STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

Transcription

1 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT

2 TABLE OF CONTENTS 3 GREEN BOND IMPACT REPORT, MARCH EXECUTIVE SUMMARY 6 COUNTY COUNCIL S ENVIRONMENTAL PROGRAMME STOCKHOLM COUNTY COUNCIL S GREEN BONDS 7 STOCKHOLM COUNTY COUNCIL S FRAMEWORK FOR GREEN BONDS 7 IMPROVED FUTURE REPORTING ON GREEN BONDS 8 FEEDBACK ON THE GREEN BONDS AND GREEN FINANCE 9 INVESTOR MEETINGS 10 STOCKHOLM COUNTY COUNCIL S PROJECTS FOR GREEN INVESTMENTS

3 GREEN BOND IMPACT REPORT, MARCH 2018 Stockholm is experiencing rapid growth and Stockholm County Council is now making historic and necessary investments in healthcare and public transport. Green bonds are a good fit for our environmental efforts. As a major actor, we need to be conscious of making investments that are of a sustainable nature. Malin Frenning, CEO Stockholm County Council The County Council s investments must be made with the smallest environmental impact possible. The investments are well suited to green bonds where we turn to investors who value our environmental efforts. Through clear and transparent reporting for green projects, we hope to provide investors more reasons to choose green investments. Frida Korneliusson, CEO Stockholm County Council Treasury Actors like the Stockholm County Council are essential for leading the way and demonstrating it is possible for the world to reduce climate emissions sufficiently to remain below a global warming of degrees, set by the Paris Agreement. Charlotta Brask, Head of Sustainability at Stockholm County Council STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT

4 EXECUTIVE SUMMARY Stockholm County Council reports it s Green Bonds impact in accordance with the Nordic Public Sector Issuers: Position Paper on Green Bonds Impact Reporting, published in October 2017 by a group of Nordic public sector green bond issuers. Any deviations from the Position Paper recommendations will be indicated in our reports. Nordic Public Sector Issuers: Position Paper on Green Bonds Impact Reporting 2017 October For more information: sll.se > Choose language > English > investor relations > funding programmes > Nordic issuers release guide on green bonds impact reporting GREEN BONDS ISSUANCE AND GREEN PROJECT PORTFOLIO SEK million Disbursed to projects/total amounts approved to projects SEK 1.1 bn green bond (2014) SEK 1.8 bn green bond (2015) SEK 1.5 bn green bond (2016) SEK 2.0 bn green bond (2017) All green bonds are fully invested. GHG IMPACT AND GREEN INDICATORS, DIVIDED BY DISBURSED AMOUNTS FOR GREEN BONDS Project category GHG emissions reduced/avoided CO 2e 1 /year (tonnes) Other result Disbursed amounts to projects, SEK mn Impact CO 2e (tonnes)/sek mn Green Buildings Renewable energy (own production) Clean transportation (excluding Roslagsbanan) Waste management n/a See individual reports Total (Reduced emissions from Renewable energy are excluded from this total as it is already partly included in Green buildings) n/a Disbursed amounts w. GHG impact SEK mn Annual renewable energy generation, MWh Annual energy savings, MWh (compared to national building requirements) MWh MWh Calculations have been made on CO2 emissions, with a GWP warming potential of 1. Thus the value in CO2 equals the value in CO2e (Carbon dioxide equivalents). 2 Due to new impact report guidelines, there is no updated information at the moment about GHG emissions reduced/avoided for issued bond 2014, 2015 (Roslagsbanan). Hence, the disbursed amount for Roslagsbanan is not part of mn and not part of 4905 mn. Also due to very low amount disbursed to New depot Högdalen, it is not part of the impact figures. 4 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

5 Key procedural aspects Each project is selected according to the Stockholm County Council Green Bonds Framework available on sll.se > Choose language > English > investor relations > funding programmes > green bond > framework for green bonds Stockholm County Council reports on a project basis, and in Swedish kronor (SEK). For this document, the reporting period ends on 31 December Key reporting methodology Stockholm County Council reports on the basis of the share of the project s total investment cost financed with green bonds (net of redemptions). Impacts are based on outstanding disbursed amounts to projects in Stockholm County Council Green Bonds with exception of Roslagsbanan (2014 and 2015). Our ambition is to include this impact parameter in next report. Impact is principally reported on expected impact (ex ante), unless clearly stated as ex post. 5

