestar, the Participation increased again in certification for homes in New Zealand. 2018 with 903 companies and funds GRESB 2017 results showed that the reporting their data to GRESB.158 Australian and New Zealand real estate sectors are leading the world in sustainability performance. The 2017 global average “Around the world, we continue to see more and more investment in GRESB score was 63 points, with Australia sustainable world-class assets. Established rating tools like Green Star and New Zealand achieving an average 156 provide investors with an independent verification of performance and GRESB Score of 73. helps us position our funds to meet the demands of leading investors.“ 160 Funding options and investment Josh McHutchison, Managing Director, pathways Investment Management, Lendlease

Low-carbon residential and low-carbon commercial buildings in Australia and New is provided by the private sector without green building development, including funds, Zealand are attractive to private-sector additional government guarantees. green loans and green bonds. Government- investors. Consequently, the vast majority owned green buildings have also been of the capital required for construction, The private sector uses a wide variety of financed with sub-sovereign green bonds. ownership and refinancing of green buildings equity, debt and project finance structures for

New Horizons, Monash University New Horizons Building at Monash University, Clayton Campus

Proponent: University of Melbourne Location: Melbourne, VIC Status: Complete

Classification: Green Star – 6-star - Design & As Built

Description: New Horizons Building at Monash University, Clayton Campus, is a 6-star Green Star-rated collaborative 2018 Monash University, Source: research centre, housing around 500 staff.160 It was the second education building in Victoria to receive this rating and the first research laboratory building to do so.

Output: Reduced utility costs and reduced environmental impact.

Cost: AUD175m issued a Certified Climate Bond into the US private placement Financial structure: Green bond – Certified Climate Bond. The market which included allocation of proceeds to its portfolio of building was originally co-funded by the Australian Federal Green Star rated buildings.161 Government, through the Education Investment Fund, Monash University and the Commonwealth Scientific and Industrial Potential investment pathways: Monash University has just Research Organisation (CSIRO). In 2016, Monash University announced its third green bond issuance.

Australia & New Zealand GIIO Report Climate Bonds Initiative 27 Darling Quarter - Commonwealth Bank Place Commonwealth Bank Place at Darling Quarter

Proponent: Lendlease Location: Sydney, NSW Status: Complete Classification: Green Star – 6-star - Design & As Built Description: Commonwealth Bank Place was awarded all four

Green Star ratings: 6-star Green Star Design rating, 6-star Green 2018 Government, NSW Source: Star As Built rating, 6-star Green Star Performance rating and a 6 star Green Star - Office Interiors rating and is the home to the Commonwealth Bank offices in Sydney.162 It consists of two office towers located in Darling Quarter, which is a community precinct featuring office buildings, retail and green spaces, as Cost: AUD500m well as eateries. The office building features chilled beam air- Financial structure: The Darling Quarter precinct was delivered conditioning technology including a single pass fresh air system through a PPP and NSW Government funding. and a 100kL rainwater harvesting tank.163 The building is leased to the Commonwealth Bank. It was acquired by investors Australian Potential investment pathways: Exposure to Lendlease can be Prime Property Fund Commercial (APPF Commercial) and First targeted as a possible green bond refinancing or investment in State Super (FSS). Lendlease’s green building portfolio.

Output: The building generates 50% less GHG emissions than Developer profile: The building was developed by Lendlease, which an average commercial office building and consumes 80% less is a listed company and a bond issuer. Lendlease have received 100 drinking water.164 Green Star certifications on buildings they have developed.

1 William Street 1 William Street building

Proponent: Cbus Property Pty Ltd Location: Brisbane, QLD Status: Complete Classification: Green Star – 6-star - Design & As Built Description: An office tower housing the Queensland Government

and public service and comprising a 43 story A-grade commercial 2018 Cbus, Source: building with premium services, providing approx. 75,000m2 net lettable area, including 1,100m2 of retail and 318 car spaces. It has achieved a 5-star Green Star - Office Design rating and a 6-star Green Star Office - As Built rating and a 5-star NABERS Energy rating. Some of its features include natural lighting, a sky garden and open, collaborative work space.165

Output: Reduction in energy costs to government occupants, Potential investment pathways: Becoming a member of the fund, freeing up CBD real estate by housing 500 public servants and or potential refinancing. reducing emissions. Developer profile: Since achieving its first Green Star rating in Cost: Est. AUD870m 2008, Cbus Property167 has developed 14 Green Star projects Financial structure: The Treasury Commercial group managed amounting to 400,000m2 of commercial space – with several more the 1 William Street procurement process, securing 100% private projects registered for certification.168 Cbus Property is the property funding for the project and providing oversight of project delivery. development and investment arm of the Construction and Building Cbus Property financed and developed the property, partnering Industry Superannuation Fund, which has 720,000 members and with Brookfield Multiplex, and ISPT Super Property acquired 50% more than AUD32bn in funds under management. ownership of the development.166

Australia & New Zealand GIIO Report Climate Bonds Initiative 28 Festival Plaza Commercial Festival Plaza Commercial Development Development rendering

