Focusing on the development of low-carbon energy and energy efficiency services, the Group is firmly committed to green bonds, which are emerging as an investment option to finance the energy transition. By the end of March 2018, the total worth of bonds issued by ENGIE in Green Bond format was €6.25 billion.
10. Impact reporting
Green bonds are financial instruments where the proceeds are invested exclusively in green projects that generate climate and/or other environmental benefits, and meet social and societal criteria. According to the Climate Bonds Initiative (CBI), 2017 global issuance reached US$155 billion, or 78% growth on 2016.
In April 2014, to support its renewable energies and energy efficiency development plan, ENGIE issued its first green bond of €2.5 billion divided into two maturity tranches of 6 and 12 years respectively.
Green Bond 2017
In March and September 2017, the Group launched two new green bond issues for EUR 1.5 billion and EUR 1.25 billion respectively.
ENGIE Green Bond - septembre 2017
ENGIE Green Bond - mars 2017
Green Bond 2018
In January 2018, the Group reaffirmed its commitment to green bonds for the fourth time with the issuing of a €1 billion Green Hybrid Bond, positioning itself as the major green bonds player and confirming its commitment to lead the energy transition and to drive the development of sustainable finance.
Green Hybrid Bond (January 2018)
To mark Climate Finance Day in Paris, in December 2017, ENGIE and eight other of Europe’s largest industrial emitters of green bonds (EDF, Enel, Iberdrola, Icade, Paprec, SNCF Réseau, SSE and TenneT) publicly announced their pledge to further develop the green bonds market. The Group agreed to implement stringent and precise reporting procedures for fund allocation and the environmental benefits of the projects.
Since 2017, the Group's Green Bonds have met the provisions of the Green Bond Framework that Engie has applied to all bond issuances since the framework was published. The net proceeds of the issuance of each Green Bond is used to fund the Group’s Eligible Green Projects, which meet a set of environmental, social and societal criteria developed in conjunction with the ESG rating agency Vigéo Eiris.
Categories of projects eligible for Green Bonds
Eligibility criteria for Green Bond projects
A Green Bond Committee meets regularly to discuss market developments and projects eligible for financing by green bonds. It is chaired by the Head of the CSR Department and jointly coordinated by the Finance Department. It comprises representatives of the Strategic Sourcing & Purchasing Department, the Global Care Department, the Ethics & Compliance Department and the main BUs concerned.
Allocation of the Green Bond of March 2017
The allocation of Green Bond proceeds to Eligible Projects in 2016 and 2017 was €81 million and €1.419 billion respectively. Net proceeds of €1.5 billion from the Green Bond issuance of March 2017 were allocated in full. The Green Bond of March 2017 helped to finance or acquire Eligible Projects as part of the company’s development strategy in renewable energies and energy efficiency.
The main projects are set out in the table below which shows, for each project, the country of implementation, the associated technology and the associated development ("Dev") or financial ("End") allocated capex.
Renewable Energy projects
Solar and wind energy projects in France
ENGIE, a major player in renewable energy production in France, is committed to the energy transition and the development of renewable projects The allocated capex related to the wind and solar projects of its solely owned subsidiary ENGIE Green, resulting from the merger of Futures Énergies and Maia Eolis in 2016 and LCV - La Compagnie du Vent - in 2017 and its subsidiary CNR (Compagnie Nationale du Rhône - 49.9%) through its subsidiary CN'Air (hydroelectricity, onshore wind and solar photovoltaic) for a total installed capacity of 142 MW and 36 MW respectively for wind and solar power. Also worth noting are the two offshore wind projects in Dieppe/Le Tréport, and l’Ile d’Yeu/Noirmoutier (2 x 500 MW in capacity, projects 47% owned by ENGIE). The 2016 financial capex relating to the buyout of minority interests in Solaire Direct has also been included.
Wind (Campo Largo) and solar (Floresta and Paracatu) projects in Brazil
ENGIE, which is the main private electricity producer in Brazil (about 6% of the country's installed capacity) is continuing its development through new renewable energy production projects. Thus renewable energy represents 90% of its installed capacity in Brazil. Capex projects currently under construction and financed by the Green Bond are the Campo Largo onshore wind farm (327 MW), and the Floresta (86 MW) and Paracatu (132 MW) solar farms.
Offshore wind farm in Moray, United Kingdom.
In September 2011, the Group won a contract with the Portuguese company EDP Renováveis to develop a 950 MW offshore wind farm in the United Kingdom. ENGIE stake: 23%.
Onshore wind farm in Australia.
ENGIE began pre-construction work on the 119 MW Willogoleche wind farm near Hallett in South Australia's Mid North region in 2017. ENGIE stake: 72%.
Two cogeneration projects to supply heating networks and operating in biomass co-combustion were integrated into the Green Bond of March 2017 (Mâcon in France - 100% ENGIE, and Sisslerfeld in Switzerland - 60% ENGIE) for an injected biomass estimated at 230 GWh.
Energy Efficiency projects
Tabreed (United Arab Emirates).