6 STOCKHOLM COUNTY COUNCIL S ENVIRONMENTAL PROGRAMME Stockholm County is a dynamic and rapidly growing region requiring major investments in public transport and healthcare to facilitate successful development. The County Council aims to contribute to sustainable development in the region, by way of limited environmental impact. The County Council is taking a comprehensive approach to reducing environmental impact from properties and installations, pharmaceuticals, textiles, food and travel. The County Council also takes national and global responsibility for the production of goods and services that are procured. The County Council s environmental programme covers five areas: Sustainable procurement Climate commitment Healthcare Public transport and other transports Properties and installations STOCKHOLM COUNTY COUNCIL S GREEN BONDS In May 2014, Stockholm County Council was the first county council in Sweden to issue a green bond. A green bond has been issued each year since. Green bonds are a way of financing investment projects with a particular environmental focus. They are a tool for raising awareness of climaterelated challenges and solutions while safeguarding green development projects in the county. In terms of risk, return, legislation and documentation, green bonds have the same characteristics as other investments. They currently account for only a small percentage of the overall bond market, however interest and demand for green bonds is growing rapidly. ISSUED GREEN BONDS Year Loan amount Issued green bonds 2014 SEK 1,1 billion 6 years 2015 SEK 1,8 billion 6 years 2016 SEK 1,5 billion 5 years and 4 months 2017 SEK 2,0 billion 5 years Any financing raised by the County Council within the green bond framework is earmarked for environmental projects and is held in a separate traceable account that is allocated for investments that meet specific environmental criteria. The Eligible Projects are selected jointly by the Stockholm County Council Treasury and the Sustainability Department. They are then approved by a Steering Group for Green Bonds consisting of executive managers from the the County Council s local bodies, strictly following the following four steps: Stockholm County Council Treasury initiates the screening process and a project group is formed. The project group for green bonds determines the portfolio of green projects to be financed by a potential green bond issuance. The Stockholm County Council Sustainability Department evaluates all the proposed projects to ensure compliance with laws and regulations, Stockholm County Council environmental and social policies as well as the Stockholm County Council Green Bond Framework. The Steering Group for green bonds has final authority in determining the final list of eligible green projects, to be financed by green bonds. 6 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

7 STOCKHOLM COUNTY COUNCIL S FRAMEWORK FOR GREEN BONDS The county council s green financing complies with a framework for green bonds. The framework stipulates how the selection process of green projects is to be conducted, how the money is to be managed in separate accounts and how the communication and reporting on the projects will ensure transparency for investors. sll.se > Choose language > English > investor relations > funding programmes > green bond > framework for green bonds IMPROVED REPORTING ON GREEN BONDS In 2016, Stockholm County Council began, in cooperation with other Nordic public issuers of green bonds, an effort to formulate a common approach to feedback reporting. The cooperation is founded on the conviction that a common Nordic position will offer valuable insight for other green bond issuers as well as the investor market in general. There is also a value in sharing experiences and expertise. Signatories are: City of Göteborg (Sweden), Kommunalbanken (Norway), Kommuninvest (Sweden), Municipality Finance (Finland), Norrköping Municipality (Sweden), Örebro Municipality (Sweden), Svensk Exportkredit (Sweden), Municipality of Lund (Sweden), Region Skåne (Sweden) and Stockholm County Council (Sweden). The objective is to develop a transparent, harmonised and relevant approach to reporting the effects of green bonds. The group s ambition is to continue to develop the guide for Nordic issuers of green bonds published in the second half of STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT

8 FEEDBACK ON GREEN BONDS AND GREEN FINANCE The first green bond issued by Stockholm County Council in 2014, funded two investment projects with a particular environmental focus: the Roslagsbanan expansion programme and the new construction and renovation of Södertälje Hospital. The proceeds from the first green bond, SEK 1.1 billion, has been fully invested as of 31 March The second green bond, in the amount of SEK 1.8 billion, was issued in May 2015 and was intended for three projects: the Roslagsbanan expansion programme, the construction of New Karolinska Solna, and the new construction and reconstruction of Södertälje Hospital. The third green bond, in the amount of SEK 1.5 billion was issued in May 2016 and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro s Red Line and new construction and renovations of Södertälje Hospital. In June 2017, the County Council s fourth green bond was issued in the amount of SEK 2.0 billion and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro s Red Line and the establishment of a depot in Högdalen as part of the expansion of the entire subway network. The table below is continuously uppdated, on sll.se, with Stockholm County Council s green investment expenditures. All projects are reported according to the guide for Nordic issuers of green bonds except the new Metro, a new depot in Högdalen, as it only represents a small portion of the proceeds. Projects MSEK Total investment Total green financing (where of green bond) Green bond 2014 (SEK 1,1 billion) Fully invested 31/ Green bond 2015 (SEK 1,8 billion) Fully invested 31/ Green bond 2016 (SEK 1,5 billion) Fully invested 30/ Green bond 2017 (SEK 2,0 billion) Fully invested 31/ Expansion of Roslagsbanan New- and reconstrution of Södertälje Hospital New Karolinska Solna Red line programme The new Metro, a new depot in Högdalen (1 495) (785) (2 568) (1509) (43) Not part of Not part of Not part of Not part of Not part of Not part of Not part of Not part of Not part of 43 8 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