Proponent: Walker Group Holdings Pty Financial structure: State Government Ltd (AUD180m), Private funding (AUD430m)

Location: Adelaide,SA Potential investment pathways: Potential refinancing on completion Status: Under construction Developer profile: The Walker Corporation Classification: Green Star - Registered is Australia’s largest private, diversified Description: A large-scale mixed-use development company, with a commitment commercial (office towers with 40,000m2 to achieving a minimum 5-star Green Star Source: Walker Corporation, 2018. 2018. Corporation, Walker Source: aiming for a 6-sar Green Star rating) and – As Built standard on all commercial and retail development with public space169 . retail projects, if not the maximum 6 Green Star rating.170 It has already benefited from Output: Reduced utility costs, reduced two green bonds issuances by banks. In early environmental impact and increased 2015, the company’s Tower 4D in Collins connectivity as well as providing a Square was part of ANZ’s AUD600m green space in the city centre for culture and bond issuance, and, in 2016, Tower 4B entertainment. Trust building in Collins Street was part of Cost: Est. AUD1bn Westpac’s AUD500m climate bond.

Commercial Bay Tower Commercial Bay Tower map with accessibility overlay

Proponent: Precinct Properties Downtown Ltd Location: Auckland, New Zealand Status: Under construction Classification: Green Star - Registered (office space only)

Description: Retail and office space for housing a working 2015 Auckland, Greater Source: population of 10,000 people being built on the Auckland waterfront. Includes a 39-level office tower, the PwC Tower, opening in 2019. It is also a public transport hub with public spaces and hospitality environments.171 Potential investment pathways: This project appears to be solely Output: Reduced utility costs, reduced environmental impact and funded with Precinct Properties debt. Exposure can be gained by increased connectivity. investing in equity or the retail bond or private placement arrangements. Cost: NZD850m Property profile: Precinct Properties have received several Green Financial structure: Bank loan and facilities + USPP and retail bond Star as well as NABERSNZ certifications for their projects.

Ongoing developments in green There is an opportunity for all new medical be green so as to ensure energy savings. buildings investment opportunities facilities to be designed and built, and for Libraries, courthouses, sporting facilities, existing facilities to be retrofitted to be greener. museums, public housing, universities, and Greening hospitals Projects already planned by national and state performing arts venues all present excellent Green hospital buildings deliver health governments in Australia and New Zealand opportunities for green buildings. outcomes for patients, staff and the that could make the necessary design changes environment. International studies collated Projects already planned by national and and register for certification under Green Star, by the World Green Building Council have state governments in Australia and New include: Caboolture Hospital Expansion Stage 1 confirmed that green healthcare facilities Zealand that could make design changes and (QLD); Logan Hospital Expansion (QLD); Ipswich provide better patient care and reduce register for certification under Green Star, Hospital Redevelopment (QLD); Toowoomba the length of stay required in hospital. include: New Museum in Western Sydney Hospital Redevelopment (QLD); Princess Specifically, green design has been found (NSW), Social and Affordable Housing PPP Alexandra Hospital Rehabilitation Facility (QLD); to deliver 8.5% reduction in hospital stays, project in NSW (Phases 1 & 2) (NSW), Victorian Comprehensive Cancer Centre (VIC), 15% faster recovery, 22% reduction in need New Performing Arts Venue (QLD), Courts New Royal Adelaide Hospital (SA); Canberra for pain medication and 11% reduction in Precinct (SA), Riverbank Entertainment Hospital expansion – Spire (ACT); and, Nelson secondary infections.172 Some of Australia’s Precinct (SA), Hobart Science and Technology Hospital Redevelopment (NZ). and New Zealand’s health facilities are Precinct (TAS), University of student already Green Star certified or are registered Greening public buildings accommodation (TAS), ACT Law Courts for certification. All government and public buildings should (ACT), Christchurch Multi-Use Arena (NZ).

Australia & New Zealand GIIO Report Climate Bonds Initiative 29 Sample green pipeline

Sector Project name Proponent Location Status Classification

Low-carbon Inland Rail Australian VIC to Planned Freight rail, Infrastructure transport Government/ ARTC QLD Sydney Light Rail NSW Government NSW Under construction Public Passenger Transport, Rail, Infrastructure Sydney Metro Northwest NSW Government NSW Under construction Public Passenger Transport, Rail, Infrastructure Melbourne Metro Rail VIC Government/ VIC Under construction Public Passenger Transport, Melbourne Metro Rail Rail, Infrastructure Authority

Brisbane Metro QLD Government/ QLD Planned Public Passenger Transport, Brisbane City Council Bus, Infrastructure Gold Coast Light Rail - Stage City of Gold Coast QLD Complete Public Passenger Transport, Planned Rail, Infrastructure Central Eyre Iron Project Iron Road Limited SA Planned Freight rail, Infrastructure (CEIP) infrastructure - rail

Canberra Light Rail – Stage 1 ACT Government ACT Under construction Public Passenger Transport, Rail, Infrastructure Auckland Electric Trains Auckland Transport / New Under construction Public Passenger Transport, Auckland Council Zealand Rail, Rolling stock

