Clean energy finance to support the transition to a low-carbon economy

US$90 trillion in new investments by 2030 have been estimated as necessary to meet the goals of UNCOP21 to address climate change. National Australia Bank (NAB)’s David Jenkins says the opportunity for green bonds to mobilise capital for this transition to a low carbon economy is immense.

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By David Jenkins, Director of Sustainable Captial Markets, Corporate Finance, NAB

As the impacts of climate change are increasingly being felt across the world, communities, governments and business leaders are now increasingly focusing on ways to address and limit the impacts of climate change, and facilitate a transition to a low carbon economy.

US$90 trillion in new investments by 2030 have been estimated as necessary to meet these goals of UNCOP21.  The financial sector has an important role to play in supporting this transition. NAB has committed to help address climate change and to support this transition to a low carbon economy.  Issuing and arranging green bonds is a key component of our commitment. Traditionally most green debt has been provided by bank debt, but this is changing with growing capital burden on bank balance sheets, and the rapid evolution and growth of green bond markets.

Bloomberg New Energy Finance shows over US$95bn of labelled green bonds were issued in 2016, up 100% from 2015 volume, with continuing growth in 2017 and beyond expected. The OECD estimates green bonds account for less than 1% of the total global bond markets, so the opportunity for green bonds to mobilise capital for this transition to a low carbon economy is immense.

NAB has now brought 7 Australian green bonds to market since 2014, raising almost A$2.5bn for a range of green projects. We were the first Australian bank to issue green bonds in both Australian and European markets, as well as being the first bank globally to issue a Climate Bond certified green bond.

At NAB we have led the development of the Australian green bond market since 2011 and have been recognised for this leadership and several of our innovative and market leading transactions, each of these has set a precedent in bringing first-time issuers to market, promoting innovative deal structures or tapping into new investments.

The green bond market continues to rapidly expand with new issuers, sectors being financed and structures fuelled by the continuing global growth of socially responsible investors seeking to decarbonise their portfolios and to participate in this transition to a low carbon economy.

At NAB we expect to see continuing issuance in 2017 and beyond from Australian, New Zealand and Asian issuers from new and repeat issuers, across a range of formats, and for a growing range of low carbon investments. NAB continues to build on our established leadership position in clean energy finance and is committed to working with our customers, both investors and borrowers, to consider not only the risks but to understand and develop opportunities this rapidly accelerating transition to the low carbon economy offers.

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