Hochbahn issues green bond for climate-neutrality in Hamburg
Hamburger Hochbahn AG has become Germany’s first transport company to issue a "green bond" in a bid to raise EUR 500 million on the "green" capital market, a press release said Thursday (February 18, 2021). Such an investment would help it fund costly sustainable transport projects for climate-neutrality in Hamburg. This comes against the backdrop of Hamburg’s goal of slashing CO2 emissions by 55 per cent through 2030. Around 1.4 million tonnes of carbon dioxide must be saved in the transport sector alone, if Hamburg is to reach that climate target as well as the mobility transition.
EUR 500 million for "green" projects
"We want to make Hamburg's buses and trains climate-neutral by 2030 and continue to massively advance the mobility transition. We need plenty of investments for both," said Anjes Tjarks, Senator for Transport and Mobility Transition and Chairman of the Supervisory Board of Hochbahn. The EUR 500 million raised will "flow exclusively towards 'green' projects, such as 50 new DT5 trains, 160 modern e-buses or the overhaul of the U3", he added.
The green bond has met with great interest and is more than six times oversubscribed, according to Hochbahn. The ten-year bond has an interest rate of 0.23 per cent. "As part of the coalition agreement, we agreed to leverage new potentials with sustainable funding and to show new ways of financing our city's future projects," said Andreas Dressel, Senator for Finance. The green bond is proving a huge success for Hamburg two years after the Hamburgische Investitions- und Förderbank (IFB Hamburg) issued EUR 250 million in social bonds, said Dressel, and stressed: "While others are still talking about sustainability in finance, we are putting it into practice in a very concrete way."
Underground trains, e-buses, HVV Switch
The bond was preceded by an "outstanding assessment" of the company's sustainability strategy based on a green bond framework. That contains Hochbahn’s sustainability goals and duties and also complies with the standards of International Capital Market Association (ICMA).
Around 70 per cent of the funds generated have been earmarked for the underground railway including the renovation of the historic circular line in central Hamburg and a major U1-Alstertal project in 2022. Around 20 per cent of the bond's volume will go towards buses. Plans are being laid to purchase more than 160 emission-free buses in the coming years and for bus depots to go electric or to be completely rebuilt. About 10 per cent of the sum has been earmarked for the service sector including renovating and upgrading underground stops, installing self-service points and expanding HVV Switch.
"Hamburg-Takt" key to mobility transition
The so-called "Hamburg-Takt" is key to the mobility transition and should go a long way towards reducing CO2 emissions in the transport sector. Projects financed by the green bond should encourage people to use public transport rather than private vehicles and to grow the percentage of bus and train journeys from 22 per cent at present to 30 per cent in 2030.