Green Infrastructure
Investment Opportunities
AUSTRALIA & NEW ZEALAND

Sponsors

Green Infrastructure Investment
Opportunities, Australia & New ZealandContents
3 Executive
summary
4 Greeninfrastructure: anopportunity for
growth5 Macroeconomic
outlook
6 Infrastructure
financing
8 Green finance13 Green standards
16 Green
infrastructure
investment
opportunities
17 Low-carbon
transport
21 Renewableenergy24 Sustainablewater
management
27 Green buildings
32 Green investment
opportunities are
growing
33 Annexes
36 References

This report highlights green infrastructure investment
opportunities in Australia and New ZealandThis report highlights green infrastructure
investment opportunities in Australia and
New Zealand. It has been prepared tohelp meet the growing demand for green
investment opportunities – including
green bonds - as well as to support thetwo countries’ transition to a low-carbon
economy. It aims to facilitate greater
engagement on this topic between
project owners and developers, andinstitutional investors.
Green finance instruments and trends
are explored in the report, with sectorby-sector options presented. Green
infrastructure investment opportunities
are also explored sector-by-sector, withprojects presented in reference casestudies and a sample green pipelineof opportunities. The sample pipeline
is not exhaustive – rather a snap shotof the different types of opportunities
available in the short and medium-term
future. A more comprehensive list of over
400 green infrastructure investment
opportunities is available on the Climate
Bonds Initiative website.
The report is intended for a wide
range of stakeholders in Australia
and New Zealand, including domestic

superannuation funds and asset
managers and their global counterparts,
potential issuers, infrastructure owners
and developers, as well as relevant
Government ministries (Finance, Planning,
Energy, Transport, Environment). It is partof a research series which commenced
with the Green Infrastructure Investment
Opportunities, Indonesia report in
May 2018 and will investigate green
infrastructure investment opportunities
around the world, initially focusing on the
Asia-Pacific region.
In developing this report, the Climate
Bonds Initiative consulted with key
Government bodies, industry, thefinancial sector, peak bodies, NGOs
and think tanks – in partnership with
ANZ, Commonwealth Bank of Australia,
Macquarie Group, NAB, Westpac, theClean Energy Finance Corporation(CEFC), IFM Investors, the Investor
Group on Climate Change, the Principles
for Responsible Investment and RIAA.
We would like to thank these partners
along with the other organisations that
contributed to the report: Australian
Water Association, Green Building Councilof Australia (GBCA), GRESB and New
Zealand Green Building Council.

Climate Bonds Initiative
The Climate Bonds Initiative is aninternational investor-focused not-forprofit organisation working to mobilise the
USD100tn bond market for climate changesolutions.

Climate Bonds Initiative screens green
finance instruments against its Climate
Bonds Taxonomy to determine alignment
and uses sector specific criteria for
certification (see Annex 1).

It promotes investment in projects andassets needed for a rapid transition to a
low-carbon and climate resilient economy.
The mission focus is to help drive down
the cost of capital for large-scale climate
and infrastructure projects and to support
governments seeking increased capital
markets investment to meet climate goals.

Climate Bond Partners range frominvestors representing USD14tn of AUM
and the world’s leading investment banks
to governments like Switzerland andFrance and include major Australian and
New Zealand institutions such as ANZ,
Commonwealth Bank of Australia, NAB,
CEFC, GBCA, Investor Group on Climate
Change and Westpac. The Climate Bonds
Initiative is also the lead partner in theGreen Infrastructure Investment Coalition.

The Climate Bonds Initiative carries out
market analysis, policy research, market
development; advises governments andregulators; and administers a global green
bond standard and certification scheme.

Australia & New Zealand GIIO Report Climate Bonds Initiative2

Executive summary
Since the signing of the Paris Agreement
there has been an increasing demand
from institutional investors for investment
opportunities that address environmental
challenges and support sustainable
development. Australia and New Zealandare both characterised by small populations,high GDP per capita and well-developed
capital markets. Australia also benefits fromaccess to a AUD2.6tn national savings pool.

This report identifies over 400 projects andassets that could qualify for refinancing,
additional financing, or new financing in thenear- to long-term.
The Climate Bonds Taxonomy1 was used to
identify eligible green projects under four
sectors. To narrow the scope and volume of
projects the following filters were also applied:
Low carbon transport –mostly projects valued
above AUD100m(Australia) and NZD100m(New Zealand)

Both nations face challenges in adapting toclimate impacts and in meeting tightening
international emissions targets. They alsoneed to develop sustainable urbanisation
models and to address congestion. Thereis a mounting urgency for government
and industry to increase their emphasison policies and provision of low-carbon,
sustainable and climate resilient ‘green’
infrastructure. The brown to green
transition from emissions intensive brown
infrastructure to cleaner assets needs
to attract broad-based support andconsiderable momentum in order to meetthe Paris goals.
There is an infrastructure construction boom
underway in Australia and New Zealand.
Although both nations have traditionally reliedheavily on high-emission, fossil fuel-poweredtransport – there is an increasing focus on (lowcarbon) public transport and freight rail. Thereis a boom in building small- to large-scale
renewable energy capacity. Green building
certifications have grown significantly, andresilient buildings are becoming mainstream.
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, justover 40% of New Zealand projects in theAustralia and New Zealand Infrastructure
Pipeline (ANZIP) could be considered ‘green’.
Green infrastructure development presents
a range of attractive green investment
opportunities. There is an increasing
number of low-carbon transport, renewableenergy, sustainable water management
and green building projects in the pipeline.

“Our cities are the crucibleof innovation, of enterprise –it’s where so much of GDP iscreated and it’s vital they havethe right infrastructure.”4
Former Australian Prime
Minister Malcolm Turnbull

Renewable energy only renewable energy
generation facilities above
50MW
Sustainable water
management – mostly
projects valued above
AUD50m (Australia) and
NZD50m (New Zealand)
Low-carbon buildings Green Star certified projects- mostly 6-star rated
projects
The report has been prepared to help
meet the growing demand for ‘green’ and
ESG investment opportunities – including
green bonds - as well as to support bothnations’ respective transitions to a lowcarbon economy. It aims to identify green
investment projects with investment
potential and explore how investors can gain
exposure to these using innovative green
finance instruments.
Internationally, growing interest in green
finance has resulted in the development andgrowth of dedicated green financial products
including green bonds, green loans, socialand sustainable bonds, green infrastructure
investment trusts and green index products,
which complement opportunities in public
and private equity investments. Green bonds
have become a popular debt instrument for
exposure to green assets and projects.
A green bond market emerged in Australia
in 2014 and more recently in New Zealand.
Australia was the 2nd largest source of
issuance within the Asia Pacific region for
H1 2018 and 12th globally, outpacing green
issuance from larger bond markets like Japan.
Australia has emerged as a best practice modelof early development with commitment
from the major banks and asset managers,
providing a sound base for expansion, despite
the relatively minor supply of non-bank ASX
100 green issuance to date.

Australia & New Zealand GIIO Report Climate Bonds Initiative“Climate change is real. It’s
happening now. This is notabout talking about what we
do in the future, but the actionthat we have the potential
to carry out as leaders in thebusiness community and theinternational environment.”3
New Zealand Prime Minister
Jacinda Ardern
Most Australian and all New Zealand green
bond issues to date have been Certified under
the Climate Bonds Standard reflecting strong
adherence to international best practice. The
label of ‘green’ is, however, not widely applied
to infrastructure. The ‘green’ standards
that do exist are mostly voluntary andadministered by non-government bodies.
There is an immediate and growing
opportunity for institutional investors
to become more active, to expand their
participation in green infrastructure
financing, building on the impressive
foundation established so far. Investing ingreen infrastructure will ultimately help thegovernments to reach their climate targets,spur innovation, broaden the economic base,reduce urban congestion and promote moresustainable economic and social well-being.
The infrastructure pipeline found in thisreport is encouraging, but the scale of thechallenge requires far greater ambition. The
Asian Development Bank estimates theclimate-adjusted infrastructure investment
needs for Pacific region countries at 9.1% of
their GDP between 2016 and 2030.2 With
Australia’s and New Zealand’s GDP totalling
USD1.5tn, this translates to approximately
USD1.5tn by 2030. There is no time to reston laurels - the scale and timeframe is suchthat far more needs to happen and quickly.
Both nations have the potential andeconomic conditions to develop a wellplanned sequential pipeline of green
investment opportunities. Australia inparticular is also uniquely placed withsuperannuation funds and managers having
a global presence in infrastructure, debt
financing and alternative assets. A robust
green market would see Australia poised
to become a significant source of capital
flows and expertise into the region as
ASEAN nations shift towards green
finance to help meet their intertwined
national-development, energy, emissions
and climate goals.

3Green infrastructure: an opportunity for growthInternational context

Australia and New ZealandGlobally, the green economy is growing. Since
the signing of the 2015 Paris Agreement
there has been an increasing and publicly
expressed awareness among institutional
investors, particularly from OECD nations andChina, of the long-term risks climate change
poses to their ability to match assets withliabilities. This has led to growing demandfor investment opportunities that addressenvironmental challenges and support
sustainable development, resulting in thedevelopment and growth of dedicated green
financial products, including green bonds.

Australia and New Zealand both facechallenges in adapting to climate impacts
and in meeting stricter internationalemissions targets. They also have challenges
in building sustainable urbanisation models
and addressing congestion. Both Australia
and New Zealand have high urban based
populations of about 90%16 .

The global green bond market has seen
exponential growth, exceeding USD161bn
of issuance in 2017 up 85% from the year
before. Milestones5 have been set for annual
issuance of USD1tn in green bonds and loans
by 20206 and an Asian market of climate
related infrastructure in the trillions during
the following decade, according to the AsianDevelopment Bank7.
In Australia, despite a slow response bygovernment, the financial sector is moving
ahead8 . Australia’s major banks have led
the way9 by adopting and promoting bestpractice10 in green bond issuance andsupporting smaller issuers. The world’s
fourth-largest pool of retirement funds
and other institutional investors havedemonstrated an appetite for alternative
assets and global presence in infrastructure11.
This creates a solid foundation to significantly
increase investments in green infrastructure
and build a robust and supportive
environment for green finance.
The same can be said for New Zealand. Greenfinance concepts12 are taking hold and green
debt13 and bond issuance14 is appearing15.
Australia and New Zealand have thepotential to be global leaders in green
infrastructure delivery as both governments
have the capacity and economic conditions
to developing a well-planned sequential
pipeline of green investment opportunities.
The respective finance sectors are well
positioned to develop and subsequently
export green finance expertise.

A greater role by the financial sector andin particular private sector investment
is considered crucial to the successful
implementation of policy responses related
to reducing carbon intensity, improving
capital allocation, bridging investment gaps,
accelerating infrastructure provision andembedding climate resilience.
Both countries have ambitious infrastructureand energy development plans. The
emphasis is on improved connectivity, morereliable service delivery, and enhanced
productivity growth. The Australian 2017-18
Federal Budget features an infrastructure
spending program of AUD75bn from2017-18 to 2026-27, including funding forcritical airport, road, and rail infrastructure
projects. Similarly, the Government of
New Zealand will focus on road, rail andwater infrastructure as well as regional
development. It has allocated almost
NZD1.5bn to these in the 2018 budget17.
Although both nations have traditionallyrelied heavily on road and water transport– using high-emission, fossil fuel-powered
vehicles and vessels – there is an increasing
focus on public transport and freight rail.
There is a boom in building small- to largescale renewable energy capacity. Greenbuilding certifications have significantly
increased, and resilient buildings are
becoming mainstream. The number ofgreen infrastructure projects has risen inboth countries.
Almost half of the projects in Infrastructure
Australia’s Infrastructure Priority List 201818
meet international investor definitions of‘green’, although they are not always labelled
as ‘green’. Similarly, just over 40% of New
Zealand projects in the Australia and New

Zealand Infrastructure Pipeline19 (ANZIP) could
be considered ‘green’. However, the budget
allocated to these seemingly ‘green’ projects,
in each country, is much less than that for allother projects.
With an increasing urgency to respond to thechallenges of climate change, governments,
the financial sector and industry all needto increase their emphasis on policies andprovision of low-carbon, sustainable andresilient green infrastructure. The transition
from polluting brown infrastructure tocleaner and greener assets needs to gain
momentum with widespread support.
Traditional high-carbon infrastructure
investments still dominate in Australia, withroad, rail and ports being built to facilitate
fossil-fuel industries. Australia’s CO₂
emissions output on a per capita basis is oneof the highest in the world20.
Having ratified the 2015 Paris Agreement,
Australia and New Zealand have committed
to making finance flows consistent with apathway towards low-carbon and climate
resilient development. The Australian
government has, however, been criticised21
for not making stronger emissions reductionscommitments. After the recent national
elections, New Zealand has been pursuingmore ambitious climate policies. It has
pledged to reach carbon neutrality by
2050 and establish the mechanisms tophase out fossil fuels.
Despite their different public approaches,both governments have made infrastructureand sustainability commitments. They will
require significant investment, both public
and private, underpinned by innovative
finance models. Green finance can play asignificantly larger role in the future.
The last two decades have been about
making assets work harder. The future will
be about making ‘green’ upgrades toexisting assets and harnessing the capitalrequired for the delivery of new smart
resilient infrastructure. Infrastructure needs
to be fit for purpose over long operating
cycles in a carbon-constrained, climateimpacted landscape.

Nationally Determined Contribution under the Paris Agreement in terms of reduction commitments
for annual national greenhouse gas emissions:
Australia: 26–28% below 2005 levels by 2030

New Zealand: 30% below 2005 levels by 2030

Under the Paris Agreement, contributions must be updated regularly. The next update to Nationally
Determined Contributions can be provided in 2020.

Australia & New Zealand GIIO Report Climate Bonds Initiative4

Macroeconomic outlook
Australia’s real GDP growth is projected tocontinue at around 3% in 2018 and 201922.
Australia has experienced uninterrupted
economic growth for 26 consecutive
years. Continued growth will be aided by
an improving global outlook, strong public
infrastructure investment, and improved
investor sentiment. Increased investment inhousing is also anticipated to provide nearterm support to the economy, helping withhousing supply and pricing23. Publicly-funded
infrastructure development and private
sector spending on non-residential buildings
will also be key drivers of investment activity
and employment over the coming years24.
The economy has adjusted to the recent
decline in mining-related investment thanks
to an accommodative monetary policy, aflexible labour market, stable rate of inflation,
and a lower exchange. Furthermore, nonmining business investment has picked up
and is projected to continue with increasing
infrastructure development.

Australia Country Facts

New Zealand Country Facts

Population: 25 million (2018)
Population growth rate: 1.35% (2017)
Urban population: 90%30
Rate of urbanisation: 1.37% annual rateof change (2015-20 est.)31

Population: 4.8 million (2018)
Population growth rate: 0.97% (2017)
Urban population: 86%33
Rate of urbanisation: 0.98% annual
rate of change (2015-20 est.)34

GDP: USD1,323bn (2017) – 13th largest
economy in the world
Interest rate (cash rate): 1.5%
(at end of 2017)
Inflation rate: 2.1% (Q2 2018)
Government 10Y, M: 2.65%(at July 1st, 2018)
Balance of trade: AUD1873m (June 2018)
Government debt to GDP: 41.9 % (2017)32

GDP: USD206bn (2017)
Interest rate (cash rate): 1.75% (at endof 2017)
Inflation rate: 1.5% (Q2 2018)
Government 10Y, M: 2.76%(at July 1st, 2018)
Balance of trade: -NZD113m (June 2018)
Government debt to GDP: 22.2 %(2017)35

Moody’s rating: Aaa (stable)
S&P rating: AAA (stable)
Fitch rating: AAA (stable)

Moody’s rating: Aaa (stable)
S&P rating: AA (stable)
Fitch rating: AA (stable)

GDP for Australia and New Zealand (2008–2018)36

Public debt is expected to fall as a proportionof GDP, which should support a positive
economic outlook. Government’s goal is to
reduce the annual deficit by around half of apercentage point of GDP per year over the
four-year budget horizon25 .

1600

New Zealand

1200

Forecasts show surpluses in the operatingbalance before gains and losses, reaching
NZD7.3bn in 2021-22 or 2.1% of GDP, whichmeans that national net debt falls as a percentage
of GDP to 19.1% in 2021-22. This would satisfy thegovernment’s net debt target of 20% by 202227.
It would also address some of the concerns
raised by Fitch Ratings: while they affirmed
New Zealand’s rating, the credit rating agency
cited high external debt burden and persistentcurrent-account deficits as an issue28.
All three ratings agencies found that New
Zealand’s ratings were supported by strong
governance standards and prudent fiscal
management. An example is the goal to keep
future annual CPI inflation between 1-3% overthe medium term and to avoid unnecessary
volatility in output, employment, the exchange
rate, and interest rates29.

