2017 Climate Action Finance Report

Transcription

1 2017 Climate Actin Finance Reprt Intrductin CLP Hldings Limited s (CLP) visin is t be the leading respnsible energy prvider in the Asia-Pacific regin, frm ne generatin t the next. As part f this endeavur, CLP is cmmitted t taking actin n climate change. In 2007, we were the first electric utility cmpany headquartered in Asia t publish carbn intensity reductin targets ut t 2050 in ur Climate Visin Nw in supprt f the Paris Agreement and respnding t the increasing investr awareness f the climate change imperative, CLP has established a Climate Actin Finance Framewrk (CAFF) that sets ut hw CLP may raise Climate Actin Bnds and use the prceeds f thse bnds t invest in prjects that are cnsistent with this strategy t respnd t the climate change challenges. This als reinfrces CLP s sustainability leadership and cmmitment t transitin t a lw carbn ecnmy as manifested in ur revised Climate Visin t reduce carbn ftprint by 82% cmpared with 2007 baseline and increase the renewable prtin f ur investments prgressively. Climate Actin Bnds may be issued t finance renewable energy but als energy transitin and emissins reductin prjects. Our purpse is t raise awareness and recgnitin that in sme parts f the wrld tday the ecnmic cnditins and/r the amunt f natural resurces d nt necessarily allw the develpment f renewable energy at the pace and scale needed t ensure energy access, security and reliability. In these situatins where we urgently want t take actin tday t reduce carbn emissins, replacing critical large base lad generatin frm cal with gas delivers significant reductins in carbn emissins in a relatively shrt time frame. CLP Climate Actin Finance Framewrk The bjective f the CAFF is t supprt the transitin t a lw carbn ecnmy by attracting scially respnsible, sustainable financings, t supprt CLP s investments that reduce the carbn cntent f energy generated and increase the efficiency f energy usage. Established in July 2017, the CAFF frmalises and gverns prject evaluatin, mnitring and reprting the use f prceeds fr Climate Actin Bnd issuances. Tw types f Climate Actin Bnds can be issued under the CAFF, which are: Energy Transitin / Emissin Reductin Bnds whse use f prceeds is t develp gas fired pwer plants t supprt the transitin frm cal fired pwer generatin in markets with limited renewable energy resurces; and New Energy Bnds whse use f prceeds is t develp renewable energy, energy efficiency and lw emissins transprtatin infrastructure prjects. The Green Bnd Principles (GBP), updated as f June 2017, are vluntary prcess guidelines that recmmend transparency and disclsure and prmte integrity in the develpment f the Green Bnd market by clarifying the apprach fr issuance f a Green Bnd. There are fur cre cmpnents f a Green Bnd - Use f Prceeds, Prcess fr Prject Evaluatin and Selectin, Management f Prceeds and Reprting. The table in the next page summarises hw CLP Climate Actin Bnds align with the GBP CLIMATE ACTION FINANCE REPORT 1

