The Climate Bonds Initiative opines on the Green credentials of the new Repsol bond

29 May The Climate Bonds Initiative opines on the Green credentials of the new Repsol bond

On May 24th 2017, Andrew Whiley from The Climate Bonds Initiative published an analysis on the EUR 500m green bond issued by Repsol SA, this being the first green bond issued by an oil company to date.

According to Whiley, using the “brown” balance sheets of fossil fuel companies to fund green assets is needed for a faster transition to a green economy. Whiley states the transparency and disclosure provided by Repsol is good and shows that the company has committed to reporting and tracking the bond funds and ongoing disclosure is provided.

The goal of the bond is to reduce GHG emissions from refineries (estimated at 1.2m tons of CO2 annually by 2020). The Climate Bonds Initiative takes the position that green bond investments should be in line with the very steep emissions trajectory that is needed to achieve a rapid transition to a sub-2 degree Celsius world in line with the Paris COP21 Agreement. According to Whiley, this will require very ambitious business planning that addresses both the projected growth in global energy demand and emissions reduction targets. For the oil & gas sector, this means investing in clean energy capacity, alternative fuels and expanding infrastructure for charging electric vehicles etc. Whiley states, in this context, the 1.2m tons in annual GHG savings seems to be fiddling around the edges and thus the bond is not included in Climate Bonds Initiatives list of green bonds.

As Whiley puts it, the time for incremental improvements, including in the oil and gas sector, has passed.

Read the full analysis here.

Photo Credit: Paulo Simões Mendes