200

1400

Australia GDP (USD bn)

180

160
1000

140
Australia
New Zealand

800

2008

2010

2012

2014

2016

120
2018

Australia and New Zealand Government Bond 10Y (2008-2018)37
7
Australia
New Zealand

6543% Interest rate

New Zealand’s real GDP growth is projected tocontinue at 3% in 2018 and 201926 . Growth will
be aided by anticipated increases in interest
rates, strong tax revenue and government
spending, particularly on infrastructure. With
government debt expected to decline as ashare of GDP, additional spending should notaffect fiscal sustainability.

220

New Zealand GDP (USD bn)

Australia

2
1

2008

Australia & New Zealand GIIO Report Climate Bonds Initiative

2010

2012

2014

2016

2018
5

Infrastructure financing

Currently about 1.5% (USD2tn) ofannual global GDP is invested ininfrastructure projects. However, an
additional 1.0% (USD1.5tn) of global GDP
needs to be invested annually to adequately
meet infrastructure needs in transport,
energy, building, land protection and water
through 203038. Unlike other asset classes,
infrastructure investments present a uniquerisk-return profile. They tend to be less
impacted by the business cycle and canprovide a hedge to changes in interest rate.
Infrastructure financing can provide longduration exposures of over 20 years.

Financing infrastructure inAustralia and New Zealand
The Australian and New Zealandgovernments have used multiple funding
mechanisms to finance infrastructuredevelopment. These include asset sales,debt, project financing, Public-Private
Partnerships (PPP), federal grants, value
capture and concessional loans.

Australia
While publicly-funded infrastructure
spending continues to increase in Australia,
the government is seeking to attract
further private investment in public sector
infrastructure projects. The public sector
alone cannot meet the increased demandfor infrastructure over the next decade andfill the gaps in Australia’s infrastructure
capability. There is also the potential to

Major publicly-funded works spending trends,
Australia, 2014-202059
24

Metronet (WA)
Snowy Hydro Expansion (NSW)

NorthCornex (NSW)
Sydney Metro Northwest (NSW)

20

Pacific Highway - Woolgoola to Balina (NSW)
Airport Link (WA)Melbourne Metro (VIC)

WestConnex (NSW)NBN

16

Level Crossing Removals (VIC)
Western Distributor (VIC)
Cranbourne-Pakenham Rail (VIC)

12

Western Harbour Tunnel (NSW)
Sydney Metro and Southwest (NSW)
Badgerys Creek Airport (NSW)8USD Billions

Globally, there is a high demonstrable
need for infrastructure investments.
Large tax cuts since the 1980s have
led to considerable public-sector
underinvestment in infrastructure. This
has resulted in a significant gap between
public sources of infrastructure financeavailable and the levels of infrastructure
investment required by global economies
to achieve their sustainable long-term
economic growth potential37.

CBD and South East
Light Rail (NSW)

4

0
2014

2015

2016

2017

2018

2019

2020

increase competition and thus drive better
value-for-money outcomes for government39.

and an information portal for market
intelligence and investment opportunities42.

With guidance from the government’s
Infrastructure and Project Financing Agency(IPFA), an active investor approach to future
infrastructure projects is planned. This will
deliver a return on taxpayer investments andtaps alternate funding40. It is anticipated thatafter 2019 public investment would decrease,and other types of financing will facilitate
ongoing infrastructure development41.

Infrastructure Partnerships Australia’s 2017
Australian Infrastructure Investment Report showeda strong appetite for infrastructure opportunities,
from both local and international investors.

There are opportunities for domestic andinternational investors to finance, construct,own and refinance Australia’s transport,
utilities and social infrastructure. The
Department of Infrastructure, Regional
Development and Cities and the Australian
Trade Commission (Austrade) is working to
specifically attract foreign direct investment(FDI) in Australian infrastructure, byfunctioning as a focal point for FDI inquiries

Australia has adopted long-term PPP
infrastructure for the licensing of social
ventures, which transfer risk to theprivate sector. However, there continues
to be limited long-term debt-financing
available since the global financial
crisis. In New Zealand, the government
continues to actively support a small,but innovative and growing PPP
infrastructure market60.

Use of Public Private
Partnerships

Examples PPPs – Australia
Project

Terms

Procuring
government

Industry

Value(AUDm)

Consortium members included

Sydney Metro
Northwest

20 years: operations,trains and systems

NSW

Transport

3,700

Northwest Rapid Transit consortium: MTR
Corporation (Australia), John Holland, Leighton
Contractors, UGL Rail Services, Plenary GroupGold Coast Light
Rail (Stage 1
and Stage 2)

15 years: design,build, finance, operate
and maintain

QLD

Transport

Stage 1: 1,296
Stage 2: 420

GoldLinQ consortium: McDonnell Dowell
Constructors, Bombardier Transportation, KDR Gold
Coast Pty Ltd (Keolis and Downer EDI), Plenary Group

Australia & New Zealand GIIO Report Climate Bonds Initiative

6

“Infrastructure is a key driver for growth,
employment, and better quality of lifein emerging markets and developing
economies (EMDEs). But this comesat a cost. Approximately 70% of
global greenhouse gas emissions comefrom infrastructure construction andoperations such as power plants,buildings, and transport. The Overseas
Development Institute estimates thatover 720 million people could be pushed
back into extreme poverty by 2050 asa result of climate impacts, while theWorld Health Organization projects thatthe number of deaths attributable to theharmful effects of emissions from key
infrastructure industries will rise fromthe current 150,000 per year to 250,000
by 2030. [...] Crucially, in EMDEs withdisproportionate exposure to climatechange impacts, low-carbon infrastructure
can help prevent a climate-related reversalof development gains.”61
Deblina Saha, co-author of Private
Participation in Low-Carbon Infrastructure
Investment,62 The World Bank

An investor survey43 showed that 70% ofparticipating investors would be highly likely toinvest in Australian infrastructure. The survey
indicated that investors were attracted by theincreased visibility of transactions and projects,
specifically citing the Australia & New Zealand
Infrastructure Pipeline (ANZIP) as a useful tool.
ANZIP is a joint initiative between theAustralian and New Zealand governments
and independent think tank InfrastructurePartnerships Australia. It provides a detailed listof likely and confirmed infrastructure investment
or major development opportunities and is
aimed at investors and contractors44.
There are many Australian infrastructure
assets which are currently held by local
and international funds. These range
from regulated assets such as water andsewerage utilities to distribution pipelines
and transmission wires. They include userfee assets like toll roads, airports, ports andrailways, as well as commercial operations
like communications, power generation andenergy providers45.
The government has a number of funds
for infrastructure. For example, the Urban
Congestion Fund (AUD1bn) established by
the Australian Federal Government to address
urban congestion in cities by investing in
projects that remove bottlenecks, improve
traffic safety and increase network efficiency
for both commuter and freight mobility46.
Australia’s superannuation funds are also active

in infrastructure investment. For example, IFM
Investors was established 28 years ago to
manage infrastructure investments on behalfof Australian industry superannuation funds. It
is owned by 27 major not-for-profit Australianpension funds and manages the retirementsavings of over 11 million Australians47. IFM
Investors currently manage AUD48bn ininfrastructure in developed markets, withinterests in 30 investments across Australia,
North America and Europe48.
As the interest of Australian superannuation
funds in infrastructure is growing, so too areinnovations for investment. In order to close
the infrastructure gap, innovative financeproducts are required along with enhancedplanning and regulatory development.

New Zealand
New Zealand has historically experienced anunderinvestment in infrastructure and there isa great demand for brownfield and greenfield
infrastructure development. The central andlocal governments in New Zealand own over
NZD200bn of infrastructure assets and theforecast is that infrastructure spend will beover NZD110bn by 202549.
The government understands that traditional
infrastructure funding and PPPs are no longer
adequate and is seeking innovative meansof funding infrastructure. The New Zealand
Trade and Enterprise agency is working
on behalf of the government to connect
investors with opportunities, including
infrastructure investment.
The government has previously set up funds
that promote infrastructure development,such as the Future Investment Fundestablished in 2012. It has provided almost
NZD5bn of new capital spending including
NZD1bn for transport50.
In 2018, the government will launch two
further funds. The Provincial Growth Fund
will have NZD3bn to invest over three years
in regional economic development, including
regional infrastructure51.
The Green Investment Fund will focus moreon promoting sustainable development,
specifically aimed at supporting the new
government-wide mission to transition
towards a net-zero-emissions economy by2050. This fund takes the new approach of
co-investing alongside private capital. It aims
to stimulate the inflow of additional private
capital once it demonstrates the commercial
benefits of investing in green projects52. Thismodel recognises that there is both the needand demand for more low-carbon green
infrastructure and less of the traditional,
high-carbon infrastructure.

Australia & New Zealand GIIO Report Climate Bonds Initiative

The need for green
infrastructure is growing
About 70% of global greenhouse gas emissions
come from infrastructure construction andoperations such as power plants, buildings, andtransport53. To overcome this global challenge
and meet the goals of the Paris Agreement,
the OECD believes about USD100tn in climate
compatible infrastructure investment will beneeded between 2016 and 203054.
In Australia, infrastructure-related emissions
account for more than half of the country’s
total greenhouse gas emissions: 35% fromthe electricity sector and 18% from thetransport sector55. In New Zealand, energy
and transport contribute just over 30% of
total greenhouse gas emissions56. To reducethese emissions, climate compatible, green
infrastructure is required, including lowcarbon and less polluting assets which arealso climate resilient.
The Australian Infrastructure Plan (2016)
emphasises that sustainability and resilienceshould not be seen as fringe concepts, but as
good economic practice, and that sustainable
and resilient infrastructure can support
growth and a higher standard of living57. With
the onset of climate change, the capacityof infrastructure to operate through minor
disruptions, and recover quickly from major
disruptions, will be critical to supporting people
and businesses over the coming decades58.
There is an immediate and growing
opportunity for investors to participate in green
infrastructure financing in Australia and New
Zealand. At the same time, investing in green
infrastructure will ultimately help the Australianand New Zealand governments to reach theirclimate targets, spur innovation, broaden theeconomic base, and promote more sustainableeconomic and social well-being.

“There is increasing focus in
the infrastructure investmentcommunity on the opportunities
that green investment brings.
Across renewable energy,
sustainable transport, green
buildings and sustainablecommunities; financial investors,
corporates and governments are
all looking for ways to facilitate
and participate in the transition
to a low-carbon economy.”
John Pickhaver, Co-Headof Macquarie Capital,
Australia and New Zealand,
Macquarie Group7

Green finance
Demand for sustainable
investments is increasing
Since the signing of the Paris Agreement
demand has increased from institutional
investors, particularly from OECD nations
and China, for investment opportunities that
address environmental challenges and support
sustainable development. This has resulted
in the development and growth of dedicatedgreen financial products including green bonds,
green loans, social and sustainable bonds,
green infrastructure investment trusts andgreen index products (see Annex 1 and 2 fordescriptions of debt and equity instruments).
Green bonds63 are currently the most developed
segment of thematic instruments, carrying
a great recognition from the investor base.
The ‘green’ label is a discovery mechanismthat enables bond issuers, governments,
investors and the financial markets to prioritise
investments, which genuinely contribute toaddressing climate change.
The demand for ‘green’ instruments continues
to rise. For example, the green bond market has
seen exponential growth - exceeding USD161bn
of issuance in 2017, up from USD87bn in 2016.
This demand for green instruments comes from:- Mainstream asset managers (e.g. Aviva,
BlackRock, State Street);- Specialist ESG and green bond fundmanagers (e.g. Amundi, Natixis/Mirova);- Sovereign and municipal governments(e.g. Chinese SOEs through their Belt andRoad Initiative);- Supranationals, i.e. multi-lateralbanks (e.g. World Bank, ADB, AsianInfrastructure Investment Bank); and- Retail investors (e.g. World Bank green
bonds and US municipality bonds).
With investors increasingly looking for ways
to address ESG and climate change in theirinvestment processes, green bonds, along withother green financing tools, present a useful
opportunity to meet environmental objectives
and deliver on their fixed income mandates.

Green finance instruments inAustralia and New ZealandThis increasing demand and innovation of themarket has seen the creation of new, ‘green’
investment products designed to appeal
to investors with different risk appetites.
There are growing opportunities to mobilise
private capital to support green infrastructure
by investing in debt, funds, equity-linked
products and listed companies.

Key global sustainable finance initiatives also illustrate
the growing popularity of green finance and investment insustainable development:• The Principles for Responsible
Investment: 2000 signatories from 67
countries, representing over 50%, orover USD80tn of global assets undermanagement (AUM).
• The Principles for Sustainable
Insurance: adopted by insurers
representing over 20% of the global
insurance market by premium volume
and USD14tn in AUM.
• The Principles for Responsible Banking:26 leading banks from 5 continents
representing USD16tn in AUM65.
• The Equator Principles: commitment
from 94 financial institutions in 37
countries, covering the majority
of international project finance indeveloped and emerging markets.
• The Climate Bonds Initiative partners
represent USD13tn AUM and USD70trn
AUM represented on its Standards Board.

Innovative financial instruments have beendeveloped in order to mobilise capital markets
to fund green infrastructure projects. Greendebt instruments include green bonds,
securitisation and other structured finance,
commercial paper, bank credit facilities,
retail bonds, secured and unsecured notes.
Institutional investors have invested in equity
funds, REITs, syndicated loans, and coinvestment vehicles. For investors with limited
ability to manage their own green projects, avariety of corporate bonds, securitisation andsyndicated loans are available.
In Australia and New Zealand, green
bonds continue to be the primary means ofgaining exposure to green finance. Financial
institutions are increasingly entering themarket to refinance pools of existing eligible
assets. Green bond issuers – particularly
large banks and State Governments –can also use green bonds as a signallingmechanism around ‘green’ policy.
Innovative structures have emerged in
the local green bond market to provide
a diversity of investment options. For
example, National Australia Bank recently
placed AUD200m of 10-year Low Carbon
Portfolio Notes, which are backed by aportfolio of loans to Australian renewableenergy developers. The structure mimics
a loan portfolio syndication and provides

Australia & New Zealand GIIO Report Climate Bonds Initiative• The One Planet Sovereign WealthFund Working Group: comprising
six major sovereign wealth funds,
including the New ZealandSuperannuation Fund, who collectively
manage over USD3tn in assets66.
• Climate Action 100+ initiative: 289
investors with nearly USD30tn AUM
have signed on, including Australianfunds with more than AUD1tn undermanagement67 68.
• The UN Environment Finance Initiative(UNEP FI): 92% of the world’s 25
largest banks are members - 120
leading banks across the world.
• The Investor Group on Climate
Change: represents Australian and New
Zealand institutional investors withtotal funds under management of over
AUD2tn69.

investors with unique risk exposure to theAustralian energy market. Westpac has also
taken an innovative approach, by issuingan AUD117.3m climate bond in 2018 toJapanese retail investors, in the Uridashi
bond market, to support the bank’s fundingfor climate change solutions.

“Our goal is to make a positiveand lasting impact on the
lives of our customers, people,
shareholders, communities,
and our environment – and ourcustomers are telling us they wantto participate in the transition
to a low carbon economy. We’recontinually developing andoffering innovative green financetools that enable investors to backmajor renewable energy projects
alongside NAB, and we find
new ways to support companies
that deliver green infrastructure
projects around the world.”
Mike Baird, NAB Chief
Customer Officer, Corporate
and Institutional Banking, NAB

8

Macquarie Group green loan
In 2018, Macquarie Group issued afour-tranche GBP2bn loan facility that
includes GBP500m green tranches: a
3-year revolving facility and a 5-year term
tranche. The green tranches will be used
to support renewable energy projects
initially and energy efficiency, waste
management, green buildings and cleantransport projects in the future. The
green loan facility is one of the first such
facilities issued under the Green Loan
Principles of the Asia Pacific Loan Market
Association (APLMA), which seek toestablish a set of best practice guidelines
for green lending. The Macquarie Group
Green Loan received considerable
interest from Asian market investors.

NAB RMBSIn 2018, the NAB, through National
RMBS Trust 2018-1, issued a AUD2bn
RMBS in a multi-tranche issue that
included a AUD300m green tranche,
earmarked against AUD525m of prime
residential mortgages. The underlying
residential properties were assessedagainst the Residential Building Criteriaof the Climate Bonds Standard. The
tranche was priced at 0.85% over the
one-month BBSW and was close to
two times oversubscribed. Inclusion of
the green tranche increased demandand investor diversity, attracting
socially responsible funds as well as
mainstream investors from Australia70.

“As a core investor inAustralia’s green bond market,
we are seeing growing interest
from superannuation funds andmanagers who want to deepen
their exposure to sustainableassets. This is essential if weare to achieve our nationalemissions reduction goals in
the infrastructure sector andbeyond. We are confident
an increasing focus fromunderlying investors, alongwith improved sophistication
and understanding of fundmanagers, and increased
diversity of supply, can attract
more investor support for thiscritical investment class.”