2 Cmpnents Use f Prceeds Prcess fr Prject Evaluatin and Selectin Management f Prceeds Energy Transitin / Emissin Reductin Bnds New natural gas fired pwer plants and cnversin f cal fired pwer plants which will result in carbn emissins less than 450gCO 2/kWh at baselad New Energy Bnds Renewable energy Energy efficiency Lw carbn transprt infrastructure Business units prpse prjects fr eligible use f prceeds and Climate Actin Bnd issuance Climate Actin Finance Cmmittee reviews and apprves the eligibility f prpsed use f prceeds and Climate Actin Bnd issuance Prceeds f each Climate Actin Bnd are credited t dedicated bank accunts/depsits pending allcatin t eligible prjects Use f prceeds tracked thrugh business units internal infrmatin system with individual register established fr each Climate Actin Bnd Reprting Climate Actin Finance Reprt issued n an annual basis disclsing the belw infrmatin f Climate Actin Bnds nt yet fully repaid: Identity f issuing business unit Type f Climate Actin Bnd issued Aggregate amunts f prceeds allcated Remaining balance f unallcated prceeds Estimatin f beneficial impact f the use f prceeds Infrmatin n prjects with allcatin f bnd prceeds The Climate Actin Finance Reprt will be reviewed by the Climate Actin Finance Cmmittee and published within the Grup Sustainability Reprt It is nted that the use f prceeds f the Energy Transitin / Emissin Reductin Bnd is nt included in the indicative list f Green Prject categries under the use f prceeds sectin in the Green Bnd Principles, therwise CLP Climate Actin Bnds issued under the CAFF align with the Green Bnd Principles. GOVERNANCE OF THE CAFF All eligible prjects f the CAFF underg a rigrus review and apprval prcess within a rbust, transparent framewrk and clear guidelines. CLP has established a Climate Actin Finance Cmmittee (the Cmmittee) with the respnsibility fr gverning the CAFF, including apprval f Climate Actin Bnd issuance and determinatin f the eligibility f prpsed use f prceeds. The Cmmittee cnsists f CLP Executive Directr and Chief Financial Officer and senir management frm sustainability, finance and legal departments. The CLP Grup Treasury & Prject Finance acts as the secretariat f the Cmmittee t prvide the necessary supprt. SECOND PARTY OPINION DNV GL, an independent cnsultant and a leading prvider f green bnd independent assessment, has prvided a secnd party pinin n the CAFF. It is DNV GL s pinin that there are envirnmental benefits fr the investments t be funded under the CAFF. CONCLUSION OF DNV GL SECOND PARTY OPINION On the basis f the infrmatin prvided by CLP and the wrk undertaken, it is DNV GL s pinin that the Climate Actin Bnds meet the criteria established in the Prtcl and there are envirnmental benefits fr the investments t be funded under the CAFF. DNV GL ntes that the Use f Prceeds f the New Energy Bnds are included in the indicative list f sectrs included in the sectin 1 f Green Bnd Principles whilst the Use f Prceeds f Energy Transitin Bnds are nt. DNV GL cncludes that the prject selectin, funds tracking and reprting prcedures set ut in the CAFF meet the criteria established in the Prtcl and are aligned with sectins 2, 3 and 4 f the Green Bnd Principles See CLP Climate Actin Finance Framewrk See DNV GL Secnd Party Opinin Reprt 2017 CLIMATE ACTION FINANCE REPORT 2

3 Inaugural Issue f Energy Transitin Bnd Castle Peak Pwer Cmpany Limited (CAPCO), a key subsidiary f CLP engaging in the electricity generatin business in Hng Kng, successfully issued US$500 millin 10-year inaugural Energy Transitin Bnd under the CAFF in July The prceeds frm the bnd will be used t finance the cnstructin f a new 550MW cmbined cycle gas turbine generatin unit (CCGT) at CAPCO s Black Pint Pwer Statin in Hng Kng. The new unit will emply the latest gas turbine technlgy t achieve high thermal efficiency and a lwer carbn emissins intensity than the average f the generatin units currently used in Hng Kng. The issue, which is the first benchmark USD Energy Transitin Bnds glbally, was mre than 2.5 times ver-subscribed with ver US$1.25 billin in rders frm glbal investrs, many f whm are envirnmental, scial and gvernance mtivated institutinal investrs. Fr CAPCO, given the severely cnstrained renewable pprtunities in Hng Kng, the key actin t supprt CLP Climate Visin 2050 is t build highly efficient lw emissin CCGT t displace cal-fired generatin units ver time. The cnstructin f the new CCGT is als a critical cmpnent f CLP's cntributin t the implementatin f Hng Kng Gvernment's Climate Actin Plan t reduce Hng Kng's carbn intensity by 65% t 70% by 2030 cmpared with the 2005 level, which includes the plicy f increasing the share f gas in the Hng Kng s fuel mix fr pwer generatin t arund 50% in 2020 frm the current level f arund 27%. As the Hng Kng's Climate Actin Plan frms part f Mainland China s cmmitment under the Paris Agreement, the CCGT investment als frms part f the implementatin f the Paris Agreement. ELIGIBILITY OF THE CCGT PROJECT UNDER CAFF Using the latest Siemens H-Class CCGT technlgy, CAPCO s new CCGT unit culd achieve a generating efficiency f 61% #. With the cnditins that it perates at its ptimal generating efficiency and under certain perating cnditins, the new CCGT unit is expected t have emissins intensity belw the threshld fr the qualificatin f an Energy Transitin Bnd (450g CO 2/kWh) and als less than the 2016 carbn intensity f the electricity used by CLP s custmers in Hng Kng (540g CO 2/kWh). CAPCO s Energy Transitin Bnd Details Issuer Guarantr Issue Date 25 July 2017 Tenr Nminal Issued Amunt Castle Peak Pwer Finance Cmpany Limited Castle Peak Pwer Cmpany Limited 10 years US$500 millin Issue Price % Listing ISIN Cde The Stck Exchange f Hng Kng XS We are pleased with the successful placement f the ntes which represents the first Energy Transitin Bnd issued under CLP s new Climate Actin Finance Framewrk and underscres ur cntinuus cmmitment t diversify financing surces thrugh innvative means. Nt nly have the ntes brught further diversificatin in financing ptins but they als came with cmpetitive pricing n the back f keen interest frm investrs arund the wrld. The new Energy Transitin Bnds will be listed in Hng Kng cntributing t the city s reginal ambitin fr climate financing. Geert Peeters, Executive Directr & Chief Financial Officer, CLP Hldings Limited, July 2017 # Prvisinal figure 2017 CLIMATE ACTION FINANCE REPORT 3