City Rail Link Government of New New Under construction Public Passenger Transport, - Stations and Tunnels Zealand Zealand Rail, Infrastructure - Western Line at Mt Eden Station

Renewable SA - NSW Interconnector Electranet SA to Potential Transmission Infrastructure energy NSW Snowy 2.0 Snowy Hydro Ltd NSW Planned Hydropower, Generation facilities, Pumped Storage Dundonnell Tilt Renewables VIC Under construction Wind, Generation facilities Coopers Gap Wind Farm PARF Company 10 Pty QLD Under construction Wind, Generation facilities Ltd, trustee for Coopers Gap Project Trust

Sun Metals solar farm Sun Metals QLD Complete Solar, Generation Corporation Pty Ltd facilities

Kidston Solar Project – Genex Power Limited QLD Phase 1 Complete, Solar, Generation facilities Phases 1 + 2 Phase 2 Planned

Eastern Creek Energy from Next Generation NSW NSW Planned Bioenergy, Generation Waste Facility facilities

North Qld Bio-Energy Plant North Queensland QLD Planned/ Under Bioenergy, Generation Bio-Energy construction facilities Corporation Limited

Cape York Solar Storage Lyon Solar QLD Planned Storage, Large scale energy storage Te Mihi Geothermal power Contact Energy New Complete Geothermal, Generation plant Zealand facilities Te Ahi O Maui (Kawerau) Eastland Group New Under construction Geothermal, Generation Zealand facilities

Australia & New Zealand GIIO Report Climate Bonds Initiative 30 Sector Project name Proponent Location Status Classification

Sustainable Shoalhaven Water’s Reclaimed Shoalhaven City NSW Under construction Water infrastructure, Water water Water Management Scheme Council treatment, Water recycling management (REMS) system Hawkesbury-Nepean Valley NSW Government NSW Planned Water infrastructure, Flood flood management defences Victorian Desalination Plant VIC Government VIC Complete Water infrastructure, Water treatment, Desalination Wedderburn, Werribee and VIC Government VIC Planned Water infrastructure, Water Bacchus Marsh irrigation Storage, Distribution upgrades

Wyaralong Water Treatment QLD Government + QLD Planned Water infrastructure, Water Plant SEQ Water treatment Perth Seawater Desalination Water Corporation WA Complete Water infrastructure, Water Plant of WA treatment, Desalination Myalup–Wellington Water WA Government + WA Planned Water infrastructure, Water Project Collie Water Storage, Distribution Alice Springs Flood Mitigation NT Government NT Under construction Water infrastructure, Flood initiatives defences Huia Water Treatment Plant Government of New New Planned Water infrastructure, Water Replacement Zealand Zealand treatment

Central Interceptor Government of New New Planned Water infrastructure, Water Zealand/ Auckland Zealand Storage, Distribution Council

Green Darling Quarter (formerly Lendlease NSW Complete 6-star Green Star - Design buildings Darling Walk) & As Built Australian Technology Park - Mirvac NSW Planned/ Under Green Star - Registered Building 1 + 2 construction

Council House 2 City of Melbourne VIC Complete 6-star Green Star - Design & As Built New Horizons Monash University VIC Complete 6-star Green Star - Design & As Built 1 William Street Cbus Property Pty Ltd QLD Complete 6-star Green Star - Design & As Built Brisbane Square Stage 2 Charter Hall Holdings QLD Planned/ Under Green Star - Registered Pty Ltd construction

Festival Plaza Commercial Walker Group SA Under construction Green Star - Registered Development Holdings Pty Ltd

The Hedberg + University of University of Tasmania TAS Planned/ Under Green Star - Registered Tasmania, West Park Campus construction – Stage 2

Christchurch Civic Building Ngai Tahu Property New Complete 6-star Green Star - Office Zealand Design, Built & Interiors

Commercial Bay Tower Precinct Properties New Under construction Green Star - Registered Downtown Limited Zealand

A more extensive list of the infrastructure project pipelines in Australia and New Zealand is available on the Climate Bonds Initiative website.

Australia & New Zealand GIIO Report Climate Bonds Initiative 31 Green investment opportunities are growing

There is an infrastructure construction boom Existing funding allocations and traditional Most Australian and New Zealand green bond underway in Australia and New Zealand financing methods will not, however, issues have been certified under the Climate driven by ambitious infrastructure and adequately provide for this green Bonds Standard, reflecting a strong leadership energy development plans. Since the signing pipeline. The Australian and New Zealand in setting international best practice. However, of the Paris Agreement, there has been governments are developing policy the ‘green’ label is not as widely applied to an increasing demand from institutional interventions to attract further private infrastructure as it could be. investors for investment opportunities that investment to public sector infrastructure With the increasing urgency to respond to the address environmental challenges and projects, but they must urgently increase challenges of climate change, governments, support sustainable development. their efforts. the financial sector and industry need to Green infrastructure development in Australia There are growing opportunities to increase their emphasis on policies and and New Zealand presents a range of attractive mobilise private capital to support green provision of low-emission, sustainable and green investment opportunities which provide infrastructure by investing in debt, resilient green infrastructure. The transition unique risk-adjusted returns. In both countries, funds, equity-linked products and listed from polluting brown infrastructure to cleaner there is an increasing number of low-carbon companies. Growing interest in green and greener assets needs to gain momentum transport, renewable energy, sustainable water finance has resulted in the development with widespread support. This will ultimately infrastructure and green building projects and growth of dedicated green financial help the Australian and New Zealand in the pipeline. This report identifies over products including green bonds, green governments to reach their climate targets, 400 projects and assets that could qualify loans, social and sustainable bonds, spur innovation, broaden the economic base, for refinancing, additional financing, or new green infrastructure investment trusts and promote more sustainable economic and financing in the near- to long-term. and green index products. social well-being.