Clean Energy FinanceCorporation (CEFC)
The CEFC, established by the AustralianGovernment, is an independent
entity investing in renewable energy,
energy efficiency and low emissions
technologies. It has access to AUD10bn
in capital. At 30 June 2018, the CEFC’s
portfolio stood at AUD5.3bn.
The CEFC is required to target an
average return of the five–year AustralianGovernment bond rate +3% to +4% perannum over the medium to long term(or +1% per annum for investments
made via the AUD200m Clean Energy
Innovation Fund). The CEFC works tocatalyse or ‘crowd in’ additional private
sector investment in clean energy
projects. Portfolio leverage at 30 June 2018exceeded AUD1.80 from the private sector
for each dollar committed by the CEFC.
The CEFC directly finances large-scale
projects, particularly in renewable energy,
and delivers finance for smaller-scale
projects through aggregation programswith established co-financiers. The CEFCis also a substantial investor in Australia’s
emerging climate bonds market, and has
invested in several large-scale equity
funds targeting clean energy gains acrossinfrastructure, property and agriculture.
Through its Sustainable Cities Investment
Program, the CEFC further encourages
investment in renewable energy, energy
efficiency and low emissions technologies
across the built environment.

“Westpac recognisesthat climate change is an
economic issue as well as anenvironmental issue, and banks
have an important role to playin assisting the Australianand New Zealand economies,transition to net zero emissions.
Increasing green bonds, green
loans and green underwriting
is a vital part of the mix, as issupporting new issuers to cometo market.”
Lyn Cobley, Chief Executive,
Westpac Institutional Bank.
FlexiGroup, an Australian retail lender,
issued its first loan receivables ABS with agreen tranche in 2016. In 2018 it introduced
a subordinated green tranche, in addition
to the usual senior green tranche seen inprevious deals.
Non-financial corporates are also innovating.
In 2017 Contact Energy, the New Zealandenergy provider, had the majority of its
outstanding debt certified as ‘green’ whenit created its Green Borrowing Programme.
The unique feature is that the programme
includes wholesale and retail bonds, private
placements, credit facilities, an export credit
line and commercial paper. Contact Energy
obtained programmatic certification under
the Climate Bonds Standard. The certified
debt facilities are backed by a pool ofgeothermal energy assets64.

National and regional green bond guidance is being adopted acrossthe world to support market growth
Regulation & official guidelines

Listing requirements

Private initiatives

In the pipeline

Ian Learmonth, CEO, CEFC

Australia & New Zealand GIIO Report Climate Bonds Initiative

9

International best practices anddomestic guidelines for green
instruments

Global certification
No external review

The global green bond market is witnessing
exponential growth, benefitting both issuers
and investors. With the growth of themarket, best practices have been developed
at the international level to guide issuers,
maintain investor confidence and avoid therisk of ‘greenwashing’. At the international
level, two main voluntary processes for green
issuance have emerged:

At a regional level, the Association ofSoutheast Asian Nations (ASEAN) CapitalMarkets Forum has provided green bondguidelines for adoption throughout theregion while financial services regulators in
China and India have their own green bondregulations. All are broadly consistent withinternational standards.
Governments, regulators and stock
exchanges have started developing
guidelines and regulations. These generally
include guidance for issuance and disclosurein line with the GBPs and are mostly alignedwith the Climate Bonds Taxonomy andStandard (see Annex 1).

Green bond issuance inAustralia and New ZealandAustralian issuance features a diverse
range of bonds, with multiple deals fromthe four biggest Australian banks, two state
governments (so far), a commercial property
fund, a leading university and several
green ABS bonds. Most Australian and
New Zealand green bond issues have beencertified under the Climate Bonds Standard,
starting with NAB in 2014 and followed by
ANZ in 2015. This reflects strong leadershipon best practice on the global stage.

80

60

40

20

0
USA
Supranational
China
FranceGermany
Netherlands
SwedenSpain
CanadaJapan
Italy
MexicoIndia
NorwayAustralia
BelgiumUK
BrazilSouth Korea
Denmark
China_HK
PolandIndonesia
Austria
New ZealandSouth Africa• the Climate Bonds Standard &Certification Scheme, managed by the
Climate Bonds Initiative and developed bya network of technical experts, with input
from industry players and investors, builds
on the GBPs and adds green asset criteria
which are aligned with achieving the goalsof the Paris Agreement.

Rating100%• the Green Bond Principles (GBPs),
coordinated by the International Climate
Markets Association (ICMA), and the Green
Loan Principles (GLPs), developed by the
Loan Market Association (LMA), provide
process guidance around transparency on theuse of proceeds, project selection process,management of proceeds and reporting72 73.

CB Certified

Australia and New Zealand are important green bond issuers
Cumulative issuance up to end H1 2018

China
USD59.1bn

Japan USD6.8bn

South Korea USD3.0bn

India
USD6.6bn

Taiwan USD804m
Vietnam USD27m
Philippines USD226m

Malaysia USD979m
Singapore USD611m
Indonesia USD1.9bn

Top issuer
USD1-10bn<USD1bn
Sovereign green bondFiji USD49m

Australia
USD6.3bn
New Zealand
USD1.5bn

Despite the lack of green bond policy byeither the New Zealand Government orAustralian Federal Government, a growing

Australia & New Zealand GIIO Report Climate Bonds Initiative

10

The following are examples of different types
of issuers, instruments and sectors of green
bonds that have been issued in Australia and
New Zealand. For more information, pleasesee our report Australia & New Zealand Greenfinancing country briefing (August 2018).

Australian use of proceeds
Renewable Energy

Low Carbon Transport

Low Carbon Buildings

Water

Waste

3.0
2.5
2.0
1.5
AUD Billions

commitment to ESG principles andsustainable investing as well as increased
awareness of climate impacts has become
one of the drivers behind the current demandfor quality green debt issuance. The latest
Responsible Investment Association ofAustralasia (RIAA) report notes that funds
raised through green bonds are financing
renewable energy assets, energy efficiency
initiatives and low-carbon public transport.

1.0
0.5
0
2014

2015

2016

2017

2018

Australia

Australia

Instrument: Use of proceeds bondIssuer: Westpac
Issuer type: Commercial bankAmount: AUD500m
Date issued: May 2016
Maturity: 5 years
External review: CBI certified, verified by EY Asia PacificUse of proceeds: Wind, Low Carbon Buildings (Commercial)

Instrument: Green senior and subordinated tranches in a
receivables ABS
Issuer: Flexi ABS Trust 2018-1
Issuer type: Non-bank lenderAmount: AUD81.3m (total for green tranches)
Date issued: May 2018
Maturity: Multiple
External review: CBI certified, verified by DNV GL
Use of proceeds: Rooftop Solar PV and Solar Hot Water Loans

Australia

Australia

Instrument: Use of proceeds bondIssuer: Queensland Treasury Corporation
Issuer type: Government
Amount: AUD750m
Date issued: March 2017
Maturity: 7 years
External review: CBI certified, verified by DNV GL
Use of proceeds: Solar, Low Carbon Transport

Instrument: Use of proceeds bondIssuer: Investa Commercial Property Fund
Issuer type: Property asset manager
Amount: AUD100m
Date issued: April 2017
Maturity: 10 years
External review: CBI certified, verified by EY Asia PacificUse of proceeds: Low Carbon Buildings (Commercial)

New Zealand

New ZealandInstrument: Use of proceeds bondIssuer: Auckland Council
Issuer type: Municipality
Amount: NZD200m
Date issued: June 2018
Maturity: 5 years
External review: CBI Certified, pre-issuance report by EY
Use of proceeds: To refinance existing debt used to buy electrictrains and equipment as well as to help finance the purchase of
more.

Instrument: Green borrowing programme
Issuer: Contact Energy Limited
Issuer type: Non-financial corporate
Amount: NZD1.88bn
Date certified: August 2017
Maturity: Multiple tenors
External review: CBI Certified, verified by EY Asia PacificUse of proceeds: The programme finances only geothermal
assets. Eligible projects must have an emission intensity
lower than 100gCO2e/kWh to be in line with Climate Bonds
Geothermal Criteria.

Australia & New Zealand GIIO Report Climate Bonds Initiative

11

The future role ofsuperannuation in Australia’s
infrastructure
Both the Australian and New Zealandgovernments are developing policy
interventions to further support theirgreen finance sectors including green
investment banks, carbon markets, green
certification mechanisms and renewableenergy incentives71.
Australia’s employment-based compulsory
superannuation contribution system has
been an underlying driver of national savings.
Coupled with strong banks that are prepared
to be early movers and adhere to bestpractice in green bond issuance, Australia
now has the foundations for green financeto expand into infrastructure projects. Thispatient retirement capital is willing and able
to make large-scale investments and can be
deployed to improve deal flow and scale up
corporate green bond issuance.
The large industry superannuation funds
have led on infrastructure and clean energy
investment since the mid 1990s. This ispartly a result of investment beliefs, abias towards alternative investments andthe ability to make direct equity-based
investments. Over time, equity investments
have increased through a mix of wholly
owned specialist managers, joint venturesand other co-ownership models.

Achieving the Sustainable Development Goals
In September 2015, 193 nations came
together to support the United Nations’Sustainable Development Goals (SDGs)- a collection of 17 global goals with 169
targets addressing social and economic
development. Climate Bonds has
identified six SDGs where increased green
investment and green bonds provide
direct benefits: SDG 6, 7, 9, 11, 13 and 15.74
For example, SDG 9 aims to build resilient
infrastructure, promote inclusive andsustainable industrialisation and foster
innovation75. Realising SDG 9 by 2030 will
require significant resources, in both thedeveloping and developed world context.
It is estimated that the funding gap forachieving all 17 of the United Nations’

SDGs is in the range of USD2tn to 3tn per
year. The growth of the green bond market
provides an excellent foundation to raise
capital for bridging this gap76.
In Australia, ANZ raised an EUR750m
SDG Bond in the European market to fundloans related to 9 SDGs.77 NAB’s novel
SDG Green Bond combines SDG goals
and Climate Bonds certification criteria as
eligibility requirements.78 Green bonds and
SDG bonds are not separate streams. They
aim to finance many of the same assets,
and deliver economically, socially andenvironmentally resilient societies.

“The Australian and New Zealand green bond markets are
representative of global best practice. The markets are underpinned
by a diversity of issuance and innovation in use of proceeds, a strong
commitment towards transparency, with high levels of international
certification. ANZ is working with investors to build confidence inmarket fundamentals and directions. The scale of green infrastructure
investments expected to be made in Australia, coupled with strong
investor demand, make the prospects for growth in green bonds bright.”
Christina Tonkin, Managing Director, Loans & Specialised Finance,
ANZ

Specialist funds
Key specialist funds in the infrastructure
financing space include Australia’s
Clean Energy Innovation Fund and IFM’s
Australian Infrastructure Fund. In New
Zealand, the Green Investment Fund will
provide a boost to green infrastructure
funding when it becomes operational at
the end of 2018.

Clean Energy Innovation Fund
The CEFC operates the Clean Energy
Innovation Fund, the largest dedicatedAustralian investor of its kind. It was
created in 2016 as a specialist financier
to invest AUD200m in early-stage
clean energy companies. The fundtargets technologies and businesses
that have passed beyond the researchand development stage and which canbenefit from early stage seed or growth
capital to help them progress to the nextstage of their development. It draws on
CEFC finance to primarily provide equity
finance to innovative clean energy projects

and businesses which invest in renewableenergy, energy efficiency and low emissions
technologies. The fund’s investments arerecognised as potentially carrying a higher
risk profile, given the start-up nature of theinvestee companies and technologies.

IFM AustralianInfrastructure Fund
Australia’s largest infrastructure fund, theAUD12bn IFM Australian Infrastructure
Fund is collaborating with CEFC to reducecarbon emissions. The CEFC is investing
AUD150m into the fund, which will be
used to target emissions reduction andenergy efficiency initiatives across some of
the nation’s largest infrastructure assets,
including ports, airports and electricity
infrastructure79. This initiative supports
IFM investors’ commitment to workwith asset management teams to deliver
sustainable ESG outcomes that benefit thecommunities they serve, the environmentand superannuation member returns.

Australia & New Zealand GIIO Report Climate Bonds Initiative

Green Investment FundAs part of a wider suite being spearheadedby the new government, the Green
Investment Fund will be established tomake investments in New Zealand that
reduce greenhouse gas emissions andprovide a financial return. The fund will
receive a NZD100m capital injection
from the government and will operate
independently, supporting the nation’stransition towards a net-zero-emissions
economy by 2050. It will work withbusinesses, infrastructure owners andinvestors to bring forward emissions
reduction projects and draw in private
investment for these projects. The fundwill co-invest alongside private capital. It
is anticipated that once it demonstrates
investment and commercial success thenother private investment will follow.

12

Green standards
A large segment of institutional
investors has shown support to address
climate change. However, when it comesto environmental criteria, investors
currently have too few tools to ensurethat their investments are making asignificant impact. Having common
definitions of ‘green’ across global
markets, allows investors, potential
issuers and policy makers to identify
green assets and attract investment
more easily.
In Australia and New Zealand there are
a number of bodies that have developed
definitions and standards for green assets
and infrastructure projects:• The Infrastructure Sustainability Councilof Australia’s (ISCA’s) Infrastructure
Sustainability Rating Scheme
covers all infrastructure types in Australia
and New Zealand80.
• The Green Star certification,
administered by the Australian Green
Buildings Council and the New Zealand
Green Buildings Council, and the National
Australian Building Environmental Rating
System (NABERS) and NABERS New
Zealand cover buildings. New Zealand also
has Homestar, an independent national
rating tool that measures the health,warmth and efficiency of houses81.
• For renewable energy generation facilities,
guidance on development in Australia
and New Zealand can be sought fromlocal standards, regulation and industry
associations.
• The Climate Bonds Taxonomy is used to
identify green projects and assets which
are aligned with achieving the goals of theParis Agreement. This excludes fossil fuelpower generation, internal combustion
engine personal vehicles and new roads
and infrastructure that facilitate their
movement, and freight rail that is primarily
used for fossil fuel transportation.
In 2017, a survey by the Investor Groupon Climate Change of Australian and
New Zealand investors - with funds
representing over AUD328bn in AUM found that for setting strategy andpursuing low-carbon investment, overhalf of all participants in the Australiansurvey indicated that they were using
their own methodology for defining
green investments, followed by the Low
Carbon Investment (LCI) Registry (24%)
standards and the Climate Bonds Initiative
standard at 11%82.

ISCA Infrastructure Sustainability Rating
Scheme is a third-party rating system forevaluating sustainability across the planning,
design, construction and operation of allphases of infrastructure programs, projects,
networks and assets in Australia and New
Zealand.

The ISCA is a member-based, not-forprofit peak body. It administers a thirdparty rating program, provides training
and knowledge sharing and creates acommunity of practice around sustainableinfrastructure83.

Green Star is an internationallyrecognised rating system for the design,
construction and operation of buildings,
fit-out and communities. To rate a building
or a fit-outs overall environmental impact,
Green Star rating tools award points
across nine categories: Energy, Water,
Materials, Indoor Environment Quality(IEQ), Transport, Land Use & Ecology,
Management, Emissions, and Innovation.

community-wide - helping to improve
environmental sustainability, boostingproductivity, creating jobs and improving
the health and well-being of place forpeople, and results in money savings.

This helps to support stakeholders in
the property and construction sectors todesign, construct and operate projects in amore sustainable, efficient and productive
way, and provides tenants with a trusted
mark of independent verification to
support decision making. It has benefits
NABERS is a national rating systemthat measures the environmental
performance of buildings, tenancies andhomes assessing energy efficiency, water
usage, waste management and indoor
environment quality of a building or
tenancy and its impact on the environment.
This is done by using measured andverified performance information, suchas utility bills, and converting them into
an easy to understand star rating scalefrom one to six stars. For example, a 6-starrating demonstrates market-leading
performance, while a 1-star rating means

Climate Bonds Taxonomy andthe Climate Bonds Standard &Certification Scheme
The Climate Bonds Taxonomy features eight
climate-aligned sectors (see Annex 1). The
purpose of the Taxonomy is to encouragecommon broad ‘green’ definitions acrossglobal markets in a way that supports thegrowth of a cohesive green bond market.
The Climate Bonds Standard & Certification
Scheme is used to provide a Fairtrade-likelabelling scheme for bonds and other debt
instruments. Certification means that the deal:• Is fully aligned with the Green Bond
Principles or the Green Loan Principles.

