Triodos debuts new climate change bonds
Posted on 21. Dec, 2009 by Sean Kidney in blog
Green banking specialist Triodos this weekend launched a new range of climate change bonds designed to offer consumers the chance to easily invest their savings in low carbon projects.
The two-, three- and five-year bonds will offer rates of interest of between 2 and 3.25 per cent, and the company is expecting to see considerable take-up of the new products from green consumers.
Final text of the COP15 agreement
Posted on 19. Dec, 2009 by Sean Kidney in blog
Released a couple of hours after it was announced. Remarkably mundane looking pages with enormous import.
See also the draft text from the early hours of the same day.
Climate Bonds launch: fast-track solution to low-carbon economy
Posted on 15. Dec, 2009 by Sean Kidney in blog
Media Release | Climate Bonds Initiative | PASS IT ON
CLIMATE BONDS: FAST-TRACK SOLUTION TO LOW-CARBON ECONOMY
The global bond market could play a central role in the fight against climate change, according to an international think tank.
Today the international Network for Sustainable Financial Markets launched the Climate Bonds Initiative, designed to foster the use of long-term debt to finance a rapid, global transition to low-carbon economy. The Climate Bonds Initiative is operating as an autonomous project supported the Carbon Disclosure Project.
While the talks in Copenhagen have been holding everyone’s attention, the role of private finance in what will be the biggest economic transformation in history — estimated in one recent report to be more than three times the size of the whole industrial revolution — is a side issue.
According to a number of recent reports a trillion dollars a year of investment has to flow into low-carbon industries if tipping points for runaway climate change are to be averted. The Initiative aims to encourage that investment.
Climate Bonds Initiative Advisory Panel members include James Cameron, Vice Chair of Climate Change Capital, Nick Robins, HSBC Climate Change Centre of Excellence, and Jeremy Leggett of Solarcentury.
Mr Robins said: “Putting the emphasis on private financing allows a different perspective. In place of always talking about the ‘costs’ of climate change, we can talk instead about investment opportunities.”
“Bonds will be an important source of finance for action on climate change. The Climate Bonds Initiative provides a welcome platform to investigate the policy and market framework that will simultaneously raise capital for low carbon solutions and provide attractive risk adjusted returns for investors’.
Mr Cameron said: “Bonds have allowed us to finance the building of Europe’s sewer systems, the growth of America’s highway system, and the financing of two World Wars. We can now use Climate Bonds to finance the quick, global transition required to head off runaway climate change.”
He added: “The transition to a low-carbon economy presents capital with what is likely to become the largest commercial opportunity of our time: investing in clean energy and low carbon infrastructure.”
Climate Bonds Initiative convenor, Sean Kidney, said there were three work streams for the project: “We are developing policy models and advice for governments and corporations, developing agreed definitions and standards for Climate Bonds, and helping countries develop proof-of-concept projects and bond issues.”
“Globally, there is no shortage of funding; for example, there is some $120 trillion being managed by institutional investors. In the wash-up of the financial crisis, fund managers the world over are re-weighting their portfolios towards fixed interest debt. But most of the bonds on offer lock institutional investors into the carbon-intensive economy.”
“Discussion with institutional investors such as pension funds has found a large appetite for bond investments related to climate mitigation projects – as long as they first meet accepted risk ratings and rates of return. Many of funds face pressures from their stakeholder groups – governments, public servants, etc – to both deliver solid returns over the long term and to help address climate change with their investments.”
The past year has seen green bonds from the World Bank and Climate Awareness bonds from the European Investment Bank. If the Climate Bonds Initiative has its way we will see an explosive growth in what are being called “green debt capital markets”.
ENDS
Backgrounder ‘Climate Bonds can fund the rapid transition to a low-carbon economy‘.
Contact: Sean Kidney, Climate Bonds Initiative: sean(at)climatebonds.net
Jeremy Leggett in the FT about climate bonds
Posted on 14. Dec, 2009 by Sean Kidney in blog
Financial innovation is much underutilised in dealing with the climate threat, both at the micro- and macro-levels. At the micro-level, for example, it is still impossible in some countries to acquire even a simple mortgage with which to overcome the upfront capital cost of microgeneration. At the macro level, for example, there is considerable untapped potential for climate bonds.
How better to mobilise a low-carbon future rapidly than the large-scale issuance of long-term debt to overcome medium-term investment barriers to achieving economies of scale in manufacturing? How better to find a way for pension-fund trustees to manoeuvre around the current dysfunctional definition of fiduciary responsibility?