Sector Definition Context Financing

Low-carbon Low-carbon transport includes Capital mobilisation for low-carbon A variety of funding structures transport transportation modes and ancillary transport continues to target the use are available to encourage private infrastructure that produce low or zero of energy-efficient transportation sector involvement in the long-term direct carbon emissions. For example, and the development of low-carbon financing required for such projects national and urban passenger rail and transport projects that reduce including green bonds, outright asset freight rail networks; Bus Rapid Transit carbon emissions. acquisitions, public private partnerships (BRT) systems; electric vehicles; and, and the securitisation of green assets. bicycle transport systems.

Renewable Renewable energy includes energy Both countries continue to lag behind Renewable energy project developers energy generation, transmission and storage other OECD member countries in and asset owners in Australia and technology that has low or zero carbon GDP per capita investment in green New Zealand have access to a wide emissions. This can include solar energy, energy. This trend is set to change, variety of funding options from wind energy, bioenergy, hydropower, with 2017 a milestone year for banks, specialised project financiers, geothermal energy, marine energy or renewable energy investment and debt clubs, investment funds, direct any other renewable energy source. development in both countries. investors and the capital markets. Sustainable Sustainable water management includes Climate change is leading to Similar to the investment pathways for water investments that reduce greenhouse gas significant changes in rainfall low-carbon transport, sustainable water management emissions (water management is a major distribution and water availability. infrastructure can be funded with green consumer of energy), address adaptation Enhanced planning processes and bonds issued by State Governments in and increase the resilience of surrounding increased upfront investment are Australia and Councils in New Zealand. environments. This can include: water required for water infrastructure in Investment in the construction, capture and collection, water storage, Australia and New Zealand to meet ownership and refinancing of new water treatment (with methane emissions the challenges of climate change types of infrastructure such as water treatment), flood defence, drought and rapid urbanisation. desalination assets, commercial and defence, stormwater management, and industrial water infrastructure provide ecological restoration/management. further options for investors.

Green To achieve global emission reductions The Australian and New Zealand Low-carbon residential and commercial buildings under the Paris Agreement the built property sectors are leading the world buildings are an established asset class environment needs to see major in sustainability performance. Green for private-sector investors. All types reductions in emissions. Green buildings Star certified buildings in Australia have of financing instruments are used. can be commercial or residential, new been shown to produce 62% less GHG Government owned green buildings or upgraded. Low-carbon emissions emissions than average Australian have been financed with sub-sovereign performance is demonstrated through buildings and consume 51% less potable green bonds. Funds have also been an accepted rating process, for example, water than if they had been built to raised for energy efficiency upgrades. Green Star certification. meet minimum industry requirements.

Australia & New Zealand GIIO Report Climate Bonds Initiative 32 Annex 1: Climate Bonds Taxonomy and Criteria

The Climate Bonds Taxonomy provides Panel, the aim of the Taxonomy is to broad guidance for prospective green bond encourage common definitions across global and climate bond issuers and investors. markets, in a way that supports the growth Guided by the Climate Science Advisory of a cohesive thematic bond market.

LAND USE & ENERGY TRANSPORT WATER BUILDINGS MARINE INDUSTRY WASTE ICT RESOURCES

Solar Private transport Water monitoring Residential Agriculture Cement Preparation Broadband production networks

Wind Public passenger Water storage Commercial Commercial Steel, iron & Reuse Telecommuting transport Forestry aluminium software and production service

Geothermal Freight rail Water treatment Products & Ecosystem Glass Recycling Data hubs systems for conservation & production efficiency restoration

Bioenergy Aviation Water distribution Urban Fisheries & Chemical Biological Power development aquaculture production treatment management

Hydropower Water-borne Flood defence Supply chain Fuel production Waste to energy management

Marine Nature-based Landfill Renewables solutions

Certification Criteria approved Transmission & Radioactive waste distribution Criteria under development management Due to commence Storage