Australia & New Zealand GIIO Report Climate Bonds Initiative

Green Star was launched by the Green
Building Council of Australia in 2003
and remains Australia’s only nationaland voluntary rating system for buildings
and communities. New Zealand now
has similar tools for design, construction
and operation of buildings, fit-out andcommunities. These tools were adapted
for New Zealand. In both countries, GreenStar can be used as a proxy for Climate
Bonds Certification84.

the building or tenancy has considerable
scope for improvement. Ideally it helps
property owners, managers and tenants toimprove their sustainability performance,
reaping financial benefits and building
their reputation.
In Australia it is run by a government
authority. In New Zealand the Energy
Efficiency Conservation Authority has thelicense for NABERSNZ in New Zealand.
The NZGBC administer NABERSNZ, which
in New Zealand is primarily focused on abuilding’s energy performancee85.

• Uses best practices for internal controls,
tracking, reporting and external review.
• Finances assets consistent with achieving
the goals of the Paris Climate Agreement.
The certification of eligible projects andassets requires independent verificationof the assets’ climate credentials against
the Climate Bonds Standard and relevant
Sector Criteria. The Criteria provide eligibility
conditions or thresholds which must be met
for assets to be in line with a rapid trajectory
towards a 2050 zero-carbon future. The
criteria are developed based on climate
science by technical expert groups with input
from industry.

13

What’s green?

+ –

+ –

+ –

Geothermal:

Solar:

Hydropower:

According to the
Geothermal Energy
Association, 39 countries
could supply 100% of their electricity
needs from geothermal energy, yet
only 6% to 7% of the world’s potential
geothermal power has been tapped86.

The world installed a record
number of new solar power
projects in 2017, more than
net additions of coal, gas and nuclear
plants put together87.

Hydropower is the largest
source of renewableelectricity in the world,
producing around 17% of the world’s
electricity from over 1 200 GW of installedcapacity, and is expected to remain
the world’s largest source of renewableelectricity generation by 202288.

UNFCCC

Drawdown Agenda

International Energy Agency

Australia & New Zealand GIIO Report Climate Bonds Initiative14

Transport (rail):

Water:

Buildings:

75% of the world’s countries
have established strategies
and targets to improve theenvironmental performance of their transport
sector within their Intended Nationally
Determined Contributions (INDCs).
One-fifth of the transport-related (I)NDCs
include measures in the railway sector89.

The UN says the planet
is facing a 40% shortfall
in water supply by 2030,
unless the world dramatically improves the
management of this precious resource90.

Building-related emissions
account for about one-thirdof global GHG emissions andcould double by 2050, making building
efficiency a critical part of the COP21
agenda91.

UNFCCC

GreenBiz

UNFCCC

Australia & New Zealand GIIO Report Climate Bonds Initiative15

Green infrastructure investment opportunities
Methodology
The following section provides an
exploration of green infrastructure
investment opportunities in Australia and
New Zealand in four key sectors: low-carbon
transport, renewable energy, sustainable
water management and green buildings. For
each sector there is an overview, funding
options and potential investment pathways,
reference case studies, information on key
trends as well as ideas for the future. At
the end there is a sample pipeline of green
infrastructure investment opportunities
across Australia and New Zealand.

Sample pipeline and referencecase studies
The sample pipeline at the end of thisreport is not exhaustive – rather a snapshotof the different types of opportunities
available in the short- and medium-term
future. A more comprehensive list of over
400 green infrastructure investment
opportunities is available on the Climate
Bonds Initiative website.
The projects and assets in the sample
pipeline have been drawn from government
plans, consultation with key stakeholders
and through extensive research of eachsector. They were selected based on theirgreen credentials as well as their investment
potential – whereby an investor would most
likely be able to gain exposure directly or
indirectly to the project or asset.
The reference case studies were chosen fromthe sample pipeline and illustrate the different
types of green infrastructure opportunities
available in each sector in different locations
in Australia and New Zealand.

Green credentials
The Climate Bonds Taxonomy was used to
identify eligible green projects under thefour sectors92. To narrow the scope andvolume of projects the following filters werealso applied:• For low-carbon transport – mostly
projects valued above AUD100m(Australia) and NZD100m (New Zealand)• For renewable energy - only renewableenergy generation facilities above 50MW
• For sustainable water management –mostly projects valued above AUD50m(Australia) and NZD50m (New Zealand)• For low-carbon buildings - Green Star
certified projects - mostly 6-star

Low-carbon
transport
Transportation
modes and ancillary
infrastructure that
produce low or zero direct carbon
emissions. This can include national
and urban passenger rail and freightrail networks; Bus Rapid Transit (BRT)systems; electric vehicles; and, bicycletransport systems.

RenewableenergyEnergy generation,transmission or storage
technology that has
low or zero carbon emissions. Thiscan include solar energy, wind energy,
bioenergy, hydropower, geothermalenergy, marine energy or any otherrenewable energy source.

Sustainablewater
management
Assets that do notincrease greenhousegas emissions or aim at emission
reductions over the operational lifetimeof the asset, address adaptation, andincrease the resilience of surrounding
environments. This could include:water capture and collection, water
storage, water treatment (withmethane emissions treatment), flood
defence, drought defence, stormwater
management, and ecological restoration/
management. This covers built as well as
nature-based water infrastructure.

Green buildings
Commercial andresidential buildings,
new or upgraded,
operating with lowcarbon emissions. The
low-carbon credentials and emissions
performance of the buildings aredemonstrated through an accepted
rating or ‘green’ assessment process, forexample, Green Star certification.

Australia & New Zealand GIIO Report Climate Bonds Initiative

Within each sector, further metrics were used
to classify the green infrastructure investment
opportunities by status:• Completed projects - high profile, recently
completed projects;• Projects under construction – major projects
from national, state and local government
pipelines that are under construction;• Planned projects - major projects fromnational, state and local government
pipelines that had not yet begun
construction and/or had been announced
and had undergone business case planning
and/or had been allocated budget;• Potential projects – projects included in
mid- to long-term plans or strategies aswell as featured in media announcementsor speculation.

Funding options and investment
pathways
There are different types of funding optionsfor ‘green’ labelled investments dependingon the sector and the project timeframe.
The sector determines the types of funding
sources and risk profile, while the timeframe
determines if there might be financing or
refinancing opportunities, namely:• Complete projects may offer refinancing
opportunities depending on circumstances• Projects under construction could offer
equity and debt funding opportunities,
and potentially refinancing (e.g. secured
financing with a take-out option)• Planned projects might have funding inplace, but could also be seeking coinvestment (e.g. private investment tocomplement public funding)• Potential projects present an opportunity
for investment in the future with thepotential to define the funding structure.
There are various ways for an investor to gain
exposure to a specific project, asset or portfolio.
The possible investment pathways will varydepending on the asset ownership structure, thestage in the asset’s financing lifecycle, and theinvestor’s mandate. This can also vary between
projects with public and private funding.
The ‘green’ credentials, funding options,timing, financial structures and possible
investment pathways for each of thereference case studies are provided forthe four sectors which follow: low-carbon
transport, renewable energy, sustainable
water management, and green buildings.

16

Low-carbon transport

Strong State and Federal Government support
for these has been shown through policy
commitments and increased funding for
future transport infrastructure. This emphasison transport can be seen in ANZIP’s list of
projects across Australia and New Zealand.
Around 60% of the projects listed relate totransport, and almost half of these could beconsidered low-carbon transport projects.
Infrastructure and rolling stock upgrades for railand busways will continue to be a priority. The
transition to electric and other low- to zeroemission vehicles and the development of thenecessary charging infrastructure will impact
private vehicle transportation.
In New Zealand, the transition of publicvehicles, like postal vans and garbage trucks,
has already begun. In Queensland, Australia,
the government has established an ElectricSuper Highway from Coolangatta to Cairns withrecharging points for all electric vehicles at key
tourism nodes along the nearly 1,800km route93.

Funding options and investment
pathways
In addition to public funding for transport
infrastructure, the private sector has a strong
pipeline of projects including PPPs, operating
franchises and rolling stock leases94. Capital
mobilisation for low-carbon transport
continues to be targeted towards encouraging
the use of energy-efficient transportationand the development of green infrastructure
projects that reduce carbon emissions.
Government-backed concessional loans are a
new structure which provides greater leverageagainst the revenue streams of transport(i.e. fares). Another innovative mechanismis ‘value capture’, which refers to the valuethat is generated for private landowners from
infrastructure and surrounding business
operations. As private sector appetite
increases, funding sources will continue todiversify, and investment will accelerate.
Investors seeking exposure to low-carbon
transport projects and assets have a range ofinvestment pathways to consider. Governmentowned low-carbon transport assets are often
identified in their green bond offerings, such aswith the Certified Climate Bonds issued by theVictorian and Queensland governments and the
Auckland Council. This pathway provides indirect
exposure for investors to specific projects
and assets and provides attractive credit andliquidity credentials for institutional investors.

Canberra Light Rail – Stage 1
Proponent: ACT Government
Location: Canberra, ACT
Status: Under construction
Classification: Public Passenger Transport,
Rail, Infrastructure
Description: Stage 1 is a light rail linefrom the northern suburb of Gungahlin
to the CBD. Canberra’s light rail will
have overhead wires along its full 12km
length. Stage one will have 13 stops andenhancements to the Civic Plaza. Stage 2
will expand the network, connecting theCity to Woden - connecting employment
hubs, community services and commutersfrom south to north95 . Further stages
could see network extensions to the west,
south and east of Stage 1 and 2 routes.
Output: Increased accessibility,
sustainability and employment.

“With record levels of transport
infrastructure investment, it isoften overlooked, the importanceof the role this new infrastructure
plays in reducing emissions andcreating a more sustainable
environment. CommonwealthBank recognises this and is proudof its record in financing modern,future-proofed, transport
infrastructure that promotes
energy efficiency at its very core.
Green bonds, working alongside
traditional forms of finance, will
ensure the continued funding ofenergy efficient infrastructure.”
Andrew Hinchliff, Group
Executive, Institutional Banking
and Markets, CommonwealthBank of Australia
More direct investment pathways
include participation in consortium debt
arrangements and/or equity stakes inindividual projects via PPPs or other publicprivate ownership and financing structures.

Canberra Light Rail Stage 1route map
Cost: AUD707m (Stage 1 - infrastructure),
this is included in the total PPP cost of
AUD1.3bn (for design, construct, operate,finance and maintain over 20 years). The
financing arrangements for Stage 2 and 3 areto be determined.
Financial structure: PPP + Federal
Government funding
Potential investment pathways: Stage 1 isbeing completed as a PPP. The operatingphase starts in 2018-2019. Stages 2 and3 could also be PPPs to involve private
partners and finance. Equity, mezzanine andsubordinated debt are part of the financing
structures available to the special purpose
companies involved. The local government
will be providing direct funding with an
AUD67m annual contribution to Stage 1.
Stages 2 and 3 will require increased funding
and could be financed or refinanced via thecapital markets.

Australia & New Zealand GIIO Report Climate Bonds Initiative

Source: ACT Government, 2018

Public transport and freight rail networks
are expected to see increased investment
as governments aim to address population
growth, increased urbanisation and worsening
congestion in major cities as well as growinginter-city freight in both Australia and New
Zealand. There is currently a rush by all states
to meet the demands of growing cities, with
upgrades of existing assets and developmentof new urban rail and bus projects.

17Melbourne Metro Rail Project

Melbourne Metro Rail Project map

Proponent: VIC Government + Melbourne Metro Rail Authority
Location: Melbourne, VIC
Status: Under construction, to be fully operational in 2026
Source: Victoria State Government, 2018

Classification: Public Passenger Transport, Rail, Infrastructure
Description: The construction of CBD North and CBD Southstations; twin 9km rail tunnels between South Kensington
and South Yarra, the alignment of Swanston Street throughMelbourne’s CBD and links with existing train and tram lines.
There will also be additional 33 high-capacity trains, which willaccommodate approximately 1,100 passengers in the initialstages96.
Output: Increase capacity (facilitating more trains to be operated
on the Sunbury, Craigieburn, Williamstown, Werribee, Frankston,Upfield and Sandringham railway routes) supporting more than
20,000 passengers an hour; providing improved intermodal
connectivity; less crowded and more reliable train network97.
Cost: AUD10.9bn
Financial structure: Funding from the VIC Government plus PPP
arrangements
Potential investment pathways: The Melbourne Metro Rail Projectis being executed through a PPP model with 3 consortia. Two

Auckland’s electric trainsof the PPPs involve the Tunnel and Stations of the Metro Tunnel
Project. The other PPP covers the new rolling stock. Mezzanine andsubordinated debt as well as equity stakes could be used to financethe different PPPs. The initial investment funding is provided by
the Victorian Government. The Treasury Corporation of Victoria
is already a green bond issuer with 78% of its Certified Climate
Bond allocated to low-carbon transport, including the Melbourne
Metro Rail Project. Further issuance of green bonds by the Victoriangovernment could provide an excellent investment pathway forinstitutional investors.

Auckland Electric Construcciones y Auxiliar deFerrocarriles trains

Location: Auckland, New ZealandStatus: Under construction
Classification: Public Passenger Transport, Rail, Rolling stock andInfrastructure
Description: The Auckland rail network has been undergoinga process of electrification since 2011, with more than 34,000
construction hours to install 3,500 foundations and masts,
carrying 560km of overhead lines across 175km of railway tracks.
In 2015, 57 three-car trains (carrying up to 232 seated passengerseach) were added to the fleet and, in 2018, the Auckland Council
committed to procuring a further 15 three-car electric trains,
increasing Auckland’s electric fleet to 7298 99.
Output: Faster, more frequent service, greater capacity per train
and reduced emissions100
Cost: Est. NZD500m (infrastructure upgrades and electric trainprocurement) + NZD133m (new electric train fleet)
Financial structure: NZD500m via Auckland Council via Crown
loan; NZD133m via Auckland Council and Crown grantAustralia & New Zealand GIIO Report Climate Bonds Initiative

Source: Auckland Transport, 2018

Proponent: Auckland Transport/Auckland Council

Potential investment pathways: The original funding andownership package comprises NZD500m Crown (national
government) loan to Auckland Council for infrastructure
upgrades and electric train procurement and a NZD90m Crown
grant to procure additional trains101. Auckland Council has sinceannounced that new trains will cost NZD133m, and that they
will cover the additional NZD43m. Auckland Council released aninaugural green bond of NZD200m in 2018. The proceeds of theCertified Climate Bond are allocated to refinance existing debt
used to buy electric trains and equipment and help finance thepurchase of the new trains102.

18

Brisbane Metro

Location: Brisbane, QLD
Status: Planned – with metro services
commencing in 2023
Classification: Public Passenger Transport,
Bus, Infrastructure
Description: A high-frequency public
transport Bus Rapid Transit system with
2 routes along 21km of existing busways
that connect the north and south of
Brisbane. The new fleet of 60 specialty
vehicles, each with capacity for up to
150 people, will provide a turn-up-andgo service, with buses arriving every 3
minutes in peak periods, every 5 minutes
at all other times and with 24-hour service
on weekends.

Cost: Est. AUD944m

Source: Brisbane City Council, 2018

Proponent: QLD Government/ Brisbane
City Council

Brisbane Metro map

Financial structure: Government funds
committed (AUD300m Federal Government+ AUD644m Local Government)
Potential investment pathways: The
Queensland Government provides the Local
Government funding component and theQueensland Treasury Corporation (QTC) isalready a green bond issuer104. Its inaugural
AUD750m Certified Climate Bond in 2017has 85% of proceeds allocated to fundlow-carbon transport projects and assets,
including AUD324m to the Gold Coast
Light Rail stage 1 & 2. The Queensland
Government intends to issue more green
bonds with allocations to low-carbon
transport, such as the Brisbane Metro105.

Output: Cut travel times, reduce CBD bus
congestion and improve services to thesuburbs103

Inland Rail

Location: VIC to QLD
Status: Planned - the first train is expected
to operate in 2024-25
Classification: Freight rail, Infrastructure
Description: A new 1,700km dedicatedfreight rail line running between
Melbourne and Brisbane via regional
Victoria, New South Wales andQueensland. Double-stacked, 1,800m
long trains with a 21-tonne axle load will
be able to use the tracks at a maximum
speed of 115km/h. Each train carrying
the equivalent freight volume of 110
B-double trucks.
Output: Connect regional Australia todomestic and international markets;
increase volume of freight per trip; reduce
congestion on highways; transform
national freight movements; provide
supply chain benefits and substantial

cost savings for producers; and improve
economic development overall, with anestimated increase to Australia’s GDP of
AUD16bn during its construction and first 50
years of operation106.

Assuming completion of Inland Rail in
2024-2025
Agricultural 9%Interstate/
Intermodal 67%

Cost: Est. AUD10.7bn over 10 years
Financial structure: Federal government
AUD8.4bn of equity into ARTC on top ofpreviously funded AUD900m.
Potential investment pathways: ARTC is
owned by the Federal Government which isproviding equity and direct grants. Through
ARTC, the use of a PPP and green bondissuance could be relevant, whereby ARTC
might want to get private partners involvedin the project (complexity and risk sharing).
ARTC is already a bond issuer althoughthese have not been labelled green107. At
the Federal Government level, it could bepossible to restructure ARTC’s debt andequity via green finance instruments in laterstages of the project’s financing life cycle.

