| 15.2°C Dublin

State to auction up to €1.5bn in 'green bonds' to fund climate change projects

Close

Call for action: Extinction Rebellion climate activists during a protest outside government buildings in Dublin. Photo: Collins Dublin, Gareth Chaney

Call for action: Extinction Rebellion climate activists during a protest outside government buildings in Dublin. Photo: Collins Dublin, Gareth Chaney

Collins Dublin, Gareth Chaney

Call for action: Extinction Rebellion climate activists during a protest outside government buildings in Dublin. Photo: Collins Dublin, Gareth Chaney

The Government will borrow up to €1.5bn today, tapping the market with so-called green bonds to finance environmentally friendly developments.

It will be the State's second time accessing debt in a rapidly growing global market for sustainable finance.

The NTMA confirmed it had hired Barclays, BofA Merrill Lynch, BNP Paribas, Danske Bank, Davy and JP Morgan to manage the auction of Sovereign Green Bonds, due for redemption in 2031.

In October 2018, the NTMA's first auction of €3bn in green bonds attracted more than €11bn in bids from more than 170 buyers, many of them first-time bidders on Irish debt securities. Such bonds attract specialist foreign fund managers seeking to put their money into climate change-fighting projects worldwide.

The money to be raised today will be earmarked to finance the State's low-carbon goals within the National Development Plan. It sets a target of spending €23bn by 2027 on water and waste management, clean transportation options including incentives for buying low-emission vehicles, sustainable management of living natural resources and land use, renewable and more efficient energy generation, and climate change adaptation projects including flood relief works.

The NTMA is seeking to borrow €14bn to €18bn this year, and has already reached €12.3bn. Today's green bonds will be added to the total.

About 95pc of bids for last year's green bonds came from outside Ireland. Some 23pc of bids originated in the UK, 19pc each in Germany and France, and 12pc from Nordic nations.

Some of the projects already being financed via the 2018 green bonds include the planting of new broadleaf and Sitka spruce forests, Luas light-rail expansion and development of the future MetroLink for Dublin, and dozens of works to improve water quality and waste water treatment nationwide.

An increasing number of corporations, as well as nations, are offering green bonds as a way to stimulate investment in environmentally positive infrastructure and services. Commercial banks and other companies in the United States and China last year issued $34.2bn (€31.1bn) and $31bn, respectively, of such targeted-use securities, followed by France ($14.2bn), Germany ($7.6bn) and the Netherlands ($7.4bn), according to the Climate Bonds Initiative.

The London-based non-profit identified Ireland's debut 2018 issuance as the world's fifth-largest auction of green bonds last year, behind the US Federal National Mortgage Association ($20.1bn), the Industrial Bank of China ($9.6bn) and the governments of France and Belgium ($6bn and $5.5bn respectively). Governments in Indonesia, Lithuania and Seychelles also issued green bonds last year.

Indo Business