9 INVESTOR MEETINGS The County Council works actively to provide transparency for investors. An example of this is the investor meetings that the County Council holds regularly. The projects financed with green bonds have been of particular interest to investors and the meetings have been well attended. Examples of meeting venues include the NKS, Södertälje Hospital, ambulance care services and the electric boat serving Saltsjön. 9

10 STOCKHOLM COUNTY COUNCIL S PROJECTS FOR GREEN INVESTMENTS New construction and renovation of Södertälje Hospital Södertälje Hospital is being expanded and modernised to create more modern and efficient premises. The project is intended to meet the anticipated increased need of care capacity in the immediate area by An important starting point for the project is that the hospital should enable greater flexibility for the future. The technical systems are duplicated, providing a back-up system to cope with outages in more than one section. A key goal of the project is to meet the requirements of the Sweden Green Building Council s Gold level of certification and to support achieving the County Council s environmental goals including having an energy consumption that is at least 30 per cent lower than that specified in Boverket s regulations for new buildings. The regulations for new building specify 125 kwh/m 2 per year, whereas the forecast for the new Södertälje Hospital is 76 kwh/m 2 per year. One of the major challenges is to implement the project on a relatively small property while ensuring the hospital remains fully operational. 10

11 Other goals in the project are to: achieve greater interactivity and process orientation for cohesive outpatient care and sterile technology achieve better logical links between inpatient care, emergency department and treatment functions create generally designed wards for greater flexibility ensure that the working environment for staff meets current demands without reducing the available range of care use the building materials assessment systems to ensure approved materials are incorporated in the buildings reduce energy consumption over time dispose of waste in an eco-friendly way ensure that transports are efficient and environmentally friendly avoid substances with a detrimental impact on health and the environment SÖDERTÄLJE HOSPITAL Category Project Indicators Unit Baseline /benchmark Renewable energy Geothermal energy (cooling) Capacity of renewable energy plant 170 MWh 2 Actual production of renewable energy 170 MWh 2 Annual GHG emissions reduced/ avoided 30 tonnes CO 2e 2 Green Buildings 1 New building standard exceeding building standard requirements Annual energy avoided, compared to national building requirements Annual GHG emissions reduced/avoided 900 MWh tonnes CO 2e 4 National building code BBR19 Green energy being used Percentage renewable energy sources Annual GHG emissions reduced/avoided using green energy 99 % 450 tonnes CO 2e 4 54 % Swedish average, Swedish Board of Energy (Energi myndigheten) 2016 Environmentally friendly materials being used Percentage of materials being used acecpted in Byggvarubedömningen 92 % Waste management Resource preserving waste treatment (construction materials) Improvement in material recovery rate compared to national references 97,5 % recovery incl. energy 5 National benchmark not available. 6 1 Theoretical values for electricity, heating and cooling from energycalculations in the report Energiberäkning Nya Södertälje Sjukhus Byggnad dated In some cases actual values has been used as reference for quality check. CO2eq./kWh for electricity comes from Vattenfall, EPD waterpower. CO2eq./kWh for district heating and cooling comes from Svensk fjärrvärme: se/statistik/fjarrvarmestatistik/miljovardering-av-fjarrvarme/ Assumption on distribution between district heating and electricity in accordance with BBR19. 2 Energy avoided is calculated on 168 MWh and baseline emissions for district heating according to Position Paper Appendix E. An alternative calculation would be that 16 tonnes of CO2e has been avoided, assuming a large heat pump run on electricity with a COP factor 4 would be used (42 MWh), since district cooling may not be an option. Assumption that energy coming from the boreholes are free energy i.e. no energy needed to produce it. 3 Rounded per 100 MWH 4 Calculated using baseline emssions from Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 5 Values for the whole construction phase. Material reuse 16 %, material recovery 29 %, energy recovery 52 %, landfill 2,5 %. 6 EU recycling target for construction waste is 70 % by weight by 2020 but little data exists on current recycling level and it is estimated to be significantly below target. STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT

12 New Karolinska Solna Hospital The construction of New Karolinska Solna (NKS) was initiated in the summer of In order to safeguard the very high environmental and sustainability goals that have been set, the entire project was being carried out from a sustainability perspective. One of the tools used is environmental certification of the buildings. Two systems of certification are being used for NKS: the Sweden Green Building Council and the international system LEED. The aim is to achieve the Gold level in both systems. In September, the fourth and final construction phase was approved for Gold level certification in accordance with the Green Building Council. NEW KAROLINSKA SOLNA Category Project Indicators Unit Baseline /benchmark Renewable energy Geothermal energy Capacity of renewable energy plant MWh 1 Green Buildings New building standard exceeding building standard requirements Green energy being used Actual production MWh 1/2 Annual GHG emissions reduced/avoided Annual energy avoided, compared to national building requirements Annual GHG emissions reduced/avoided compared to national building standards Percentage renewable energy sources Annual GHG emissions reduced/avoided using green energy tonnes CO 2e MWh 4 (52 % reduction) tonnes CO 2e 5 National building code BBR16 99 % 54% Swedish average, Swedish Board of Energy (Energi myndigheten) tonnes CO 2e 5 Environmentally friendly materials being used Percentage of materials being used acecpted in Byggvarubedömningen 89 % Clean transportation Infrastructure for electric vehicles Percentage of parking spaces reserved for electric vehicles 10 % 0 % (no local/ national demands) Estimated savings in GHG emissions 30 tonnes CO 2e 6 Waste management Resourcepreserving waste treatment Improvement in material recovery rate compared to national references 95 % recovery incl. energy. 7 National benchmark not available. 8 SITA supplier average for Sweden is 92 % incl. energy. 1 Capacity is based on total production 2017 ( MWh) minus ingoing electricity. Capacity will increase when the hospital is in full use. Energy produced by geothermal energy is part of the energy avoided. The facility also recycles energy from the buildings. Rounded per MWh. 2 Actual production is defined as the total production that has been used in the facilities. The total production could not be used 2017 as the hospital is not yet in full use. Rounded per MWh. 3 Energy produced by geothermal energy is part of the energy avoided. Calculated using baseline emission values from Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 4 Theoretical value as the hospital is not yet in full use. Rounded per 100 tonnes. 5 Calculated using baseline emssions from Position Paper Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 6 Year % material recovery incl. energy and 5 % landfill are the figures for the whole construction phase. Figures from 2016 show material recovery 43 %, energy recovery 54,2 %,landfill 2,7 %. Mixed materials have been calculated as 100 % energy recovery, but part of it may have been sent to material recovery 8 EU recycling target for construction waste is 70 % by weight by 2020 but little data exists on current recycling level and it is estimated to be significantly below target. 12 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

13 A preliminary certificate can thus be issued for the entire installation after an extensive third party inspection has been carried out by the certification body Sweden Green Building Council. One aspect of the Green Building Council system is the aim to reduce the energy needs from the heating, cooling and maintenance of the installation. The NKS is constructed for reduced energy consumption, satisfying and exceeding the requirements set by Boverket s Building Regulations. This means substantial savings, both financial and environmental, since the annual reduction in energy consumption is the rough equivalent of the total amount of energy used in 1,200 private homes. By switching to renewable energy, a large portion also stemming from own production, 99% per cent renewable energy will be used. This means minimizing the emissions of Green house gases. Another focus area is to reduce the use of chemicals and hazardous substances. Thanks to the deliberate choice of flooring material, the use of softeners with an adverse impact on health (phthalates containing allergy- causing and hormone-disruptive properties) has been reduced by at least 70,000 kg compared with conventional construction and this is only one of all the materials used in the construction. The Green Building Council The Green Building Council is a Swedish certification system for building installations where the focus lies on energy, the indoor environment and construction material. Clear follow-up of supplier deliveries and reduced maintenance costs is one of the issues for which the Green Building Council is known. A building can achieve the Bronze, Silver or Gold level. On completion of the construction planning a preliminary certificate is awarded. In order to be awarded a final certificate, the preliminary certificate must be verified no later than two years after the commissioning of the installation. 13