4 CCGT Prject CCGT Prject Details Business Unit Name f Prject Lcatin Ttal Investment Amunt Amunt t be financed by Energy Transitin Bnd Installed Capacity Generatin Efficiency Technlgy Castle Peak Pwer Cmpany Limited (CAPCO) New Gas-fired Cmbined Cycle Gas Turbine Unit Black Pint Pwer Statin, Hng Kng HK$5.5 billin HK$3.9 billin (US$500 millin equivalent) 550MW 61% #, higher than any f the units currently in use in Hng Kng and being ne f the mst efficient gas-fired generatin unit in the wrld The latest Siemens H-Class CCGT technlgy Prject Prgress Prject apprved by the Hng Kng Gvernment n 13 December 2016 Estimatin f Beneficial Envirnmental Impact Awarded the engineering, prcurement, cmmissining services and technical advisry services cntract t Siemens fr the cmbined cycle gas turbine unit Awarded all majr cntracts fr the cnstructin Cnstructin wrk cmmenced upn prject apprval and it is scheduled t have the new unit in cmmercial peratin by t 2 millin tns f CO 2 emissins avided per year expected t have emissins intensity less than the 2016 carbn intensity f the electricity used by CLP s custmers in Hng Kng (540g CO 2/kWh) and belw the threshld fr the qualificatin f an Energy Transitin Bnd (450g CO 2/kWh) ptential reductin f annual NOx emissin up t 19% and Sulphur Dixide (SO 2) and Respirable Suspended Particulates (RSP) emissins by arund 10% in 2020 fr CAPCO pwer generatin system The new generatin unit at Black Pint is an imprtant step twards meeting the Gvernment s target f increasing lcal gas generatin t arund 50% f the ttal fuel mix in This new climate financing initiative cmbined with very favurable exprt credit cvered lan facilities assciated with the equipment purchased have prvided attractive funding in supprt f CLP s material cntributin t Hng Kng s lw carbn transitin. Chiang Tung Keung, Managing Directr, CLP Pwer Hng Kng Limited, July 2017 # Prvisinal figure 2017 CLIMATE ACTION FINANCE REPORT 4

5 Use f Prceeds Reprting During the year, the CAPCO US$500 millin Energy Transitin Bnd was the nly issuance under the CAFF. Bnd prceeds were swapped int Hng Kng dllar f abut HK$3.9 billin t mitigate freign exchange risk and the full amunt is earmarked fr the CCGT prject. Bnd prceeds were applied at the utset f the bnd tenr t replace bank debt bridge facilities assciated with the CCGT prject and the remaining balance was credited t dedicated bank accunt/depsits pending settlement f future CCGT related payments. As at the reprting date f 31 December 2017, the use f the bnd prceeds is illustrated in the chart belw: * 274, 7% Reprting Criteria Fllwing sectin 6 f the CAFF Reprting n Use f Prceeds : a Climate Actin Bnd is added t this reprt when the bnd was issued during the reprting perid; and a Climate Actin Bnd is remved frm this reprt when the bnd has been fully repaid. Assurance f Climate Actin Finance Reprt CLP has engaged PwC as an independent assurance prvider t prvide assurance that selected infrmatin in this reprt has been prepared in line with the CLP Climate Actin Finance Framewrk. * 3179, 81% * 723, 19% * 449, 12% See PwC Assurance Reprt Unallcated Allcated - finance Allcated - refinance Allcated - aggregate Allcatin f CAPCO's Energy Transitin Bnd Prceeds (in HK$ millin) * Infrmatin has been subject t independent limited assurance by PwC 2017 CLIMATE ACTION FINANCE REPORT 5