Can be certified now Criteria in development TWGs launching soon

IN D O L A R T H E R A RI N RO P O ENER & M W S O M M E D W IO GY O N A E A Y E B I N G L H R T A U G B E I M

R E

T

N

S

I T

D Energy

IC D R A RAIL EH LES API TR T N S V R A E R P / N T O S S R U I A T T B W Transport

WAT E R I N G & ISPOSA IT UNICA L R E D L M TI C U M O Y N C S O E C S E

R Utilities

DE ER ESI NT MM CIA R IA O L L C

Buildings

E S T CULT H E R O R RY RI U R IS I E F G E F S

A Resources Natural Natural

E M E N T STEEL ING & C UR PR T O C C A E F S

U S I

N

N

A

G M Industry

Australia & New Zealand GIIO Report Climate Bonds Initiative 33 Annex 2: Green debt instruments

Debt instruments Use of proceeds Rating Australian and New Zealand example

Supra-nationals Proceeds are allocated to Debt securities carry the credit No sovereign green bonds issued yet from and sovereigns nominated projects and rating of the issuing State. However, Australia or New Zealand. assets. an independent rating may be assigned by ratings agencies.

Green state Proceeds are allocated Credit rating is based on that of Queensland Treasury Corporation issued treasury and to nominated projects the issuing municipality and the a AUD750m 7-year green bond in 2017 to municipal bonds and assets within the credit quality of the underlying refinance solar energy, rail and cycle ways. (sub-sovereign sponsoring region. assets. Treasury Corporation of Victoria issued a green bonds) AUD300m 5-year bond in 2016 for wind,

solar, transport, buildings upgrades and water infrastructure.

Auckland Council issued a NZD200m 5-year

bond in 2018 to finance electrified railway

infrastructure.

General obligation Proceeds are allocated As the green bonds are backed ANZ issued a AUD600m 5-year bond in 2015 green bond on nominated projects by balance sheet assets, the bond to fund low carbon buildings, wind and solar. and assets. will carry the credit rating of the issuing entity.

Green revenue Proceeds are allocated As the green bonds are backed No specific green revenue bonds have been bond on nominated projects at least partially by the revenue issued yet but Auckland Council’s NZD200m and assets. stream, bonds carry the credit obligation bond is secured on expected rates rating of the issuing entity. revenue collection of the council. Green Proceeds are allocated Debt securities backed by a pool of FlexiGroup has done three ABS deals with securitisation or on nominated projects underlying assets; an independent green tranches, mostly senior (Class A) for the green tranches and assets. credit rating is issued by a rating refinancing of solar rooftops but in its 2018 in ABS and MBS agency. deal it placed a B note too. NAB provides an deals RMBS example.

Global examples of green securitisations include Obvion’s three Green Storm RMBS. Green structured Proceeds are allocated Debt securities backed by a pool of National Australia Bank placed AUD200m finance on nominated projects underlying assets; an independent of secured notes for the refinancing of wind and assets. credit rating is issued by a rating and solar assets in June 2018. The structure agency. is backed by loans to Australian renewable energy developers. Green project Proceeds are allocated Credit rating is based on the No green project bonds issued yet. bond on nominated projects quality of the backing green assets and assets. and the returns stream of the underlying project.

Green loans, Provides lending to Interest rates are based on Macquarie Group has issued a green revolver syndicated loans encourage market borrower credit scores or an ESG and a green green term loan. and credit lines development in climate- score assigned by an ESG rating Contact Energy’s green debt includes a variety aligned sectors in agency. of credit facilities. line with the Climate Bonds Taxonomy and Syndication deals currently underway for wind in compliance with the and solar construction could be labelled green Green Loan Principles. (currently not). Mezzanine and Proceeds are allocated Hybrid capital investments, from Mezzanine finance facility of EUR245m subordinated debt on nominated projects development banks seeking to provided by AMP Capital to Neoen a and assets. support private investment in the renewable-energy provider. senior debt or from investors with a higher risk appetite.

Australia & New Zealand GIIO Report Climate Bonds Initiative 34 Annex 3: Green equity instruments

Equity instruments Use of proceeds Structure Australian and New Zealand example

Private equity buyout, Fund allocations to Aid project developers and The Clean Energy Innovation Fund in April of venture capital and innovative pilot-scale entrepreneurs to secure a 2017 invested AUD5m in Zen Ecosystems’ unlisted equity funds green projects including funding stream for green series-B funding round. for qualified green projects. PE often incorporates infrastructure. green indicators into process.

Public equity Allocations towards Primarily stock including Last November, New Energy Solar raised in mature green green-bond linked products its initial public offering AUD200m. technologies such as and pureplay investments. solar, wind energy Additional capital in the form of and particularly government expenditure. infrastructure.

YieldCos Use of proceeds to fund Publicly traded vehicle Limited activity in Australia or New Zealand. a portfolio of off-balance consisting of pools of long-term sheet green certified cash-generating green assets, energy projects. often with tax advantages.

Mezzanine and Hybrid financing typically Capital market investments in a AMP Capital’s GBP37m mezzanine preferred stock (Green from development banks hybrid debt-equity tranche. investment stake in a GBP247m refinancing B-shares) and international finance of UK solar parks.173 174 institutions supported by subordination of equity tranches.