Australia & New Zealand GIIO Report Climate Bonds Initiative

Coal
25%

Source: Australian Rail Track, 2018

Proponent: Australian Government,
through the Australian Rail Track
Corporation (ARTC)

Inland Rail – Net Tonne
Kilometres by market - 2050108

Melbourne- Brisbane
54%

Brisbane - Adelaide 6%
Brisbane - Perth 7%

19

The LRT + BRT boom

the potential for electric vehicles to provide
support for the grid through smart charging,as a distributed network of batteries which
can respond quickly.

Almost every major city in Australia either
has, is developing or is planning to develop
a light rail transit system (LRT) and/or bus
rapid transit system (BRT). This is also atrend in New Zealand and around the world.
This is because these systems provide
many benefits: reduced congestion and thesmoothing of traffic flows, improvement oftravel speeds and reliability, greater mode
shifting and reduced greenhouse gas (GHG)
emissions. Their infrastructure development
costs and times are also much less thandeveloping an underground rail system.
Overall, they are efficient and cost-effective
mass-transit systems.

Making ports and airports climate resilient
Australia and New Zealand are planning thedevelopment and upgrade of several ports andairports and there is the potential for theseto include measures that mitigate against
and adapt to the effects of climate change.
For example, on-site electricity production,energy efficiency measures for indoor andoutdoor lighting as well as integration withpublic transport and freight rail infrastructure.
It is also important for ports and airports toprotect themselves and the cities they support
from the impacts of climate change by building
adaptive features like reinforced sea-defences
and improved drainage systems.

Ongoing developments in lowcarbon transport investment
opportunities“The reality is that thetransition to EVs is inevitable.
We’re already seeing vehicle
makers confirm they willstop producing pure internal
combustion engines over the
coming years. At the sametime, we’re seeing dramatic
improvements in vehicle
charging networks, creating
the essential infrastructure
to support electric vehicles.
These measures can deliver amaterial improvement on ourgreenhouse gas emissions, aswell as take our vehicle fleet
into the 21st century.”109
Ian Learmonth, CEO, CEFC

The upgrade of all bus and public vehicle
fleets and all rail rolling stock to electricElectric and plug-in hybrid vehicles are set
to experience high growth over the next two
decades in Australia, according to a report
released by the Australian Renewable Energy
Agency (ARENA) and CEFC110. There is also

LRT and BRT developments – Australia and New ZealandSubsector

Project nameLocation

StatusSydney Light Rail

NSW

Under
construction

Parramatta Light
Rail

NSW

Planned

NSW

Under
construction

VIC

Complete

QLD

Complete

QLD

Planned

QLD

PlannedWA

PlannedAdelaide Trams

SA

Complete

Riverline (Hobart)

TAS

Planned

ACT Light Rail

ACT

Under
construction

Auckland Light RailNZ

PlannedLRT: A public
Newcastle Lighttransportation
system operating Railon exclusive,
Yarra Trams
right-of-way rail
Gold Coast Lightlines that are
Rail - Stage 1 +generally above
Stage 2ground and case studies
Referencesometimes on aGold Coast Light shared roadway,
Rail Stage 3 + 3A
with a frequent
Sunshine Coast
service ofLight Railelectrified trainsor trams.
Rockingham Light
Rail

Australia & New Zealand GIIO Report Climate Bonds Initiative

Subsector

Project nameLocation

StatusSydney: B-Line,LiverpoolParramatta T-way,
Metrobus: NorthWest T-way andM2 bus corridor

NSW

Complete

VIC

Complete

QLD

Complete

QLD

PlannedSAComplete

ACT

PlannedNZ

Complete

NZ

Under
construction

BRT: A public
transportation
system using
Smart bus
dedicated lanes
South-East,and stations
Northern and(separated
Eastern Busways
from traffic) toallow for rapid
Referencecase studies
Brisbane Metroand frequent
O-Bahn Busway operation by
City Access Projectbuses (thatideally have
Canberra’s Rapid
no direct
Bus Network
emissions - such
Auckland: Northernas hydrogen,Busway, Central
biogas electric
Connector
or electrifiedbuses).
AMETI (Auckland
Manukau Eastern
Transport Initiative)

20

Renewable energy
Renewables accounted for 17% of New ZealandAustralian electricity generation
Currently, New Zealand is powered by a range
in 2017119
of renewable energy technologies including
Renewable Generation by Technology Type
Large-scalesolar PV 1.8%

Bioenergy
9.7%

Australia

Australian energy storage 2017121
Residential energy storage system installations
25
20
15
10
5
0
2015

2016

2017

bringing the total number of residentialbattery systems installed across Australia up
to 28,000116.

Te Mihi Geothermal power
plant
Proponent: Contact Energy

New Zealand hopes to increase the shareof renewable energy generation to at least
90% by 2025 with further expansion in
geothermal generation; investment ingeneration from wind; and continued growthof the residential solar PV market117.

Funding options andinvestment pathways
Wind
33.8%

Installations (000)Looking forward, solar and wind energy
generation continue to have the greatest
potential for investment. There will also be
an increase in battery storage and pumpedhydro projects. In the last two years there
has been a significant increase in thenumber of residential and large-scale battery
storages facilities installed. In 2017, 12% ofsolar PV installations included a battery,

Hydro
33.9%

Small-scalesolar PV
20.3%

In 2017, approximately 700 MW of renewableenergy projects were completed and began
generation, with seven times that amounteither under construction or with financial
support113. This investment was dominatedby large-scale wind and solar developments,
which represented around AUD12bn.
In 2018, the Clean Energy Regulator announced
that the volume of projects currently
committed to could adequately meet theexisting Large-scale Renewable Energy Target
for 2020 and 2030114. Another outcome
from this renewable energy boom is the
anticipated decrease in residential electricity
prices predicted by the Australian Electricity
Market Commission, expected to fall by
6.2% on average over the next two years115.

Solar thermal 0.1%
Medium-scalesolar PV 0.5%hydro, geothermal, wind and solar. Fossil fuel(gas) power generation represents a relatively
small share of the power generation fleet.

Renewable energy project developers andasset owners have access to a wide variety
of funding options, including banks, project
financiers, debt clubs, investment funds,
direct investors and the capital markets.
Green bonds are best suited to large renewableenergy projects or portfolios of assets and canbe structured in a number of ways, including
covered bonds, ABS, corporate use of proceeds
bonds, and project bonds. Aggregation ofsmaller projects can be done through green
securitisation or through banks originating green
loans and refinancing in the green bond market.
Renewable energy funds are also being used tosupport greenfield renewable energy projects
and stimulate innovation. In addition to publicly
backed funds, like the Clean Energy Innovation
Fund, there are private sector funds like thePowering Australian Renewables Fund, which isa AUD2-3bn fund created by AGL to develop
and own approximately 1,000 MW of largescale renewable generation projects118.

Te Mihi Geothermal power
plant aerial view

Location: New ZealandOutput: Safe and reliable low-carbon energy,
powering more than 160,000 homes.

Status: Complete

Cost: NZD623m

Classification: Geothermal, Generation
facilities

Financial structure: Private equity and green
debt funding

Description: A two-unit 166MW geothermal
plant on the Wairakei geothermal steam fieldin Taupo; includes a bioreactor that reduces
the amount of hydrogen sulphide entering
the Waikato River; 2015 Energy Project of
the Year in the Deloitte Energy ExcellenceAwards, recognising excellence in projectplanning and execution and in deliveringcommunity benefits120.

Potential investment pathways: The
geothermal plant was privately funded byContact Energy. Contact Energy then issued a
Climate Bonds Certified green bond to refinancesome of its debt for geothermal assets.
Through Contact Energy’s Green Borrowing
Programme, investors have the opportunity
to invest in certified green debt instruments.
The NZD1.8bn Green Borrowing Program

Australia & New Zealand GIIO Report Climate Bonds Initiative

Source: Power Magazine, 2013

Over 85% of New Zealand’s energy is
supplied by renewable energy resources.
Australia is currently at 17% and growing111.
In terms of the proportion of gross domestic
product per capita investment in ‘green’
energy, both countries continue to lag
relative to other OECD member countries112.
This trend is set to change, with 2017a milestone year for renewable energy
investment and development.

includes all of Contact’s wholesale bonds
maturing after 2018 as well as various private
placement and bank debt arrangements. Allof these instruments have been certified,giving investors a number of pathways.
Further funds raised via the Green Borrowing
Programme will be certified as green debt
instruments, providing primary market
opportunities for potential investors.

21

Kidston Solar Project

Kidston Solar Project aerial photo

Proponent: Genex Power Ltd
Location: Far-North Queensland, QLD
Status: Phase 1 complete, Phase 2 planned
Source: Power Technology, 2018

Classification: Solar, Generation facilities
Description: The Kidston Solar Project involves the developmentof a 320 MW solar farm, in two phases, starting with 50 MW in
Stage 1. It is located on the historical Kidston Gold Mine and is partof Genex’s plans to build a AUD1bn renewable energy hub 400km
west of Townsville. This will include a 250 MW pumped-hydroproject with 1500 MW hours storage capacity, the 270 MW Phase
2 solar project and a 150 MW wind farm.
Output: Phase 1 of the Solar Project is expected to generate
145GWh of renewable electricity per year, powering around 26,000
Australian homes and avoiding 120,000 tonnes of CO2 emissions122.
Cost: Phase 1 AUD126m, with Phase 2 estimated at AUD420m
Financial structure: Equity + green loans + Federal Government
funding

Potential investment pathways: Genex is listed on the Australian
Stock Exchange providing investors with direct equity in the parent
company. Phase 1 funding included an ARENA Grant for AUD8.9m
and debt finance of AUD54m from the CEFC123. The Northern
Australia Infrastructure Facility has supported the developmentof the financing structure for the Stage 2 project through theprovision of an indicative term sheet for a long-term concessional
debt facility. Further funding will be sought via the banks.

Proponent: Snowy Hydro Ltd + AustralianGovernment
Location: Regional, NSW
Status: Planned
Classification: Hydropower, Generation
facilities, Pumped Storage
Description: Snowy 2.0 is a proposed
pumped-hydro expansion of the Snowy
Mountains Scheme which will supercharge
its existing hydro-electric generation andlarge-scale storage capabilities. It will link
the two existing Snowy Scheme reservoirsof Tantangara and Talbingo throughunderground tunnels and an undergroundpower station with pumping capabilities.
Instead of releasing the water after energy
has been generated, a pumped hydroscheme recycles or pumps water back to
the upper reservoir to be used again124.
Output: The expansion is expected toincrease the capacity of the Snowy Hydroscheme by 50%.125 It will provide reliable

Map of the Snowy Schemeand stable low-carbon electricity.
Cost: Est. AUD3.8bn - AUD4.5bn(potentially an additional AUD2bn fortransmission grid upgrades)
Financial structure: Equity from the Federal
Government + other debt financing

Source: Snowy Hydro, 2018

Snowy 2.0

Potential investment pathways: The original
equity structure for the existing snowyhydro facility was 13% Federal Government
and 87% NSW and VIC governments.
The Federal Government bought the State
Government stakes in 2018, making it thesole owner of Snowy Hydro and the project.
With this new equity structure, the federal
government has the opportunity to fundthe project with green finance products.
Snowy Hydro has a BBB+ rating from S&P
and could be a green bond issuer withallocation of proceeds to Snowy 2.0. It could
also use other green debt instruments tosecure adequate finance as the project isconstructed. The CEFC may also provide
capital to Snowy 2.0.

Australia & New Zealand GIIO Report Climate Bonds Initiative22

Dundonnell Wind Farm

Dundonnell Wind Farm map

Proponent: Tilt Renewables Ltd
Location: Regional, VIC
Source: Tilt Renewables, 2018

Status: Under construction
Classification: Wind, Generation facilities
Description: The wind farm will have up to 88 wind turbines,
hosted by 12 host landholders over approximately 4500ha. The
wind farm will be connected to the National Electricity Market(NEM) via a 38km 220kV transmission line.126
Output: Proposed maximum capacity of 350 MW
Cost: Est. AUD600m
Financial structure: Equity plus debt from local and internationalbanks
Potential investment pathways: The Dundonnell farm is fully
owned by Tilt Renewables Ltd, which is listed on the Australian

SA - NSW Interconnector

and New Zealand stock exchanges and was previously part ofTrustpower. Exposure to this project and other parts of the growing
Tilt portfolio is possible with equity, debt and potentially bonds
for financing and refinancing. Tilt Renewables was recently in themarket with an AUD300m equity raising linked to the Dundonnell
project, with strong interest from institutional investors.

Map of indicative SA – NSW Interconnector route

Proponent: ElectraNet
Location: SA to NSW
Source: Solar Quotes, 2018

Status: Potential
Classification: Transmission Infrastructure
Description: A high-capacity 330 kV interconnector between SA
and NSW, to be delivered by 2021-2022127
Output: More reliable and affordable power as well as improved
electricity security to SA, and greater integration of renewables in
the NEM.
Cost: AUD1.5bn
Financial structure: AU200m State Government + private andtrustee ownership
Potential investment pathways: ElectraNet is owned 46% by
State Grid Corporation of China, which is already a green bondOngoing developments inrenewable energy investment
opportunities
Recycling and waste-to-energy
In Australia, 23 million tonnes of urban waste
go to landfill each year. This represents
a significant opportunity for recycling or
re-purposing waste, including via wasteto-energy generation facilities. Waste-toenergy electricity production is considered
low-emissions technology when the waste
used has been sorted and does not include
plastics or metals. The CEFC estimates that
there is a AUD2.2bn - AUD3.3bn market for
waste-to-energy generation.129

issuer and will likely to continue issuing green bonds, 33% by YTLPower, which is listed on the Malaysian stock exchange, and 20%
by a fund manager128. Gaining exposure to SA-NW Interconnector
could be possible via the fund manager, equity in YTL Power, or
green bond issuance by State Grid.

Renewables to power heavy industry
According to ARENA, the mining sector
accounts for roughly 10% of Australia’s
total energy use, with less than 5% of
the mining sector’s energy coming fromrenewable energy sources.130 There is ahuge opportunity for the share of renewableenergy supply to increase, with the mining
and metals industry already investing inlarge-scale integrated renewable energy
and storage systems to reduce their energy
costs. Co-generation is also an option forthe metals industry – with the international
giant GFG Alliance planning upgrades at thesteelworks in Whyalla, SA, to capture andutilise heat output.131

Australia & New Zealand GIIO Report Climate Bonds Initiative

23

Sustainable water management
In both Australia and New Zealand, waterprojects and assets can include dams,
desalination plants and wastewater treatment
plants, components of distribution networks,
including pipes and pumping stations. They
also include projects to harvest storm waterand recycled water, mitigate floods andsupport local biodiversity. The ownership andregulation of these assets varies between
the jurisdictions and so does the urgency to
upgrade and replace aging infrastructure andrespond to the needs of a growing populationand the challenge of climate change.
In Australia and New Zealand, water
infrastructure, climate change and economic
performance are closely related. The
Millennium drought in Australia and the watercontamination incidents in New Zealandhave highlighted the need for reliable andresilient water infrastructure to withstandstressors like drought and flood conditions.
Enhanced planning processes and increased
upfront investment will be required for water
infrastructure to meet the challenges of climatechange and rapid urbanisation. Particularly as
Australia’s major cities are forecast to need
73% more than the current supply by 2050.132

AWA alternative models for financing water infrastructure133
Investment Source

Type of arrangement

Government

Banks

Investors

RAB Model
Green Bonds
PPP
Value Capture
Conessional loans
GrantsLong Term Lease

Reference case studies
Direct Structured Lease

Indirect Structured Financing
respective State treasuries. This is unlikely tochange in the medium-term.

Funding options andinvestment pathways

In New Zealand, a recent focus on the resilienceof the nation’s water infrastructure has drawn
attention to the potential for aggregation ofwater assets from council-by-council ownership
into regional business models. This would assist
with consolidating investment opportunities
across New Zealand’s water sector.

The majority of water-related infrastructure
in Australia and New Zealand continues tobe publicly owned. In Australia, the urban
and rural water corporations are owned by
the State Government and funded by the

Similar to the investment pathways for lowcarbon transport, the primary investment
pathway for sustainable water infrastructureis through green bonds issued by State
Governments (Australia) and Councils (NewCentral Interceptor

Zealand). Further investment pathways
exist in the construction, ownership andrefinancing of new types of infrastructuresuch as water desalination assets andcommercial/industrial water infrastructure.
The Australian Water Association (AWA) has
also undertaken research showing there are arange of alternative financing options available
for water infrastructure projects from a variety
of investment sources. In identifying themost appropriate arrangement, the various
considerations include: the funding source,
ownership, risks as well as the project type(greenfield or brownfield), size, age, capitalprofile, demand profile and operational control.

