A pipeline of infrastructure investments that can be funded via green finance has been outlined in a new Green Infrastructure Investment Opportunities Australia and New Zealand (GIIO) report launched by the Climate Bonds Initiative.
It was accompanied by the release of the Australia and New Zealand Green Finance Briefing, which provides a full analysis of green investment in both nations to date.
The reports noted that cumulative green bond issuance in Australia is $8.3bn (US$6.3bn) and New Zealand NZ$2.1bn (US$1.5bn) for a combined total of $10.2bn in green bond issuance to date.
H1 2018 issuance in Australia was $2.6bn (US$1.95bn) up from $2.5bn for the corresponding period in 2017, a 5.3 per cent increase. Australia was the second largest cumulative source of issuance within the Asia Pacific region in H1 2018, second to China and twelfth in overall world rankings. In CY 2016 Australia recorded $1.1bn in green bonds, in CY 2017 $3.3bn, a 209 per cent increase from 2016.
H1 2018 for New Zealand saw NZ$200m (US$136m) issued.
Overall there are a total of eleven individual issuers from Australia, some of whom are multiple issuers, and two from New Zealand.
Despite a challenging policy backdrop, Australia has emerged over the last four years as an example of world’s best practice in market development, with commitment from the major banks and a diversity of green bond issuances including from two state governments, property and tertiary sectors, and also high levels of certification. New Zealand’s first green issuance was in 2017.
Notwithstanding the positive directions, both nations are yet to effectively harness sufficient capital allocation to generate the volume of green infrastructure investment required to meet international mitigation and emissions commitments, whilst improving domestic climate adaptation and resilience.
Both the reports supported the two countries’ respective transitions to a low-carbon economy, meeting the growing demand for green investment opportunities – including green bonds – and facilitating greater engagement between project owners and developers, and institutional investors including asset managers and superannuation funds.
“As a core investor in Australia’s green bond market, we are seeing growing interest from superannuation funds and managers who want to deepen their exposure to sustainable assets. This is essential if we are to achieve our national emissions reduction goals in the infrastructure sector and beyond,” Clean Energy Finance Corporation CEO, Ian Learmonth, said.
“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.”
The Green Infrastructure Investment Opportunities Australia and New Zealand report also explored low carbon infrastructure opportunities on a sector-by-sector basis and is a first of its kind for Australia and New Zealand, identifying over 400 projects and assets (360 and 62 respectively) that could be considered green and qualify for refinancing, additional financing, or new financing, in the near and medium term future.
Almost half the projects included in Infrastructure Australia’s Infrastructure Priority List 2018 meet international investor definitions of ‘green’ although they are not always labelled as such. Similarly, just over 40 per cent of New Zealand projects in the Australia and New Zealand Infrastructure Pipeline (ANZIP) could be considered ‘green’.
Projects aligned with international definitions of green include low carbon transport, renewable energy, sustainable water and waste management, and low carbon buildings. The infrastructure investment opportunities are explored in the GIIO report are based on these four sectors.