Senior equity tranches Purchase of equity stakes Structured senior investment The CEFC committed AUD100m to an in projects of strategic grade equity tranches geared agricultural fund of Macquarie Infrastructure and social and environmental towards risk-averse investors. Real Assets, targeting improved on-farm energy importance. efficiency and reduced carbon emissions. Junior equity tranches Junior subordinated Fully subordinated first-loss The CEFC uses these instruments. and equity guarantees equity tranche, from capital or in the case of public (Green C-shares) investors or grant companies, common stock. agencies, often to serve as catalytic capital.

Australia & New Zealand GIIO Report Climate Bonds Initiative 35 References and end notes

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Retrieved from green-and-blue-bonds-tipped-to-boom-hsbc- sdg-6-7-9-11-13-15 au/traffic-transport/public-transport/brisbane- https://carbon-pulse.com/25568/ head-says-20180530-p4zicv.html 77 ANZ. 2018. ANZ Prices first €750m SDG metro 129 CEFC. 2016. Energy from waste in Australia: 55 Renew Economy. 2018. CEFC and IFM Bond. Retrieved from https://institutional.anz. 104 Queensland Treasury Corporation. 2018. a state-by-state update. Retrieved from https:// Investors work together to cut carbon emissions com/insight-and-research/ANZ-Prices-First- Green Bond Report 2018. Retrieved from https:// www.cefc.com.au/media/222701/cefc-energy- in infrastructure assets. Retrieved from https:// 750m-SDG-Bond www.qtc.com.au/wp-content/uploads/2018/05/ from-waste-market-report-november-2016.pdf reneweconomy.com.au/cefc-ifm-investors- 78 https://capital.nab.com.au/docs/NAB_SDG_ QTC-Green-Bond-Report-May-2018.pdf 130 ARENA. 2018. Renewable Energy in the work-together-cut-carbon-emissions- Green_Bond_Framework.pdf 105 Queensland Treasury Corporation. 2018. Australian Mining Sector. Retrieved from https:// infrastructure-assets-39566/ 79 CEFC. 2018. CEFC and IFM Investors work Green Bond Report 2018. Retrieved from https:// arena.gov.au/assets/2017/11/renewable-energy- 56 OECD. 2017. Environmental performance together to cut carbon emissions in infrastructure www.qtc.com.au/wp-content/uploads/2018/05/ in-the-australian-mining-sector.pdf reviews - New Zealand Highlights 2017. assets. Retrieved from https://reneweconomy. QTC-Green-Bond-Report-May-2018.pdf 131 Parkinson, G. 2018. Behind Sanjeev Gupta’s Retrieved from https://www.oecd.org/env/ com.au/cefc-ifm-investors-work-together-cut- 106 ARTC. 2018. Inland Rail Programme. plans for Australia’s solar-powered economy. country-reviews/Highlights_OECD_EPR_ carbon-emissions-infrastructure-assets-39566/ Retrieved from https://inlandrail.artc.com.au/ Retrieved from https://reneweconomy.com.au/ NewZealand.pdf 80 ISCA. 2018. Infrastructure Sustainability programme behind-sanjeev-guptas-plans-for-australias- 57 Infrastructure Australia. 2018. Rating System. Retrieved from http://www.isca. 107 ARTC. 2017. ARTC 2018-18 Statement of solar-powered-economy-99356/ Infrastructure Priority List. Retrieved from org.au/is_ratings Corporate Intent. Retrieved from https://www. 132 CSIRO. 2018. Future urban water supplies. http://infrastructureaustralia.gov.au/policy- 81 NZGBC. 2018. Homestar. 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Retrieved from https://www.iasplus.com/en/ %20Green%20Bond%202018/green-bond- default/files/2015-10/ppp-public-model-and- Homestar assesses a house, apartment or multi- binary/europe/0810arcproposalannex.pdf framework-9-may-2018.pdf policy-sep15.pdf unit development. A home is rated on a scale from 112 Asia Development Bank (ADB). 2018. 136 Shoalhaven Council. 2018. Reclaimed 61 World Bank blog, 2017. Low-carbon 6 to 10. A 10 Homestar rating means you’ve built a Promoting Green Local Currency Bonds for Water Management Scheme. Retrieved from infrastructure: an essential solution to climate world leading house. Owned and operated by the Infrastructure Development in ASEAN+3. http://shoalwater.nsw.gov.au/About-Us/Major- change? Retreived from: http://blogs.worldbank. New Zealand Green Building Council Homestar Retrieved from https://www.adb.org/sites/ Projects/REMS org/ppps/low-carbon-infrastructure-essential- is now being used by Government, developers, default/files/publication/410326/green-lcy- 137 Shoalhaven Council. 2018. Reclaimed solution-climate-change retirement home providers, home builders’ and bonds-infrastructure-development-asean3.pdf Water Management Scheme. Retrieved from 62 The World Bank, 2017. Low-Carbon others. Source: NZGBC. 2018. Homestar. Retrieved 113 Clean Energy Agency. 2018. Clean http://doc.shoalhaven.nsw.gov.au/displaydoc. Infrastructure, Private Participation in from https://www.nzgbc.org.nz/homestar Energy Outlook. Retrieved from https://www. aspx?record=D16/149320 Infrastructure (PPI), 2002 to H1 2017. Retreived 85 AGBC. 2018. Green Star. Retrieved from cleanenergycouncil.org.au/policy-advocacy/ 138 NSW Government. 2018. NSW Budget from: http://ppi.worldbank.org/~/media/ https://new.gbca.org.au/green-star/ + NZGBC. reports.html 2018: Sustainability Bonds Herald New GIAWB/PPI/Documents/Global-Notes/2017_ 2018. Green Star. Retrieved from https://www. 114 Clean Energy Regulator. 2018. Large-scale Era of Investment. Retrieved from https:// Low_Carbon_Infrastructure_PPI.pdf nzgbc.org.nz/greenstar renewable energy target. Retrieved from http:// www.treasury.nsw.gov.au/sites/default/ 63 Green bonds are debt instruments that 86 https://www.drawdown.org/solutions/ www.cleanenergyregulator.gov.au/RET/About- files/2018-06/20180615%20-%20Media%20 raise capital exclusively to finance or re-finance electricity-generation/geothermal the-Renewable-Energy-Target/How-the-scheme- Release%20-%20Perrottet%20-%20NSW%20 projects and assets with environmental benefits. 87 https://unfccc.int/news/clean-energy- works/Large-scale-Renewable-Energy-Target Budget%202018%20-%20Sustainability%20 64 Contact Energy. 2018. 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Australia & New Zealand GIIO Report Climate Bonds Initiative 37 141 Queensland Treasury Corporation. 2018. 150 Infrastructure Australia. 2017. 159 Green Building Council Australia. 2017. 168 Green Building Council of Australia. 2018. Green Bonds. Retrieved from https://www. Project Evaluation Summary Myalup- Australia Posts Seven Years Global Sustainability Cbus Property shakes up the sustainability space. qtc.com.au/institutional-investors/green- Wellington Water Project. Retrieved leadership. Retrieved from https://new.gbca.org. Retrieved from https://new.gbca.org.au/news/ bond-2018/ from http://infrastructureaustralia.gov.au/ au/news/gbca-media-releases/australia-posts- gbca-news/cbus-property-shakes-sustainability- 142 Queensland Treasury Corporation. 2018. projects/files/MWWP_summary_30112017.pdf seven-years-global-sustainability-leadership/ space/ Green Bond Report 2018. Retrieved from https:// 151 Infrastructure Pipeline. 2018. Myalup- 160 Monash University. 2018. 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Partners Contributors Acknowledgements IFM Investors, the Investor Australian Water Association, AGL, Auckland Council, Contact Energy, Department of State Group on Climate Change, Green Building Council of Development, Manufacturing, Infrastructure and Panning the Principles for Responsible Australia, GRESB and New (Queensland Government), Infrastructure Partnerships Australia, Investment, RIAA Zealand Green Building Council. Infrastructure Sustainability Council of Australia.