In July 2017, ENGIE bought a 40 percent stake in Tabreed (National Central Cooling Company PJSC), which provides innovative cooling solutions for buildings and other infrastructure to the United Arab Emirates and the member countries of the Gulf Cooperation Council (GCC). The company delivers the equivalent of over 1 million tons of cooling to its clients across 71 district cooling plants located throughout the region, replacing individual refrigeration systems with 40% lower efficiency.
Ohio State University (United States)
In April 2017, ENGIE (50%) and Axium Infrastructure US (50%) won a 50-year concession to sustainably manage Ohio State University’s energy infrastructure. The contract pertains to the operation and optimization of the university’s energy production and distribution facilities, and energy efficiency services to reduce energy consumption by 25% within the first ten years of the contract.
Keepmoat (Great Britain).
In March 2017, ENGIE acquired Keepmoat Regeneration, the UK’s leading provider of regeneration services, improving buildings, places and communities through refurbishment and upgrade. Keepmoat has extensive capabilities in creating zero carbon new homes, retrofitting high-rise residential accommodation and supporting the cost reduction and energy efficiency targets of community regeneration projects, such as insulation and heating solutions to on-site generation and energy consultation services. Energy savings were estimated using statistical data based on installed technology. Most of the savings were generated from heat insulation with an estimated efficiency of 20 percent.
Green Charge (United States)
In 2016, ENGIE acquired an 80 percent stake in California-based battery power storage company Green Charge Networks (Green Charge). It uses advanced patented software algorithms and analytics to optimize battery systems at commercial & industrial (C&I) and public sector customer sites in the United States. These systems generate financial and environmental benefits by storing energy from an efficient system (generally combined cycles) and avoiding non-efficient peak systems considered 40% less energy efficient.
Smart Grid (Gazpar - France).
Since January 2016, more than 160,000 smart meters have been installed in 24 pioneering municipalities. The general roll-out of these gas meters began in May 2017 and will gradually be extended to all French metropolitan regions, benefiting approximately 11 million customers. The smart gas meter allows customers to monitor their consumption to better control it. A technical and economic study carried out under the supervision of the French Energy Regulation Authority ("CRE") based on the GRDF scope, estimated the total possible gains in terms of energy savings following the installation of these smart meters at 1.5%.
Calculating the contribution of Eligible Projects to avoided or reduced CO2 emissions
The benchmark methodology for calculating the contribution to avoided emissions of electricity generation projects is based on a Life Cycle Assessment (LCA) approach. It compares the LCA emissions generated by the energy production technique implemented on a project and the average LCA emissions generated for the country in question. ENGIE evaluates the contribution to avoided emissions of Green Bond-financed projects by multiplying the difference between the two LCA values mentioned by the rated capacity of the plant and the average rate of use of the technology. Avoided emissions are calculated on the basis of one year of operation of the projects, considered to be in a normal operating phase and taken at 100 percent regardless of the Group's ownership rate for these projects.
Benchmarks by country for the operating rates of the technologies making up the country mix, and the average CO2/kWh emission rates of the energy mix, are sourced from Enerdata. LCA technologies data are sourced from the IPCC (Intergovernmental Panel on Climate Change). Examples of these data are shown below.
For CDM (Clean Development Mechanism) projects registered and approved by the United Nations, the results of the calculations are based on the underlying methodologies.
|Projects||Avoided Emissions TCO2/an||UNFCCC references|
|Campo Largo||778 493|
CPA 10286-0005 : Campo Largo Wind Complex (Phase 1)http://cdm.unfccc.int/ProgrammeOfActivities/cpa_db/KQJZ8ACBLWSEO7XR063T2VYMH1NG9I/view
CPA 10286-0003 : Floresta Solar Power Complexhttp://cdm.unfccc.int/ProgrammeOfActivities/cpa_db/QX39GUAOV176JY4BWTKZR205IMPFNE/view
CPA 10286-0004 : Paracatu Solar Power Complexhttp://cdm.unfccc.int/ProgrammeOfActivities/cpa_db/B9UCFX5H6OWQYD743VAEMIRPNZ1K8G/view
To calculate the contribution to reduced emissions by energy efficiency projects, ENGIE multiplies the energy savings generated by the project by the energy mix emissions of the country where the project is in operation. Reduced emissions are calculated on the basis of one year of operation of the projects, considered to be in a normal operating phase and taken at 100 percent regardless of the Group's ownership rate for these projects.
Green bond of March 2017: reduced and avoided emissions
In the full operating phase, renewable projects (at 100%) should contribute to avoided greenhouse gas emissions of at least 2.2 million tons of CO2eq/year while energy efficiency projects (at 100%) should contribute to reduced greenhouse gas emissions of at least 1.1 million tons of CO2eq/year, that is, a total of 3.3 million tons of CO2eq per year.
Technology and regional breakdowns of the impacts in tons of CO2 eq of the projects financed by the Green Bond of March 2017 are set out below (at 100%).
Reduced and avoided emissions are set out in the following table according to different weighting methods: a) at 100%, b) according to Group participation, c) only development projects (at 100%) and finally d) according to Group participation in development projects only.