Climate Bonds launched two Australian focussed research reports outlining the opportunities and state of the market for green finance in Australia.
Green Finance in Australia
The Green Finance State of the Market Australia 2019 (SoTM) provides a detailed analysis of domestic green investment with green bond issuance reaching AUD15.6bn (USD11.6bn) as of 30th June 2019. This places Australia third in the Asia-Pacific region behind China (USD91.5bn) and Japan (USD12.4bn) and in front of South Korea at fourth (USD6.7bn) and Indonesia at fifth with USD4.0bn.
Australia’s annual green bond issuance in CY 2018 was AUD6.0bn, almost double the AUD3.3bn for CY 2017, placing Australia ninth in global rankings for the 2018 year.
On a cumulative basis, low carbon buildings dominate green bond allocations with approximately 43% share of use of proceeds. Energy follows with 25%, low carbon transport at 24%, water at 6% and waste at 2%.
The five largest green bond transactions to date have been led by New South Wales TCorp AUD1.8bn (USD1.313bn), Queensland Treasury Corporation AUD1.25bn (USD892m), NAB EUR750m (AUD1.2bn) and Macquarie Group GBP500m (AUD883m).
Green Infrastructure Investment Opportunities Australia
The Green Infrastructure Investment Opportunities Australia 2019 (GIIO) and the identifies a national pipeline of over 400 green infrastructure projects with investment potential.
Expanded green finance mechanisms and cooperation between the public and private sector are needed to achieve more productive capital allocation into green infrastructure, with energy, transport, water, waste and buildings as the priority areas. The report notes that despite some progress, sustained emissions reduction has not yet been effectively integrated into national infrastructure priorities.
“Australia has both the opportunity and the capital to meet its green infrastructure challenges and create a climate ready, resilient and robust economy, fit for the future. Investing in low carbon transition will create jobs, boost productivity and economic growth and help Australia meet its international obligations”, said Sean Kidney, CEO, Climate Bonds Initiative.
The report suggests that building Australia’s green finance capabilities would also support ASX listed companies in undertaking higher levels of green investment, critical to meeting increasing institutional investor expectations of brown to green transition and progress towards low carbon and ultimately zero carbon business models.
Australia’s is well positioned to take a role as a leading green finance hub for Asia-Pacific in the 2020s and beyond, leveraging the green financial expertise of the banking sector and the ready capital and infrastructure investment capabilities of the superannuation sector, as nations in the region seek to meet their combined infrastructure, energy, development and climate goals.