Long section of proposed Central
Interceptor route

Proponent: Government of New Zealand + Auckland Council
Source: Watercare, 2018

Location: Auckland, New ZealandStatus: Planned
Classification: Water infrastructure, Water Storage, Distribution
Description: The construction of a new wastewater tunnel
between Western Springs and the Mangere wastewater treatment
plant in Auckland and sewers conveying wastewater to thetunnel. The main tunnel will be approximately 13km long, situatedbetween 15 and 110 metres below the surface.134
Output: Provides additional capacity to the network toaccommodate population growth in Auckland andreduces overflows to the Waitemata and Manukau Harbours
during wet weather.
Cost: NZD1.2bn

Australia & New Zealand GIIO Report Climate Bonds Initiative

Financial structure: Local council funding
Potential investment pathways: Auckland Council will fund theinterceptor. Auckland Council released an inaugural green bondin 2018. According to the council’s green bond framework135
proceeds from future green bonds could be used to financeassets and projects for sustainable water management, andinvestors could target new green bond issuance as their premierissuance was oversubscribed.

24

Shoalhaven Water’s REMS construction image
Source: NSW Government Water, 2018

Shoalhaven Water’s Reclaimed Water
Management Scheme (REMS) – Stage 1b
Proponent: Shoalhaven City Council
Location: NSW
Status: Under construction
Classification: Water infrastructure, Water treatment,
Water recycling system
Description: Stage 1A cost AUD34m, was commissioned in 2002
and has since irrigated over 500ha of land including 14 dairy
farms, a golf course and sporting grounds, using over 20,000 ML
through the REMS, and 70% of reclaimed water produced. Stage
1b will include reclaimed water from the Nowra and Bomaderry
Wastewater treatment plants, both of which will be upgraded.136

Financial structure: Local council funding +State Government funding

Potential investment pathways: The funding arrangement was signedin the early stage of Phase 1 with NSW government and local council
funding. The NSW Government confirmed AUD10.8m funding for
REMS 1b. In 2018, the NSW Government138 will, for the first time,issue sustainability bonds, which according to announcements
could include financing for sustainable water infrastructure. The
local council is planning to absorb the project139 in its budget withincreasing CPI for future years and through bank lending. Exposure
could be possible through the NSW Government green bond, should
the project meet their sustainable program requirements.

Wyaralong Water Treatment Plant

SEQ Water – water treatment plant

Output: Reduced water use and increased water security.
Cost: AUD130m137

Proponent: QLD Government + SEQ Water
Location: QLD
Source: SEQ Water, 2018

Status: Planned
Classification: Water infrastructure, Water treatment
Description: A staged water treatment plant, located adjacent to
the Cedar Grove Weir, with an initial capacity of 30 megalitres perday. Additional stages will increase the capacity of the plant to notless than 100 megalitres per day, with construction timeframes
dependent on growth in demand.140
Output: Meet growing demand for potable water in Beaudesert
and the South Logan area and reducing the draw from the Southern
Regional Water Pipeline.
Cost: AUD50m
Financial structure: State Government funding

Ongoing developments insustainable water investment
opportunities
Improving alternative water sources
Alternative water sources can include recycledwater, desalinated water, rainwater collection,
storm-water harvesting or groundwater. They
supplement traditional water supply sources,
such as dams and reservoirs, which diversifies
the supply and improves the sustainability
and resilience of urban water supplies andincreases water security.143 This is particularly
important in drought prone Australia. In
New Zealand, this approach could allow for
more isolated rural communities to have astable and clean water supply. Desalinationis the most adopted of these technologies in

Potential investment pathways: The Queensland Government
provides the funding for SEQ Water and the Queensland
Treasury Corporation (QTC)141 is already a green bond issuer.
Its inaugural AUD750m Certified Climate Bond in 2017 wasa success and the Queensland Government intends to issue
more green bonds with allocations to sustainable water andwastewater infrastructure.142

Australia, providing 484 to 674 GL/year ofadditional water. With the potential for major
improvements to their efficiency and cost,
desalination plants present a significant future
investment opportunity.144
Promoting the water/ energy nexus
Government and industry are increasingly
thinking of innovative ways to use watersupply and energy generation together toresult in efficiencies for both. The increased
uptake of pumped-storage hydroelectricity
shows how existing water sources can beused (without being depleted) to generate
electricity. The NSW Government isinvestigating the opportunity for private
developers to make energy investments inexisting state-owned water infrastructure andAustralia & New Zealand GIIO Report Climate Bonds Initiative

resources, including 38 dams across NSW –envisioning the potential for further pumpedhydro, floating solar and other technologies,that can use WaterNSW assets.145
In a different example, desalination plants(normally high energy consumers) areusing renewable energy to reduce theiremissions whilst increasing water supply. In
South Australia, a concentrated solar power
tower plant has been developed to supply
electricity, heat and desalinated seawater togrow 15 million kg of tomatoes per year in
the Australian desert. The greenhouses at
the Sundrop tomato farm will also produce
over 450,000m3 of freshwater per year anddisplace the use of about 2 million litres ofdiesel per year.146

25

Location: WA
Status: Planned
Classification: Water infrastructure,
Water Storage, Distribution
Description: The project comprises
integrated above and below dam
infrastructure components, aimed at
reducing salinity in the Wellington Damand surrounding area. The project is a
response to the increased salinity andreduced reliability of groundwater that has
reduced the yield of fruit and vegetable
agricultural activity and abandonment ofagricultural activity in the region.149
Output: By diverting high saline inflows
upstream from Wellington Dam fordesalination the quality of water stored
in and released from the Wellington Dam
for agriculture would improve and overall
agricultural productively could increase.150

Cost: AUD349m
Financial structure: State Government +Federal Government + private funding
Potential investment pathways: Collie
Water, a private water company wasestablished to manage the MyalupWellington Water Project. The WA
Government has allocated AUD37m. The
Federal Government will provide AUD140m
in funding as well as a concessional loanof up to AUD50m, and Collie Water will
provide an estimated AUD169m to theproject. Collie Water’s contribution will befacilitated by the sale of at least 10GL per
year of desalinated potable water to Water
Corporation.151 152 Exposure to this project
could be possible should the Western
Australian Government join its east-coast
State Government counterparts in issuinggreen bonds that include funding forsustainable water management projects.

Victorian Desalination Plant

Victorian Desalination Plant
schematic

Proponent: Victorian Government +AquaSure

Melbourne and Geelong area, and thecapability to expand to 200 billion litres a year.

Location: VIC

Cost: AUD4bn

Status: Complete

Financial structure: PPP (fully funded by theprivate sector)

Classification: Water infrastructure,
Water treatment, Desalination
Description: Located in Wonthaggi,
the desalination plant includes reverse
osmosis facilities, two undergroundtunnels and an 84km water transfer
pipeline that provides desalinated wateror catchment supplies to communities
throughout Melbourne, South Gippsland
and Westernport.147 The facility has been
designed to integrate into the landscapeand reduce the amount of energy required
to draw the seawater into the plant.
Output: Capable of supplying up to 150
billion litres of water a year to the greater

Potential investment pathways: The project
was built as a PPP through the AquaSure
consortium, comprising Degrémont SA, Suez
Environnement, Thiess Pty Ltd and Macquarie
Group, in partnership with the Capital Projects
Division of the Department of Sustainability
and Environment, Victoria. Watersure
is responsible for the operations andmaintenance of the Victorian Desalination
Project through September 2039 undercontract to AquaSure. Watersure comprises
SUEZ and Ventia (formerly Thiess Services).
The bank group originally committed toseven-to ten-year funding, with the State
Government acting as the lender of last resort

Australia & New Zealand GIIO Report Climate Bonds Initiative

Source: AquaSure, 2018

Proponent: WA Government +Collie Water

Myalup-Wellington Water
Project map
Source: Collie Water, 2018

Myalup-Wellington Water Project

for an initial bank syndication process. This
was to enable AquaSure to seek additional
long-term investors for AUD1.7bn ofdebt funding, which proved successful.148
Degrémont is a specialised water treatment
subsidiary of Suez, and Suez is a listedcompany that has also issued green bonds.
Exposure to the project could be possible
via equities and through investment ingreen bond issuance.

26

Green buildings
Globally, the building sector has thelargest potential to significantly reducegreenhouse gas emissions compared toother major emitting sectors.153 Green Star
certified buildings in Australia have beenshown to produce 62% less GHG emissions
than average Australian buildings andconsume 51% less potable water thanif they had been built to meet minimum
industry requirements.154

GRESB (Global Real Estate
Sustainability Benchmark)As the global ESG benchmark forreal assets, GRESB assesses thesustainability performance of realestate and infrastructure portfolios
and assets worldwide.157 GRESB’s
annual Real Estate Assessment
evaluates performance against sevensustainability aspects and indicators. In
2017, a record 850 property companies
and real estate funds, representing
77,000 assets and over USD3.7tn invalue, completed the Assessment.
Participation increased again in2018 with 903 companies and funds
reporting their data to GRESB.158

Green building certification programs are
now institutionalised in mature real estatemarkets like Australia.155 There are currently
1,986 (August 2018). Green Star-rated
projects in Australia and 153 Green Starrated projects in New Zealand. 25,000
homes are going through Homestar, thecertification for homes in New Zealand.
GRESB 2017 results showed that theAustralian and New Zealand real estate
sectors are leading the world in sustainability
performance. The 2017 global average
GRESB score was 63 points, with Australia
and New Zealand achieving an average
GRESB Score of 73.156

Romilly Madew, CEO, Green
Building Council of Australia“Around the world, we continue to see more and more investment insustainable world-class assets. Established rating tools like Green Star
provide investors with an independent verification of performance andhelps us position our funds to meet the demands of leading investors.“ 160

Funding options and investment
pathways
Low-carbon residential and low-carbon
commercial buildings in Australia and New
Zealand are attractive to private-sector
investors. Consequently, the vast majorityof the capital required for construction,
ownership and refinancing of green buildings“GRESB can help investors understandimportant non-financial metrics thatare influencing the value of buildings
across global markets. Leading
companies understand this, which iswhy 20% more Australian companies
are now reporting to GRESB than ayear ago.“159

Josh McHutchison, Managing Director,
Investment Management, Lendleaseis provided by the private sector without
additional government guarantees.
The private sector uses a wide variety ofequity, debt and project finance structures for

New Horizons, Monash University

green building development, including funds,
green loans and green bonds. Governmentowned green buildings have also been
financed with sub-sovereign green bonds.

New Horizons Building at Monash University,
Clayton Campus
Source: Monash University, 2018

Proponent: University of Melbourne
Location: Melbourne, VIC
Status: Complete
Classification: Green Star – 6-star - Design & As Built
Description: New Horizons Building at Monash University,
Clayton Campus, is a 6-star Green Star-rated collaborative
research centre, housing around 500 staff.160 It was the second
education building in Victoria to receive this rating and the firstresearch laboratory building to do so.
Output: Reduced utility costs and reduced environmental impact.
Cost: AUD175m
Financial structure: Green bond – Certified Climate Bond. The
building was originally co-funded by the Australian Federal
Government, through the Education Investment Fund, Monash
University and the Commonwealth Scientific and Industrial
Research Organisation (CSIRO). In 2016, Monash University

Australia & New Zealand GIIO Report Climate Bonds Initiative

issued a Certified Climate Bond into the US private placement
market which included allocation of proceeds to its portfolio ofGreen Star rated buildings.161
Potential investment pathways: Monash University has justannounced its third green bond issuance.

27

Darling Quarter - Commonwealth Bank Place

Commonwealth Bank Place at Darling Quarter

Source: NSW Government, 2018

Proponent: Lendlease
Location: Sydney, NSW
Status: Complete
Classification: Green Star – 6-star - Design & As Built
Description: Commonwealth Bank Place was awarded all fourGreen Star ratings: 6-star Green Star Design rating, 6-star GreenStar As Built rating, 6-star Green Star Performance rating anda 6 star Green Star - Office Interiors rating and is the home to
the Commonwealth Bank offices in Sydney.162 It consists of two
office towers located in Darling Quarter, which is a community
precinct featuring office buildings, retail and green spaces, aswell as eateries. The office building features chilled beam airconditioning technology including a single pass fresh air system
and a 100kL rainwater harvesting tank.163 The building is leased to
the Commonwealth Bank. It was acquired by investors AustralianPrime Property Fund Commercial (APPF Commercial) and First
State Super (FSS).

Cost: AUD500m

Output: The building generates 50% less GHG emissions thanan average commercial office building and consumes 80% lessdrinking water.164

Developer profile: The building was developed by Lendlease, which
is a listed company and a bond issuer. Lendlease have received 100
Green Star certifications on buildings they have developed.

1 William Street

1 William Street building

Financial structure: The Darling Quarter precinct was delivered
through a PPP and NSW Government funding.
Potential investment pathways: Exposure to Lendlease can betargeted as a possible green bond refinancing or investment in
Lendlease’s green building portfolio.

Proponent: Cbus Property Pty Ltd
Location: Brisbane, QLD
Source: Cbus, 2018

Status: Complete
Classification: Green Star – 6-star - Design & As Built
Description: An office tower housing the Queensland Government
and public service and comprising a 43 story A-grade commercial
building with premium services, providing approx. 75,000m2 net
lettable area, including 1,100m2 of retail and 318 car spaces. It has
achieved a 5-star Green Star - Office Design rating and a 6-star
Green Star Office - As Built rating and a 5-star NABERS Energy
rating. Some of its features include natural lighting, a sky garden
and open, collaborative work space.165
Output: Reduction in energy costs to government occupants,
freeing up CBD real estate by housing 500 public servants andreducing emissions.
Cost: Est. AUD870m
Financial structure: The Treasury Commercial group managed
the 1 William Street procurement process, securing 100% private
funding for the project and providing oversight of project delivery.
Cbus Property financed and developed the property, partneringwith Brookfield Multiplex, and ISPT Super Property acquired 50%
ownership of the development.166

Australia & New Zealand GIIO Report Climate Bonds Initiative

Potential investment pathways: Becoming a member of the fund,or potential refinancing.
Developer profile: Since achieving its first Green Star rating in
2008, Cbus Property167 has developed 14 Green Star projects
amounting to 400,000m2 of commercial space – with several more
projects registered for certification.168 Cbus Property is the property
development and investment arm of the Construction and Building
Industry Superannuation Fund, which has 720,000 members andmore than AUD32bn in funds under management.

28

Festival Plaza Commercial
Development rendering

Proponent: Walker Group Holdings Pty
LtdFinancial structure: State Government(AUD180m), Private funding (AUD430m)

Location: Adelaide,SA

Potential investment pathways: Potentialrefinancing on completion

Status: Under construction
Classification: Green Star - Registered
Description: A large-scale mixed-use
commercial (office towers with 40,000m2
aiming for a 6-sar Green Star rating) andretail development with public space169 .
Output: Reduced utility costs, reduced
environmental impact and increased
connectivity as well as providing aspace in the city centre for culture andentertainment.
Cost: Est. AUD1bn

Source: Walker Corporation, 2018.

Festival Plaza Commercial
Development

Developer profile: The Walker Corporationis Australia’s largest private, diversified
development company, with a commitment
to achieving a minimum 5-star Green Star– As Built standard on all commercial andretail projects, if not the maximum 6 GreenStar rating.170 It has already benefited fromtwo green bonds issuances by banks. In early
2015, the company’s Tower 4D in Collins
Square was part of ANZ’s AUD600m green
bond issuance, and, in 2016, Tower 4B
Trust building in Collins Street was part ofWestpac’s AUD500m climate bond.

Commercial Bay Tower

Commercial Bay Tower map with accessibility
overlay
Source: Greater Auckland, 2015

Proponent: Precinct Properties Downtown Ltd
Location: Auckland, New ZealandStatus: Under construction
Classification: Green Star - Registered (office space only)
Description: Retail and office space for housing a working
population of 10,000 people being built on the Auckland
waterfront. Includes a 39-level office tower, the PwC Tower,
opening in 2019. It is also a public transport hub with public spaces
and hospitality environments.171
Output: Reduced utility costs, reduced environmental impact andincreased connectivity.
Cost: NZD850m
Financial structure: Bank loan and facilities + USPP and retail bondOngoing developments in green
buildings investment opportunities
Greening hospitals
Green hospital buildings deliver healthoutcomes for patients, staff and theenvironment. International studies collatedby the World Green Building Council haveconfirmed that green healthcare facilities
provide better patient care and reduce
the length of stay required in hospital.
Specifically, green design has been foundto deliver 8.5% reduction in hospital stays,
15% faster recovery, 22% reduction in needfor pain medication and 11% reduction insecondary infections.172 Some of Australia’sand New Zealand’s health facilities are
already Green Star certified or are registeredfor certification.

Potential investment pathways: This project appears to be solely
funded with Precinct Properties debt. Exposure can be gained byinvesting in equity or the retail bond or private placement arrangements.
Property profile: Precinct Properties have received several GreenStar as well as NABERSNZ certifications for their projects.

