Financing climate transition

Our Climate Action Finance Framework sets out how we may raise green and sustainable financing to invest in projects that can reduce the carbon footprint of our business.

CLP Climate Action Finance Framework

 

The objective of the Climate Action Finance Framework (CAFF) is to support the transition to a low carbon economy by attracting socially responsible, sustainable financing, to support CLP’s investments that reduce the carbon content of energy generated and increase the efficiency of energy usage.

Established in July 2017, the CAFF formalises and governs project evaluation, monitoring and reporting the use of proceeds for Climate Action Bond issuances. Two types of Climate Action Bonds can be issued under the CAFF, which are:

  • Energy Transition / Emission Reduction Bonds whose use of proceeds is to develop gas-fired power plants to support the transition from coal-fired power generation in markets with limited renewable energy resources; and
  • New Energy Bonds whose use of proceeds is to develop renewable energy, energy efficiency and low emissions transportation infrastructure projects.

All eligible projects of the CAFF undergo a rigorous review and approval process within a robust, transparent framework with clear guidelines. CLP has established a Climate Action Finance Committee (the Committee) with the responsibility for governing the CAFF, including approval of Climate Action Bond issuance and determination of the eligibility of proposed use of proceeds. The Committee consists of CLP Executive Director and Chief Financial Officer and senior managers from our sustainability, finance and legal departments.

DNV GL, an independent consultant and a leading provider of green bond independent assessment, has provided a second party opinion on the CAFF, confirming that there are environmental benefits for the investments to be funded under the CAFF.

Download CLP Climate Action Finance Report 2017

Inaugural issue of Energy Transition Bond

Castle Peak Power Company Limited (CAPCO), a key subsidiary of CLP engaging in the electricity generation business in Hong Kong, successfully issued a US$500 million 10-year inaugural Energy Transition Bond under the CAFF in July 2017.

The proceeds from the bond will be used to finance the construction of a new 550MW combined cycle gas turbine generation unit (CCGT) at CAPCO’s Black Point Power Station in Hong Kong. The new unit will employ the latest gas turbine technology to achieve high thermal efficiency and a lower carbon emissions intensity than the average of the generation units currently used in Hong Kong.

The issue, which is the first benchmark USD Energy Transition Bond globally, was more than 2.5 times over-subscribed with over US$1.25 billion in orders from global investors, many of whom are environmental, social and governance motivated institutional investors.

The construction of the new CCGT is a critical component of CLP's contribution to the implementation of Hong Kong Government's Climate Action Plan 2030+ to reduce Hong Kong's carbon intensity by 65% to 70% by 2030 compared with the 2005 level, which includes the policy of increasing the share of gas in the Hong Kong’s fuel mix for power generation to around 50% in 2020 from the current level of around 27%. This Energy Transition Bond was listed in the Stock Exchange of Hong Kong, which also supports the Hong Kong Government’s ambition to promote Hong Kong as a green financing hub.

Read more on our first issue of Energy Transition Bond

CAPCO’s Energy Transition Bond Details
Issuer Castle Peak Power Finance Company Limited
Guarantor Castle Peak Power Company Limited
Issue Date 25 July 2017
Tenor 10 years
Nominal Issued Amount US$500 million
Issue Price 99.417%
Listing The Stock Exchange of Hong Kong
ISIN Code XS1648263926