Media Partner KangaNews

Lead author: Co-authors: Design: Kristiane Davidson Rob Fowler, Kingsley Kwadwo Oteng-Amoako, Godfrey Design Laurent Buzenet Drogba, Andrew Whiley, Cymroan Vikas.

Electronic version The electronic version of this report and related information, including a list of infrastructure projects in Australia and New Zealand, can be retrieved from https://www.climatebonds.net/resources/reports/green-infrastructure-investment-opportunities-australia-and-new-zealand#

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Australia & New Zealand GIIO Report Climate Bonds Initiative 38 Sponsors The CEFC is responsible for investing bonds in Australia supporting the growth of AUD10bn in clean energy projects on the market. Climate bonds have enormous behalf of the Australian Government. Our potential to unlock new finance to support goal is to help lower Australia’s carbon increased investment across the clean energy emissions by investing in renewable energy, sector. The CEFC is working with issuers to energy efficiency and low emissions demonstrate the investment potential of technologies. We also support innovative Australia’s emerging climate bond market. start-up companies through the Clean Energy ANZ is a leading sustainable financing Innovation Fund. Across our portfolio, we bank, helping clients to transition to deliver a positive return to taxpayers. The a low-carbon economy backed by an CEFC has been a major investor in climate unparalleled international network among its peers. The bank operates in 34 markets globally, including 29 in the Asia Pacific. We have funded and At Commonwealth Bank of Australia Our Energy Efficient Equipment Finance facilitated AUD8.3bn in low-carbon we recognise our role in supporting program continues to help businesses and sustainable solutions since 2015 long-term investment in low-carbon fund energy efficient vehicles, equipment including renewable energy, green and renewable infrastructure and in and projects and in FY18 our lending bonds, green buildings and low- accelerating the growth of climate bonds exposure to the renewable energy emissions transport. We have led in Australia. In FY17 we arranged AUD sector grew to AUD 3.7 billion. In over USD7bn-equivalent of Green, 1.02 billion of climate bonds including January 2018, the Global 100 Index Social and Sustainability bonds across Australia’s first green asset-backed named Commonwealth Bank the most Australia, Asia and New Zealand since securitisation and the world’s first sustainable business in Australia for the 2015. Recent highlights include New climate bond from a tertiary education third consecutive year. Zealand’s first domestic green bond institution. We led more than AUD 2 for Auckland Council in June 2018, billion of green and sustainability notes the International Finance Corp’s first in FY18 for clients across the globe, one social bond in Australia in March transaction being China Development 2018 as well as ANZ’s February 2018 Bank’s inaugural offshore green bond. benchmark SDG Bond, the second SDG corporate bond issue globally.

