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Climate Bonds Initiative Publishes Annual Report

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Today the Climate Bonds Initiative published its fifth annual analysis of the climate-aligned bond universe. The report, Bonds and Climate Change: that State of the Market in 2016, finds and measures bonds that being used to fund low carbon and climate resilient infrastructure. The report studies green bonds and bonds that are financing climate solutions but do not have an official label.

The report’s key findings include:

  • The climate-aligned bonds universe now stands at $694bn outstanding – A jump of $96bn (16%) from the 2015 figure.  This total is comprised of unlabelled climate-aligned bonds at $576bn and labelled green bonds at $118bn.
  • The universe is made up of over 3,590 bonds (issued from Jan 2005 to May 2016) from 780 individual issuers across transport, energy, buildings and industry, water, waste and pollution and agriculture and forestry.
  • In the climate-aligned bond universe, the Chinese RMB is the dominant currency (with 35% of the total amount outstanding), followed by the US dollar (24%) and the Euro (16%).
  • 78% of the universe is investment grade; the majority of bonds have tenors of 10 years or more; the majority are also government-backed.
  • The $96bn increase on 2015 includes $94bn in new bonds from existing issuers, plus $85bn from new issuers minus $83bn of matured bonds and issuers that no longer meet our climate-aligned criteria.
  • Low carbon transport was the largest single sector, accounting for $464bn (67%) of the total climate aligned universe, followed by clean energy at $130bn (19%).
  • The remaining $97bn (14%) is drawn from Building and Industry, Agriculture and Forestry, Waste and Pollution, Water or Multi-Sector bonds; a small but welcome pointer towards more diversity in issuance.

During the research phase of the report, we analysed over 1,700 different issuers to discover those with over 95% of revenue derived from climate-aligned assets. Bonds from these issuers formed the data pool used in compiling the report.

The HSBC Climate Change Centre of Excellence commissioned State of the Market 2016, continuing their support from previous years.

Zoe Knight, Managing Director of Climate Change Centre of Excellence at HSBC, said: “The growth in size and depth of both the climate aligned and labelled green bonds is a positive for potential investors looking to lift their green exposure post the COP21 at Paris. It’s a sign of the scale and liquidity in the market and demonstrates the potential for future green investment.

“Encouragingly, the report shows that financing low carbon growth paths in the major emerging economies through green bonds has begun and with sound market frameworks, can undergo rapid growth.”

Sean Kidney, Climate Bonds CEO, said: “Bridging the climate finance gap doesn’t require complex new investment models.  The re-alignment of bond market activity with climate change and low emission goals will deliver a stable long term source of green investment. This report shows that the large scale harnessing of bonds and other forms of debt based capital towards climate and carbon goals is within reach.

“Green bond based capital to fund infrastructure projects are now an established model. As countries look to turn their INDC commitments into climate plans the report shows that green and climate resilient transport, urban development, water and energy projects are already being financed by green bonds and can be scaled up. The biggest challenge now is for policy makers and investors to develop models that simply accelerate the flow of investment.” 

Country Specific Findings: China & USA

China

China leads the top 10 countries for climate aligned bonds with $246bn of total issuance (36%) followed by the US ($136bn/16%) then the United Kingdom and France ($62bn 9% & $64bn 9% respectively).

Unlabelled issuance is dominated by China Railway Corporation (largest issuer with $194bn). This figure highlights the significance of bonds within the transport sector and demonstrates the continuing importance they will play in raising finance for low-carbon transportation.

Our collaboration with entities such as the CCDC, CECEP, NAFMII and Shanghai Stock Exchange has helped to identify more unlabelled domestic bonds

USA

At 16%, the USA is the second largest country of issuance. Burlington North Santa Fe is the largest issuer from within the USA, making up 17% of USA issuance alone. While issuers in the Energy theme tend to be much smaller, they are also more numerous with over 200 separate Energy issuers making up a total of $28bn issuance.

40% of the entire Water theme is made up of US issuers, primarily Municipal bonds which have been labelled as green bonds. USA-based issuers continue to drive the green labelled bond market, the USA being the largest single issuing country to date of labelled green bonds.

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Environment

Road Trip! How to Choose the Greenest Vehicle for Your Growing Family

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Greenest Vehicle
Licensed Image by Shutterstock - By Mascha Tace -- https://www.shutterstock.com/g/maschatace

When you have a growing family, it often feels like you’re in this weird bubble that exists outside of mainstream society. Whereas everyone else seemingly has stability, your family dynamic is continuously in flux. Having said that, is it even possible to buy an eco-friendly vehicle that’s also practical?

What to Look for in a Green, Family-Friendly Vehicle?

As a single person or young couple without kids, it’s pretty easy to buy a green vehicle. Almost every leading car brand has eco-friendly options these days and you can pick from any number of options. The only problem is that most of these models don’t work if you have kids.

Whether it’s a Prius or Smart car, most green vehicles are impractical for large families. You need to look for options that are spacious, reliable, and comfortable – both for passengers and the driver.

5 Good Options

As you do your research and look for different opportunities, it’s good to have an open mind. Here are some of the greenest options for growing families:

1. 2014 Chrysler Town and Country

Vans are not only popular for the room and comfort they offer growing families, but they’re also becoming known for their fuel efficiency. For example, the 2014 Chrysler Town and Country – which was one of CarMax’s most popular minivans of 2017 – has Flex Fuel compatibility and front wheel drive. With standard features like these, you can’t do much better at this price point.

2. 2017 Chrysler Pacifica

If you’re looking for a newer van and are willing to spend a bit more, you can go with Chrysler’s other model, the Pacifica. One of the coolest features of the 2017 model is the hybrid drivetrain. It allows you to go up to 30 miles on electric, before the vehicle automatically switches over to the V6 gasoline engine. For short trips and errands, there’s nothing more eco-friendly in the minivan category.

3. 2018 Volkswagen Atlas

Who says you have to buy a minivan when you have a family? Sure, the sliding doors are nice, but there are plenty of other options that are both green and spacious. The new Volkswagen Atlas is a great choice. It’s one of the most fuel-efficient third-row vehicles on the market. The four-cylinder model gets an estimated 26 mpg highway.

4. 2015 Hyundai Sonata Hybrid

While a minivan or SUV is ideal – and necessary if you have more than two kids – you can get away with a roomy sedan when you still have a small family. And while there are plenty of eco-friendly options in this category, the 2015 Hyundai Sonata Hybrid is arguably the biggest bang for your buck. It gets 38 mpg on the highway and is incredibly affordable.

5. 2017 Land Rover Range Rover Sport Diesel

If money isn’t an object and you’re able to spend any amount to get a good vehicle that’s both comfortable and eco-friendly, the 2017 Land Rover Range Rover Sport Diesel is your car. Not only does it get 28 mpg highway, but it can also be equipped with a third row of seats and a diesel engine. And did we mention that this car looks sleek?

Putting it All Together

You have a variety of options. Whether you want something new or used, would prefer an SUV or minivan, or want something cheap or luxurious, there are plenty of choices on the market. The key is to do your research, remain patient, and take your time. Don’t get too married to a particular transaction, or you’ll lose your leverage.

You’ll know when the right deal comes along, and you can make a smart choice that’s functional, cost-effective, and eco-friendly.

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