There is an opportunity for all new medical
facilities to be designed and built, and forexisting facilities to be retrofitted to be greener.
Projects already planned by national and state
governments in Australia and New Zealandthat could make the necessary design changes
and register for certification under Green Star,
include: Caboolture Hospital Expansion Stage 1(QLD); Logan Hospital Expansion (QLD); Ipswich
Hospital Redevelopment (QLD); Toowoomba
Hospital Redevelopment (QLD); Princess
Alexandra Hospital Rehabilitation Facility (QLD);
Victorian Comprehensive Cancer Centre (VIC),
New Royal Adelaide Hospital (SA); Canberra
Hospital expansion – Spire (ACT); and, Nelson
Hospital Redevelopment (NZ).
Greening public buildings
All government and public buildings should

Australia & New Zealand GIIO Report Climate Bonds Initiative

be green so as to ensure energy savings.
Libraries, courthouses, sporting facilities,
museums, public housing, universities, andperforming arts venues all present excellent
opportunities for green buildings.
Projects already planned by national andstate governments in Australia and New
Zealand that could make design changes andregister for certification under Green Star,
include: New Museum in Western Sydney(NSW), Social and Affordable Housing PPP
project in NSW (Phases 1 & 2) (NSW),
New Performing Arts Venue (QLD), Courts
Precinct (SA), Riverbank Entertainment
Precinct (SA), Hobart Science and Technology
Precinct (TAS), University of Tasmania student
accommodation (TAS), ACT Law Courts(ACT), Christchurch Multi-Use Arena (NZ).

29

Sample green pipeline
SectorProject name

Proponent

Location

StatusClassification

Low-carbon
transport

Inland Rail

AustralianGovernment/ ARTC

VIC toQLD

PlannedFreight rail, Infrastructure

Sydney Light RailNSW Government

NSW

Under construction

Public Passenger Transport,
Rail, Infrastructure

Sydney Metro Northwest

NSW Government

NSW

Under construction

Public Passenger Transport,
Rail, Infrastructure

Melbourne Metro RailVIC Government/
Melbourne Metro Rail
Authority

VIC

Under construction

Public Passenger Transport,
Rail, Infrastructure

Brisbane Metro

QLD Government/
Brisbane City Council

QLD

PlannedPublic Passenger Transport,
Bus, InfrastructureGold Coast Light Rail - Stage
PlannedCity of Gold Coast

QLD

Complete

Public Passenger Transport,
Rail, Infrastructure

Central Eyre Iron Project(CEIP) infrastructure - rail

Iron Road Limited

SA

PlannedFreight rail, Infrastructure

Canberra Light Rail – Stage 1

ACT Government

ACT

Under construction

Public Passenger Transport,
Rail, Infrastructure

Auckland Electric Trains

Auckland Transport /Auckland Council

New
Zealand

Under construction

Public Passenger Transport,
Rail, Rolling stock

City Rail Link
- Stations and Tunnels- Western Line at Mt Eden
StationGovernment of New
ZealandNew
Zealand

Under construction

Public Passenger Transport,
Rail, Infrastructure

SA - NSW Interconnector

Electranet

SA to
NSW

Potential

Transmission Infrastructure

Snowy 2.0

Snowy Hydro Ltd

NSW

PlannedHydropower, Generation
facilities, Pumped Storage

Dundonnell

Tilt Renewables

VIC

Under construction

Wind, Generation facilities

Coopers Gap Wind Farm

PARF Company 10 Pty
Ltd, trustee for Coopers
Gap Project Trust

QLD

Under construction

Wind, Generation facilities

Sun Metals solar farm

Sun Metals
Corporation Pty Ltd

QLD

Complete

Solar, Generation
facilities

Kidston Solar Project –Phases 1 + 2

Genex Power Limited

QLD

Phase 1 Complete,
Phase 2 Planned

Solar, Generation facilities

Eastern Creek Energy from
Waste Facility

Next Generation NSW

NSW

Planned

Bioenergy, Generation
facilities

North Qld Bio-Energy Plant

North Queensland
Bio-Energy
Corporation Limited

QLD

Planned/ Under
construction

Bioenergy, Generation
facilities

Cape York Solar Storage

Lyon Solar

QLD

PlannedStorage, Large scale energy
storage

Te Mihi Geothermal power
plant

Contact Energy

New
ZealandComplete

Geothermal, Generation
facilities

Te Ahi O Maui (Kawerau)

Eastland GroupNew
Zealand

Under construction

Geothermal, Generation
facilities

RenewableenergyAustralia & New Zealand GIIO Report Climate Bonds Initiative

30

Sector

Project name

Proponent

Location

StatusClassification

Sustainablewater
management

Shoalhaven Water’s Reclaimed
Water Management Scheme(REMS)

Shoalhaven City
Council

NSW

Under construction

Water infrastructure, Water
treatment, Water recycling
system

Hawkesbury-Nepean Valley
flood management

NSW Government

NSW

PlannedWater infrastructure, Flooddefences

Victorian Desalination Plant

VIC Government

VIC

Complete

Water infrastructure, Water
treatment, Desalination

Wedderburn, Werribee andBacchus Marsh irrigation
upgradesVIC Government

VIC

PlannedWater infrastructure, Water
Storage, Distribution

Wyaralong Water Treatment
Plant

QLD Government +SEQ Water

QLD

PlannedWater infrastructure, Water
treatment

Perth Seawater Desalination
Plant

Water Corporation
of WA

WA

Complete

Water infrastructure, Water
treatment, Desalination

Myalup–Wellington Water
Project

WA Government +Collie Water

WA

PlannedWater infrastructure, Water
Storage, Distribution

Alice Springs Flood Mitigation
initiatives

NT GovernmentNT

Under construction

Water infrastructure, Flooddefences

Huia Water Treatment Plant
Replacement

Government of New
ZealandNew
ZealandPlannedWater infrastructure, Water
treatment

Central Interceptor

Government of New
Zealand/ Auckland
CouncilNew
ZealandPlannedWater infrastructure, Water
Storage, Distribution

Darling Quarter (formerly
Darling Walk)

Lendlease

NSW

Complete

6-star Green Star - Design& As Built

Australian Technology Park Building 1 + 2

MirvacNSW

Planned/ Under
construction

Green Star - Registered

Council House 2

City of Melbourne

VIC

Complete

6-star Green Star - Design& As Built

New Horizons

Monash University

VIC

Complete

6-star Green Star - Design& As Built

1 William Street

Cbus Property Pty Ltd

QLD

Complete

6-star Green Star - Design& As Built

Brisbane Square Stage 2

Charter Hall Holdings
Pty Ltd

QLD

Planned/ Under
construction

Green Star - Registered

Festival Plaza Commercial
Development

Walker Group
Holdings Pty Ltd

SA

Under construction

Green Star - Registered

The Hedberg + University of
Tasmania, West Park Campus– Stage 2

University of Tasmania

TAS

Planned/ Under
construction

Green Star - Registered

Christchurch Civic Building

Ngai Tahu Property

New
ZealandComplete

6-star Green Star - Office
Design, Built & Interiors

Commercial Bay Tower

Precinct Properties
Downtown Limited

New
Zealand

Under construction

Green Star - RegisteredGreenbuildings

A more extensive list of the infrastructure
project pipelines in Australia and New
Zealand is available on the Climate Bonds
Initiative website.

Australia & New Zealand GIIO Report Climate Bonds Initiative

31

Green investment opportunities are growing
There is an infrastructure construction boom
underway in Australia and New Zealanddriven by ambitious infrastructure andenergy development plans. Since the signingof the Paris Agreement, there has been
an increasing demand from institutional
investors for investment opportunities that
address environmental challenges andsupport sustainable development.

Existing funding allocations and traditional
financing methods will not, however,adequately provide for this green
pipeline. The Australian and New Zealandgovernments are developing policy
interventions to attract further private
investment to public sector infrastructure
projects, but they must urgently increase
their efforts.

Green infrastructure development in Australia
and New Zealand presents a range of attractive
green investment opportunities which provide
unique risk-adjusted returns. In both countries,
there is an increasing number of low-carbon
transport, renewable energy, sustainable water
infrastructure and green building projects
in the pipeline. This report identifies over
400 projects and assets that could qualify
for refinancing, additional financing, or new
financing in the near- to long-term.

There are growing opportunities tomobilise private capital to support green
infrastructure by investing in debt,
funds, equity-linked products and listedcompanies. Growing interest in green
finance has resulted in the development
and growth of dedicated green financial
products including green bonds, green
loans, social and sustainable bonds,
green infrastructure investment trusts
and green index products.

Most Australian and New Zealand green bondissues have been certified under the Climate
Bonds Standard, reflecting a strong leadershipin setting international best practice. However,the ‘green’ label is not as widely applied toinfrastructure as it could be.
With the increasing urgency to respond to thechallenges of climate change, governments,
the financial sector and industry need toincrease their emphasis on policies andprovision of low-emission, sustainable andresilient green infrastructure. The transition
from polluting brown infrastructure to cleaner
and greener assets needs to gain momentum
with widespread support. This will ultimately
help the Australian and New Zealandgovernments to reach their climate targets,spur innovation, broaden the economic base,and promote more sustainable economic andsocial well-being.

SectorDefinition

Context

FinancingLow-carbon
transport

Low-carbon transport includes
transportation modes and ancillary
infrastructure that produce low or zero
direct carbon emissions. For example,
national and urban passenger rail andfreight rail networks; Bus Rapid Transit(BRT) systems; electric vehicles; and,bicycle transport systems.

Capital mobilisation for low-carbon
transport continues to target the useof energy-efficient transportationand the development of low-carbon
transport projects that reducecarbon emissions.

A variety of funding structures
are available to encourage private
sector involvement in the long-term
financing required for such projects
including green bonds, outright asset
acquisitions, public private partnerships
and the securitisation of green assets.

RenewableenergyRenewable energy includes energy
generation, transmission and storage
technology that has low or zero carbon
emissions. This can include solar energy,
wind energy, bioenergy, hydropower,
geothermal energy, marine energy or
any other renewable energy source.

Both countries continue to lag behind
other OECD member countries in
GDP per capita investment in green
energy. This trend is set to change,
with 2017 a milestone year for
renewable energy investment anddevelopment in both countries.

Renewable energy project developers
and asset owners in Australia and
New Zealand have access to a wide
variety of funding options frombanks, specialised project financiers,
debt clubs, investment funds, direct
investors and the capital markets.

Sustainablewater
management

Sustainable water management includes
investments that reduce greenhouse gas
emissions (water management is a major
consumer of energy), address adaptationand increase the resilience of surrounding
environments. This can include: water
capture and collection, water storage,
water treatment (with methane emissions
treatment), flood defence, drought
defence, stormwater management, andecological restoration/management.

Climate change is leading tosignificant changes in rainfall
distribution and water availability.
Enhanced planning processes andincreased upfront investment are
required for water infrastructure inAustralia and New Zealand to meetthe challenges of climate change
and rapid urbanisation.

Similar to the investment pathways for
low-carbon transport, sustainable water
infrastructure can be funded with green
bonds issued by State Governments inAustralia and Councils in New Zealand.
Investment in the construction,
ownership and refinancing of new
types of infrastructure such as water
desalination assets, commercial andindustrial water infrastructure provide
further options for investors.

Greenbuildings

To achieve global emission reductions
under the Paris Agreement the built
environment needs to see major
reductions in emissions. Green buildings
can be commercial or residential, newor upgraded. Low-carbon emissions
performance is demonstrated throughan accepted rating process, for example,
Green Star certification.

The Australian and New Zealandproperty sectors are leading the worldin sustainability performance. GreenStar certified buildings in Australia havebeen shown to produce 62% less GHG
emissions than average Australianbuildings and consume 51% less potablewater than if they had been built tomeet minimum industry requirements.

Low-carbon residential and commercial
buildings are an established asset classfor private-sector investors. All typesof financing instruments are used.
Government owned green buildings
have been financed with sub-sovereign
green bonds. Funds have also beenraised for energy efficiency upgrades.

Australia & New Zealand GIIO Report Climate Bonds Initiative32

Annex 1: Climate Bonds Taxonomy and Criteria
The Climate Bonds Taxonomy provides
broad guidance for prospective green bondand climate bond issuers and investors.
Guided by the Climate Science Advisory

Panel, the aim of the Taxonomy is toencourage common definitions across global
markets, in a way that supports the growthof a cohesive thematic bond market.
LAND USE &MARINERESOURCES

TRANSPORT

WATER

Solar

Private transport

Water monitoring

Residential

Agriculture

Cementproduction

Preparation

Broadband
networks

Wind

Public passenger
transport

Water storage

Commercial

Commercial
Forestry

Steel, iron &aluminium
production

Reuse

Telecommuting
software andservice

Geothermal

Freight rail

Water treatment

Products &systems for
efficiency

Ecosystem
conservation &restoration

Glass
production

Recycling

Data hubs

Bioenergy

Aviation

Water distribution

Urban
development

Fisheries &aquaculture

Chemicalproduction

BiologicaltreatmentPowermanagement

Hydropower

Water-borne

Flood defence

Supply chain
management

Fuel production

Waste to energy

ENERGY

BUILDINGS

INDUSTRYWASTE

Nature-based
solutions

MarineRenewables

ICT

Landfill

Certification Criteria approved

Transmission &distribution

Radioactive waste
management

Criteria under development
Due to commence

StorageCan be certified now

Criteria in development
MA

A

RINE

ROPOW

OE
BI

TWGs launching soon

Y

C
RE

CO

MM

E RCI

PO S A

IT

L

M

MU

N I C AT

IO

AL

FO

R E S T RYGR

I C U LT U R

E

FIS

HERIE

S

E
CEM NTSTEEL

TU

R I NG & P R

OCESS IN G

Australia & New Zealand GIIO Report Climate Bonds Initiative

A

C

A

Industry

SID ENTI

DIS

NS

Utilities

ING & RE

P

SE

RE

L

NaturalResources Buildings

CL

TRANS

U

Y

ER

CO

S

WA

T

W AT E R

T

RT

SI

BU

A P ID T R A

O

/R

N

Transport

HICLESN
MENT

VE

N & MA

GE

RAIL

O
TI

A

E

NERG

R

H

YD

Energy

THERM

L

G

EO

M AN U F A

SOLARDISTRIBU

WIND

33

Annex 2: Green debt instruments
Debt instruments

Use of proceeds

RatingAustralian and New Zealand example

Supra-nationals
and sovereigns

Proceeds are allocated tonominated projects andassets.

Debt securities carry the credit
rating of the issuing State. However,an independent rating may be
assigned by ratings agencies.

No sovereign green bonds issued yet from
Australia or New Zealand.

Green statetreasury andmunicipal bonds(sub-sovereign
green bonds)

Proceeds are allocatedto nominated projects
and assets within thesponsoring region.

Credit rating is based on that of
the issuing municipality and thecredit quality of the underlying
assets.

Queensland Treasury Corporation issued
a AUD750m 7-year green bond in 2017 torefinance solar energy, rail and cycle ways.
Treasury Corporation of Victoria issued a
AUD300m 5-year bond in 2016 for wind,solar, transport, buildings upgrades and water
infrastructure.
Auckland Council issued a NZD200m 5-yearbond in 2018 to finance electrified railway
infrastructure.

General obligation
green bondProceeds are allocatedon nominated projects
and assets.

As the green bonds are backed
by balance sheet assets, the bondwill carry the credit rating of theissuing entity.

ANZ issued a AUD600m 5-year bond in 2015
to fund low carbon buildings, wind and solar.

Green revenue
bond

Proceeds are allocatedon nominated projects
and assets.

As the green bonds are backed
at least partially by the revenue
stream, bonds carry the credit
rating of the issuing entity.

No specific green revenue bonds have been
issued yet but Auckland Council’s NZD200m
obligation bond is secured on expected rates
revenue collection of the council.

Green
securitisation or
green tranches
in ABS and MBS
deals

Proceeds are allocatedon nominated projects
and assets.

Debt securities backed by a pool ofunderlying assets; an independent
credit rating is issued by a rating
agency.

FlexiGroup has done three ABS deals withgreen tranches, mostly senior (Class A) for therefinancing of solar rooftops but in its 2018
deal it placed a B note too. NAB provides an
RMBS example.
Global examples of green securitisations
include Obvion’s three Green Storm RMBS.

Green structured
finance

Proceeds are allocatedon nominated projects
and assets.

Debt securities backed by a pool ofunderlying assets; an independent
credit rating is issued by a rating
agency.

National Australia Bank placed AUD200m
of secured notes for the refinancing of windand solar assets in June 2018. The structure
is backed by loans to Australian renewableenergy developers.

Green projectbond

Proceeds are allocatedon nominated projects
and assets.

Credit rating is based on thequality of the backing green assets
and the returns stream of theunderlying project.

