Australia on track for net zero
Green financing enables infrastructure developers to fund projects that contribute to countries’ and industries’ net-zero pathways. Societe Generale has helped to refinance Australia’s electric rail project in Queensland, which will further the state government’s economic development plans while also saving on greenhouse gas (GHG) emissions.
The transport sector is Australia’s third-largest source of GHG emissions, contributing 96MtCO2e a year, or 17% of the country’s total emissions.1 Since transport is a ‘hard-to-abate’ sector, it requires a long-term approach to decarbonisation.
Putting the trains on track
A green loan has been used to refinance the new passenger trains in South East Queensland. This landmark transaction supports the Queensland Government’s Climate Transition Strategy with a commitment to achieve zero net emissions by 2050.2
Queensland’s 75 New Generation Rollingstock (NGR) trains replace an aging fleet and increase the size of Queensland’s fleet by 26%3. The new trains operate on a number of lines across the Brisbane area and will be the only trains to use the Cross River Rail underground tunnel, currently under construction and also financed by Societe Generale. NGR is the second public private partnership (PPP) in Australia to obtain financing through a certified green loan.
Green features
The new trains are certified as Low Carbon Transport under the Climate Bond Initiative's Low Carbon Transport Criteria4 which signifies that financing for this project is aligned with the Paris Agreement’s target of restricting global warming to less than two degrees Celsius above pre-industrial times. The project’s debt facilities are also certified under the Asia Pacific Loan Market Association's (APLMA) Green Loan Principles.5
Awarded to the Qtectic consortium in 2014, the EUR 2.8 billion (AUD4.4 billion) NGR PPP was the largest-ever rail transport investment by the Queensland Government at the time, which enables it to continue building out its public transport network – and support economic development – in an environmentally responsible way. This project financing illustrates how sustainable infrastructure can be delivered through PPP and innovative financing solutions, ensuring that pursuing decarbonisation doesn’t mean cutting back on development project plans.
“We’re proud to be involved with NGR and welcome Societe Generale’s partnership in supporting this important project. NGR embodies John Laing’s commitment to responsible infrastructure projects that respond to public needs, empower sustainable growth and improve the lives of the communities in which we work,” said Ben Loomes, CEO at John Laing.
The bank for next-generation infrastructure
Societe Generale acted as lender on the transaction. Qtectic is owned by a consortium consisting of John Laing, Aberdeen Standard Investments, Itochu and Alstom, all of whom are all key existing clients of the bank.
“This refinancing highlights how Societe Generale can partner with our clients in creating a positive impact by providing decarbonising transport solutions that serve local communities, while supporting the state government to meet its sustainability commitments. We will continue to play our role in contributing to the region’s sustainable development through infrastructure projects,” said Marie Vinnell, Head of Infrastructure Finance for Asia Pacific at Societe Generale.
As decarbonisation becomes an increasingly urgent priority, green financing is supporting a new generation of low-carbon infrastructure projects. For investors, more opportunities to fund sustainable infrastructure projects helps them to decarbonise their own portfolios. For issuers, green bonds and loans can diversify their funding sources and provide attractive borrowing terms.
1 https://www.climatecouncil.org.au/wp-content/uploads/2017/09/FactSheet-Transport.pdf
2 https://www.qld.gov.au/environment/climate/climate-change/transition/queensland-climate-transition-strategy
3 https://www.railwaygazette.com/traction-and-rolling-stock/ngr-emus-ready-to-enter-service-in-brisbane/45603.article
4 https://www.climatebonds.net/standard/transport
5 https://www.aplma.com/microsites/categories/3