across all of our key sectors and markets to support low-carbon opportunities for our customers. NAB has been at the forefront Established 160 years ago, NAB today of the green, social, and sustainability serves 9 million customers in Australia, New bond markets in Australia since 2011, Macquarie Group is a diversified Zealand, and around the world, including recognised as both a ‘Green Bond Pioneer’ financial group providing clients in our key trading and investment markets and ‘Australian Sustainability Debt House with asset management and finance, of Asia, UK and USA. We recognise that of the Year’. In 2017, NAB committed to banking, advisory and risk and capital climate change is a significant risk and increasing environmental financing for solutions across debt, equity, energy a major challenge for the global economy, customers from AUD18bn by 2022 to and commodities. Macquarie is and for society. As a global provider of AUD55bn by 2025. Our goal is to make committed to supporting the growth financial products and services, we seek to a positive and lasting impact on the lives of the global green economy. As one play a key role in financing the transition of our customers, people, shareholders, of the world’s largest investors in to a low-carbon economy, and to innovate communities, and our environment. renewable energy, we have invested or arranged over AUD20bn of capital into renewable projects globally since 2010. Westpac is Australia’s first bank and oldest two years, Westpac has provided committed Macquarie Capital is a leading equity company, serving over 13 million customers. funding supporting over AUD4.5bn of investor, participant and sponsor in We have a long history of sustainability capital investment in Australian renewable the development and construction of leadership, having been ranked as the energy projects with a total generation global renewable energy infrastructure world’s most sustainable bank in the Dow capacity in excess of 2.5GW which, when assets. From battery storage in Jones Sustainability Index ten times since complete, will generate sufficient electricity California and biomass-fuelled power the Index was first established in 1999. 2018 to power over 1.4 million homes. Renewables in the UK, to solar in Japan, wind in marks a decade since we released our first now represent over 70% of our lending to Australia and waste-to-energy in climate change position statement. Westpac the electricity generation sector. We have Asia, we’re delivering some of the has a long-term lending target of AUD25bn also played a prominent role in developing largest and most innovative renewable to climate change solutions by 2030 – a sign the AUD green bond market since projects globally. The ideas, capital and of our commitment to help businesses and facilitating its opening with World Bank’s expertise of Macquarie and its Green individual customers respond to climate 2014 green issue. Investment Group are powering green change. We have lent more than AUD8.5bn opportunities across Asia Pacific and (total committed exposure) to climate around the world. change solutions, as at 1H18. Over the past

Australia & New Zealand GIIO Report Climate Bonds Initiative 39 “Westpac recognises “With record levels of transport infrastructure investment, it is often that climate change is an overlooked, the importance of the role this new infrastructure plays economic issue as well as an in reducing emissions and creating a more sustainable environment. environmental issue, and banks Commonwealth Bank recognises this and is proud of its record in have an important role to play financing modern, future-proofed, transport infrastructure that in assisting the Australian promotes energy efficiency at its very core. Green bonds, working and New Zealand economies’ alongside traditional forms of finance, will ensure the continued transition to net zero emissions. funding of energy efficient infrastructure.” Increasing green bonds, green Andrew Hinchliff, Group Executive, Institutional Banking and loans and green underwriting Markets, Commonwealth Bank of Australia is a vital part of the mix, as is supporting new issuers to come to market.” “The Australian and New “Our goal is to make a positive Lyn Cobley, Chief Executive, Zealand green bond markets and lasting impact on the Westpac Institutional Bank are representative of global lives of our customers, people, best practice. The markets shareholders, communities, are underpinned by a and our environment – and “There is increasing focus diversity of issuance and our customers are telling us in the infrastructure innovation in use of proceeds, they want to participate in investment community on a strong commitment towards the transition to a low-carbon the opportunities that green transparency, with high levels economy. We’re continually investment brings. Across of international certification. developing and offering renewable energy, sustainable ANZ is working with investors innovative green finance transport, green buildings to build confidence in market tools that enable investors to and sustainable communities; fundamentals and directions. back major renewable energy financial investors, corporates The scale of green infrastructure projects alongside NAB, and and governments are all investments expected to be we find new ways to support looking for ways to facilitate made in Australia, coupled with companies that deliver green and participate in the transition strong investor demand, make infrastructure projects around to a low-carbon economy.” the prospects for growth in the world.” green bonds bright.” John Pickhaver, Co-Head of Mike Baird , NAB Chief Macquarie Capital, Australia Christina Tonkin, Managing Customer Officer, Corporate and New Zealand, Macquarie Director, Loans & Specialised and Institutional Banking, Group Finance, ANZ NAB

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