COP15 snippets
Posted on 11. Dec, 2009 by Sean Kidney in blog
> Amazing scenes in the negotiator’s Plenary today, with Tuvalu rep arguing and China resisting – both politely but in a very determined way – that a treaty has to limit global temperature increases to 1.5 degrees and to reduce CO2 in the atmosphere to 350ppm. No resolution yet.
> Hot news: Indonesia announced it’s proposing a feed-in tariff for geo-thermal energy. Apparently they have 40% of the world’s hot rock resources! See http://tinyurl.com/y9pm6t6
> Russia announced it would cut emissions by 25% by 2020 (from 1990 levels) if other countries agreed to do the same; they had been saying 10-15%; the EU is saying “we convinced them”. EBRD at a seminar today explained that Russia’s energy intensity is incredibly bad; they have enormous potential to cut emissions from energy efficiency measures. Hopefully the high returns will entice energy efficiency investors despite political and crime risks. EBRD aims to help de-risk.
> Outlook for a “good” Copenhagen Agreement seems to be improving. Insiders are saying that having so many world leaders (more than 100) turning up, and Obama now coming for the end of the Conference, is forcing a better outcome.
> Also helping was the US EPA announcement this week to formally classify CO2 as a pollutant. That allows Obama to regulate CO2 without Congress – it dramatically increases his ability to deliver at least the cuts he’s promising.
> The Conference is quite a buzz; 15,000 people talking non-stop in the conference centre. Thousands of laptops, lots of coffee, chanting anti-REDD demonstrators in the background. The cloak room is open 18 hours a day this week; it advertises that next week, as negotiations come to then end, it will be open 24 hours a day.
> Had a talk with a rep couple of big EU pension fund this week to see if they’d join Danish ATP pension fund’s new €1 billion ‘Climate Change Action Fund for Emerging Economies’, reported earlier this week. They think they tackle the issue of investing better by building in relevant criteria across all their asset classes – i.e. in the whole fund. The €1 billion, they think, puts it into a sideline rather than mainstreaming the idea.
COP15: 4 snippets
Posted on 09. Dec, 2009 by Sean Kidney in blog
There is a real excitement in the air, with some 20 thousand people turning up from every corner of the world and a party atmosphere in the streets. The talk, however, is all climate:
1. Lord Stern in a speech a couple of nights ago talked of the stark choice we face between acting fast or sliding into disaster, and thus how important this Conference was to the future of the planet. Lord Giddens talked of the Copenhagen Conference being, with the sense of pressure for a global agreement and over 100 heads of States turning up, the first real gathering for global governance: an historic event.
2. More practically, Q-Cells, one of the world’s largest photovoltaic solar companies, claims that solar cells have reached grid price parity in key markets, such as Italy and Germany. That means that solar cells are price comparable with fossil fuel energy (gas in Italy’s case) coal and gas for Germany. Big news! Why would you still build coal in those markets, let alone high-emission-potency gas?
3. According to the International Energy Authority, 77% of the energy infrastructure that will exist in the world 2050 has not been built. So we have an extraordinary chance to make sure it’s infrastructure for a low-carbon, not a high-carbon, economy.
4. Denmark’s ATP pension fund, one of the largest in the world, announced that they’re setting up a € 1 billion ‘Institutional Investor Climate Change Action Fund for Emerging Economies’. The aim is for the Fund to become a joint initiative involving several like-minded institutional investors. The Fund will operate on private sector conditions and only invest in projects that are expected to deliver relevant risk-adjusted rewards.
FT: UK pension funds call for big rise in long-dated gilts
Posted on 01. Dec, 2009 by admin in blog
December 2 2009
A big rise in borrowing through index-linked and long-dated government bonds would be the most effective action the Treasury could take to help hard-pressed defined benefit pension schemes, according to the industry’s trade body.
The National Association of Pension Funds said that 80% of its members saw an increase in the issuance of long-dated and inflation-linked gilts as the government measure that would most help its members.
Pensions experts say protecting schemes against adverse market moves requires the purchase of long-dated and index-linked gilts, since these move in line with pension fund -liabilities.
Already, pension schemes are moving out of riskier assets such as equities into bonds, which rise in value when interest rates – and therefore scheme liabilities – fall. Since 2006, the average allocation to equities has fallen to 44.2 per cent of funds, down from 59.3 per cent in 2006. The average allocation to bonds has risen to 37.9 per cent from 29.9 per cent over the same period.
For full story see http://www.ft.com/cms/s/0/6ce02428-dee3-11de-adff-00144feab49a.html