No green project bonds issued yet.

Green loans,
syndicated loans
and credit lines

Provides lending toencourage market
development in climatealigned sectors inline with the Climate
Bonds Taxonomy andin compliance with theGreen Loan Principles.

Interest rates are based onborrower credit scores or an ESG
score assigned by an ESG rating
agency.

Macquarie Group has issued a green revolver
and a green green term loan.

Proceeds are allocatedon nominated projects
and assets.

Hybrid capital investments, fromdevelopment banks seeking tosupport private investment in thesenior debt or from investors witha higher risk appetite.

Mezzanine andsubordinated debt

Contact Energy’s green debt includes a varietyof credit facilities.
Syndication deals currently underway for windand solar construction could be labelled green(currently not).

Australia & New Zealand GIIO Report Climate Bonds Initiative

Mezzanine finance facility of EUR245m
provided by AMP Capital to Neoen arenewable-energy provider.

34

Annex 3: Green equity instruments
Equity instruments

Use of proceeds

Structure

Australian and New Zealand example

Private equity buyout,
venture capital andunlisted equity funds

Fund allocations toinnovative pilot-scale
green projects includingfor qualified green
infrastructure.

Aid project developers andentrepreneurs to secure afunding stream for green
projects. PE often incorporates
green indicators into process.

The Clean Energy Innovation Fund in April of2017 invested AUD5m in Zen Ecosystems’series-B funding round.

Public equity

Allocations towards
mature green
technologies such as
solar, wind energy
and particularly
infrastructure.

Primarily stock including
green-bond linked products
and pureplay investments.
Additional capital in the form ofgovernment expenditure.

Last November, New Energy Solar raised in
its initial public offering AUD200m.

YieldCos

Use of proceeds to funda portfolio of off-balance
sheet green certified
energy projects.

Publicly traded vehicle
consisting of pools of long-term
cash-generating green assets,
often with tax advantages.

Limited activity in Australia or New Zealand.

Mezzanine andpreferred stock (GreenB-shares)

Hybrid financing typicallyfrom development banks
and international financeinstitutions supported bysubordination of equity
tranches.

Capital market investments in a
hybrid debt-equity tranche.

AMP Capital’s GBP37m mezzanine
investment stake in a GBP247m refinancingof UK solar parks.173 174

Senior equity tranches

Purchase of equity stakes
in projects of strategicsocial and environmental
importance.

Structured senior investment
grade equity tranches geared
towards risk-averse investors.

The CEFC committed AUD100m to an
agricultural fund of Macquarie Infrastructure andReal Assets, targeting improved on-farm energy
efficiency and reduced carbon emissions.

Junior equity tranches
and equity guarantees(Green C-shares)

Junior subordinatedequity tranche, frominvestors or grantagencies, often to serve
as catalytic capital.

Fully subordinated first-loss
capital or in the case of publiccompanies, common stock.

The CEFC uses these instruments.

Australia & New Zealand GIIO Report Climate Bonds Initiative35

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Australia & New Zealand GIIO Report Climate Bonds Initiative

21 Duran, P. 2018. Australia green bond market
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ashx?la=en36

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58 Infrastructure Australia. 2018.
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59 ANZ. 2017. Australian Major
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news/industries/banking/principles-coregroupannouncement/

66 International Forum of Sovereign WealthFunds. 2018. One Planet SWF Working Group
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72 The Green Loan Principles were recently
released, which are voluntary guidelines for loansthat finance or re-finance new and/ or existingeligible Green Projects - providing a benchmark for
the wholesale green loan market (LMA & APLMA,2018).
73 International Climate Markets Association(ICMA). 2018. Green Bond Principles. Retrieved
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74 https://www.climatebonds.net/2018/06/
green-bonds-bridge-sdgs-focussdg-6-7-9-11-13-15
75 United Nations. 2018. Goal 9: Sustainable
Development Knowledge Platform. Retrieved fromhttps://sustainabledevelopment.un.org/sdg976 Further reading on the role of green
bonds in achieving the SDGs, visit the Climate
Bonds website at: https://www.climatebonds.
net/2018/06/green-bonds-bridge-sdgs-focussdg-6-7-9-11-13-15
77 ANZ. 2018. ANZ Prices first €750m SDG
Bond. Retrieved from https://institutional.anz.
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78 https://capital.nab.com.au/docs/NAB_SDG_
Green_Bond_Framework.pdf
79 CEFC. 2018. CEFC and IFM Investors work
together to cut carbon emissions in infrastructure
assets. Retrieved from https://reneweconomy.
com.au/cefc-ifm-investors-work-together-cutcarbon-emissions-infrastructure-assets-39566/
80 ISCA. 2018. Infrastructure Sustainability
Rating System. Retrieved from http://www.isca.
org.au/is_ratings
81 NZGBC. 2018. Homestar. Retrieved fromhttps://www.nzgbc.org.nz/homestar
82 UNEP Finance Initiative. 2018. 26 UNEP FI
Banking members working together to redefine
how the banking industry delivers a sustainable
future. Retrieved from http://www.unepfi.org/
news/industries/banking/principles-coregroupannouncement/
83 ISCA. 2018. Infrastructure Sustainability
Rating System. Retrieved from http://www.isca.
org.au/is_ratings
84 Homestar is a national rating system for thehealth and sustainability of new homes in New
Zealand. It covers energy, health and comfort,water efficiency, adaptation to climate change,
construction waste, surface water run-off andother areas.
Homestar assesses a house, apartment or multiunit development. A home is rated on a scale from
6 to 10. A 10 Homestar rating means you’ve built aworld leading house. Owned and operated by the
New Zealand Green Building Council Homestar
is now being used by Government, developers,
retirement home providers, home builders’ andothers. Source: NZGBC. 2018. Homestar. Retrieved
from https://www.nzgbc.org.nz/homestar
85 AGBC. 2018. Green Star. Retrieved fromhttps://new.gbca.org.au/green-star/ + NZGBC.
2018. Green Star. Retrieved from https://www.
nzgbc.org.nz/greenstar
86 https://www.drawdown.org/solutions/electricity-generation/geothermal
87 https://unfccc.int/news/clean-energytransition-needs-to-accelerate
88 https://www.iea.org/topics/renewables/hydropower/
89 https://unfccc.int/news/railway-sector-ontrack-to-acheive-low-carbon-goals
90 https://unfccc.int/news/world-needs-tomanage-water-more-sustainably
91 https://www.greenbiz.com/article/how-parisagreement-sparked-green-building-progress
92 This does not mean that these projects are
eligible for certification by CBI.

Australia & New Zealand GIIO Report Climate Bonds Initiative

93 QLD Government. 2018. Electric Super
Highway. Retrieved from https://www.qld.gov.au/transport/projects/electricvehicles/super-highway
94 PwC. 2018. Assessing Global Transport
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au/publications/assessing-global-transportinfrastructure-market-australian-outlook-2025.
html
95 Transport Canberra. (2018). City to Woden Stage Two. Retrieved from https://www.transport.
act.gov.au/light-rail-network/city-to-wodenstage-two
96 VIC Government. 2018. Metro Tunnel.
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97 Railway Technology. 2018. Melbourne Metro
Rail Project. Retrieved from https://www.railwaytechnology.com/projects/melbourne-metro-railproject/
98 Auckland Transport. 2017. Electric trains.
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99 Auckland Council. 2018. Detailed
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Capacity – June 2017. Retrieved from http://
infocouncil.aucklandcouncil.govt.nz/
Open/2017/07/FIN_20170726_AGN_6798_
AT_files/FIN_20170726_AGN_6798_AT_
Attachment_54591_1.PDF
100 Maude, S. (2018). Auckland’s battery
trains side-lined for $133m electric train deal.
Retrieved from https://www.stuff.co.nz/
auckland/98658251/Aucklands-battery-trainssidelined-for-133m-electric-train-deal
101 National Business Review. 2011. Auckland
to get 57 new trains – in 2013. Retrieved fromhttps://www.nbr.co.nz/article/auckland-get-57new-trains-%E2%80%93-2013-cw-99877
102 Our Auckland. 2018. Auckland Council toopen Green Bond offer. Retrieved from http://ourauckland.aucklandcouncil.govt.nz/articles/
news/2018/6/auckland-council-to-open-greenbond-offer/
103 Brisbane City Council. 2018. Brisbane Metro.
Retrieved from https://www.brisbane.qld.gov.
au/traffic-transport/public-transport/brisbanemetro
104 Queensland Treasury Corporation. 2018.
Green Bond Report 2018. Retrieved from https://
www.qtc.com.au/wp-content/uploads/2018/05/
QTC-Green-Bond-Report-May-2018.pdf
105 Queensland Treasury Corporation. 2018.
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Partners
IFM Investors, the Investor
Group on Climate Change,
the Principles for Responsible
Investment, RIAA

Contributors
Australian Water Association,
Green Building Council ofAustralia, GRESB and New
Zealand Green Building Council.

Acknowledgements
AGL, Auckland Council, Contact Energy, Department of State
Development, Manufacturing, Infrastructure and Panning(Queensland Government), Infrastructure Partnerships Australia,
Infrastructure Sustainability Council of Australia.

Media Partner
KangaNews

Lead author:
Kristiane Davidson

Co-authors:
Rob Fowler, Kingsley Kwadwo Oteng-Amoako,
Laurent Buzenet Drogba, Andrew Whiley, Cymroan Vikas.

Design:Godfrey Design

Electronic version
The electronic version of this report and related information, including a list of infrastructure projects in Australia and New Zealand, can be
retrieved from https://www.climatebonds.net/resources/reports/green-infrastructure-investment-opportunities-australia-and-new-zealand#© Climate Bonds Initiative, August 2018
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financialorganisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility forcontent on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within
this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certification under the Climate Bond Standard only reflects
the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A
decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties onbehalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Australia & New Zealand GIIO Report Climate Bonds Initiative38

Sponsors

ANZ is a leading sustainable financing
bank, helping clients to transition toa low-carbon economy backed by an
unparalleled international network
among its peers. The bank operates
in 34 markets globally, including 29 in
the Asia Pacific. We have funded andfacilitated AUD8.3bn in low-carbon
and sustainable solutions since 2015
including renewable energy, green
bonds, green buildings and lowemissions transport. We have led
over USD7bn-equivalent of Green,
Social and Sustainability bonds acrossAustralia, Asia and New Zealand since2015. Recent highlights include New
Zealand’s first domestic green bondfor Auckland Council in June 2018,
the International Finance Corp’s firstsocial bond in Australia in March2018 as well as ANZ’s February 2018
benchmark SDG Bond, the second SDG
corporate bond issue globally.

Macquarie Group is a diversified
financial group providing clientswith asset management and finance,banking, advisory and risk and capitalsolutions across debt, equity, energy
and commodities. Macquarie iscommitted to supporting the growthof the global green economy. As oneof the world’s largest investors in
renewable energy, we have invested or
arranged over AUD20bn of capital into
renewable projects globally since 2010.
Macquarie Capital is a leading equity
investor, participant and sponsor in
the development and construction of
global renewable energy infrastructure
assets. From battery storage in
California and biomass-fuelled powerin the UK, to solar in Japan, wind inAustralia and waste-to-energy in
Asia, we’re delivering some of thelargest and most innovative renewableprojects globally. The ideas, capital andexpertise of Macquarie and its Green
Investment Group are powering green
opportunities across Asia Pacific andaround the world.

The CEFC is responsible for investing
AUD10bn in clean energy projects onbehalf of the Australian Government. Our
goal is to help lower Australia’s carbon
emissions by investing in renewable energy,
energy efficiency and low emissions
technologies. We also support innovative
start-up companies through the Clean Energy
Innovation Fund. Across our portfolio, wedeliver a positive return to taxpayers. The
CEFC has been a major investor in climate

bonds in Australia supporting the growth ofthe market. Climate bonds have enormous
potential to unlock new finance to support
increased investment across the clean energy
sector. The CEFC is working with issuers todemonstrate the investment potential ofAustralia’s emerging climate bond market.

At Commonwealth Bank of Australia
we recognise our role in supporting
long-term investment in low-carbon
and renewable infrastructure and inaccelerating the growth of climate bondsin Australia. In FY17 we arranged AUD
1.02 billion of climate bonds including
Australia’s first green asset-backed
securitisation and the world’s firstclimate bond from a tertiary education
institution. We led more than AUD 2
billion of green and sustainability notes
in FY18 for clients across the globe, one
transaction being China Development
Bank’s inaugural offshore green bond.

Our Energy Efficient Equipment Financeprogram continues to help businesses
fund energy efficient vehicles, equipment
and projects and in FY18 our lending
exposure to the renewable energy
sector grew to AUD 3.7 billion. In
January 2018, the Global 100 Index
named Commonwealth Bank the mostsustainable business in Australia for thethird consecutive year.

Established 160 years ago, NAB today
serves 9 million customers in Australia, New
Zealand, and around the world, including
in our key trading and investment marketsof Asia, UK and USA. We recognise thatclimate change is a significant risk anda major challenge for the global economy,and for society. As a global provider offinancial products and services, we seek toplay a key role in financing the transition
to a low-carbon economy, and to innovate

Westpac is Australia’s first bank and oldest
company, serving over 13 million customers.
We have a long history of sustainability
leadership, having been ranked as theworld’s most sustainable bank in the Dow
Jones Sustainability Index ten times since
the Index was first established in 1999. 2018
marks a decade since we released our firstclimate change position statement. Westpac
has a long-term lending target of AUD25bn
to climate change solutions by 2030 – a signof our commitment to help businesses andindividual customers respond to climatechange. We have lent more than AUD8.5bn(total committed exposure) to climatechange solutions, as at 1H18. Over the past

Australia & New Zealand GIIO Report Climate Bonds Initiativeacross all of our key sectors and markets to
support low-carbon opportunities for ourcustomers. NAB has been at the forefrontof the green, social, and sustainability
bond markets in Australia since 2011,
recognised as both a ‘Green Bond Pioneer’and ‘Australian Sustainability Debt Houseof the Year’. In 2017, NAB committed toincreasing environmental financing forcustomers from AUD18bn by 2022 to
AUD55bn by 2025. Our goal is to makea positive and lasting impact on the livesof our customers, people, shareholders,
communities, and our environment.

two years, Westpac has provided committed
funding supporting over AUD4.5bn ofcapital investment in Australian renewableenergy projects with a total generation
capacity in excess of 2.5GW which, whencomplete, will generate sufficient electricity
to power over 1.4 million homes. Renewables
now represent over 70% of our lending to
the electricity generation sector. We havealso played a prominent role in developing
the AUD green bond market sincefacilitating its opening with World Bank’s
2014 green issue.

39

“Westpac recognisesthat climate change is an
economic issue as well as anenvironmental issue, and banks
have an important role to playin assisting the Australianand New Zealand economies’
transition to net zero emissions.
Increasing green bonds, green
loans and green underwriting
is a vital part of the mix, as issupporting new issuers to cometo market.”
Lyn Cobley, Chief Executive,
Westpac Institutional Bank

“There is increasing focus
in the infrastructure
investment community on
the opportunities that green
investment brings. Acrossrenewable energy, sustainabletransport, green buildings
and sustainable communities;
financial investors, corporates
and governments are all
looking for ways to facilitate
and participate in the transition
to a low-carbon economy.”
John Pickhaver, Co-Head of
Macquarie Capital, Australia
and New Zealand, Macquarie
Group“With record levels of transport infrastructure investment, it is often
overlooked, the importance of the role this new infrastructure plays
in reducing emissions and creating a more sustainable environment.
Commonwealth Bank recognises this and is proud of its record in
financing modern, future-proofed, transport infrastructure that
promotes energy efficiency at its very core. Green bonds, working
alongside traditional forms of finance, will ensure the continued
funding of energy efficient infrastructure.”
Andrew Hinchliff, Group Executive, Institutional Banking andMarkets, Commonwealth Bank of Australia“The Australian and New
Zealand green bond markets
are representative of global
best practice. The markets
are underpinned by adiversity of issuance andinnovation in use of proceeds,
a strong commitment towards
transparency, with high levels
of international certification.
ANZ is working with investors
to build confidence in market
fundamentals and directions.
The scale of green infrastructure
investments expected to bemade in Australia, coupled withstrong investor demand, makethe prospects for growth ingreen bonds bright.”
Christina Tonkin, Managing
Director, Loans & Specialised
Finance, ANZ© Published by the Climate Bonds Initiative, August 2018

“Our goal is to make a positiveand lasting impact on the
lives of our customers, people,
shareholders, communities,
and our environment – andour customers are telling us
they want to participate in
the transition to a low-carbon
economy. We’re continuallydeveloping and offering
innovative green financetools that enable investors toback major renewable energy
projects alongside NAB, andwe find new ways to support
companies that deliver green
infrastructure projects aroundthe world.”
Mike Baird , NAB Chief
Customer Officer, Corporate
and Institutional Banking,
NAB