14 Metro Red Line programme Creating the possibility for more people to travel by public transport leads to a considerable reduction of carbon dioxide emissions (CO 2) in the atmosphere, which is one of the County Council s main efforts in reducing negative environmental impact in the County. The upgrade of the Metro s Red Line aims to develop and strengthen capacity and thereby contribute to sustainable public transport. To achieve this goal, investments are being made in a new service command centre and new service command system an increase in the number of depots new quieter vehicles that are more energy efficient than older models Throughout the construction phase, sustainability will be monitored and measures will be applied on continual basis, such as material optimisation and reducing the amount of material transports. RED LINE Category Project Indicators Unit Baseline /benchmark Clean transportation Expansion of Metro Red Line Net avoided emissions from cars and other vehicles Number of people in new means of transportation tonnes CO 2/year people/ weekday 2 17,5 km car kilometers/ person/week day. 260 days a year. Estimated reduction in car kilometers the project will replace km tonnes Co2e/year 1 Aggregated value in number of people for 5 years, divided per year. 17,5 km car kilometers/person/week day. 260 days a year. Estimated car emissions of 0,2 kg CO2/km. 2 Estimated increase in number of people, aprox 1,7% per year during 5 years. Extension of the Metro in Stockholm The extension of Stockholm s Metro is the largest investment in the subway system in modern times. 19 kilometres of new track and 11 new stations divided into four sections are being built and, around 2025, Metro service will operate between Nacka C, Barkarby station and Arenastaden. More vehicles and garaging points with greater capacity for servicing these vehicles are needed for the Metro extension. Today, the number of vehicles and depot capacity fall short of the requirements necessary for the successful extension of the planned Metro.The extended Metro will be a resource-efficient and climate-smart travel alternative to fossil-fuelled means of transport. During the project, environmental and sustainability aspects have been taken into account in every area. The Metro extension will have a large climate impact during its construction phase, but from a life-cycle perspective, the Metro will have a clearly positive effect with reduced resource consumption and reduced climate burden for the county s residents. Multiple measures are planned to reduce the climate impact in the construction phase, such as optimisation of material selection and resource consumption, reduction 14 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

15 of the number of transports, etc. The climate burden from the extended Metro will be reduced by at least 25% during the project s implementation and no serious work environment accidents will occur. The County Council s Extended Metro Administration is environmentally certified according to ISO Through climate calculations, the County Council monitors the climate impact of stations right from the design stage. The project s sustainability coordinator provides support and monitors sustainability issues in every project. The certification system CEEQUAL 1 will be used to ensure that the County Council s strategic environment work is integrated into the planning and project engineering of all sub-projects. The objective is to achieve the rating of Very Good as a minimum 2. Depot for extended Metro in Högdalen The Depot-Vehicle project has the task of reinforcing the capacity at the existing Högdalen depot by several measures, promoting the resilience and capacity of the overall Metro system. The Högdalen maintenance facilities garaging points will be expanded and the connection possibilities to the depot will be extended to be accessible to both the Green and the Blue Lines. All of these measures will make it possible to increase the number of vehicles which is much needed. The project is vital for ensuring that the finished Metro lines will be fully operational for the scheduled launch of service. At the same time, an upgrade is being performed on the vehicle fleet and the transport systems. Reinforcing sustainable transport systems reduces the level of carbon dioxide emissions in Stockholm County. The project has the objective of achieving the rating of Very Good as a minimum. Multiple measures are planned to reduce the climate impact in the construction phase of the depot. An above-ground garage, with a timber frame is planned, which will provide an estimated climate improvement of around 165 tonnes of carbon dioxide equivalents compared with a steel frame. It has also been engineered to enable the installation of solar cells on buildings above ground and placing the entrances to the garage below ground, cutting the heating costs. Constant optimisations are made to reduce resource consumption, especially the amount of concrete that is used. The use of light concrete is an important aid for reducing the number of heavy transports in the construction phase. 1 CEEQUAL is a sustainability assessment, rating and awards scheme for civil engineering, infrastructure, landscaping and public realm projects. CEQUAL was developed by the British industrial association Institution of Civil Engineers (ICE) and was launched in 2003 in the UK and Ireland. 2 The rating Very Good is the second highest rating on the scale and means that the project received more than 60%, but less than 75 % of the total points. STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT

16