Decarbonising the
economy towards a 1.5°C pathway [1] requires a collective effort from the
financial industry, with the Intergovernmental Panel on Climate Change (IPCC)
estimating that annual average investments in low-carbon energy technologies
and energy efficiency must be upscaled by roughly a factor of six by 2050
compared to 2015. Transition bonds help carbon-intensive issuers’ shift to the
green economy by supporting decarbonisation pathways to reduce their emissions via
ambitious strategies that accelerate the energy transition.
Transition bonds help carbon-intensive issuers’ shift to the green economy by supporting decarbonisation pathways to reduce their emissions through ambitious strategies that accelerate the energy transition.
In June 2019, the British
Government passed legislation committing the UK to net zero greenhouse gas
emissions by 2050. As Cadent is the largest gas distribution network in the UK,
supplying gas to 11 million homes and businesses across the country, supporting
the energy transition has become a core driver of its financing strategy. To
shape the future of the energy system through its network, Cadent collaborated
with BNP Paribas’ sustainable finance experts to create a transition bond
framework, presenting an ambitious pathway to decarbonisation. This culminated
in Cadent issuing the UK’s first ever transition bond in March 2020, a €500
million 12-year bond aligned to the EU Sustainable Finance Taxonomy and the UK’s
National Adaption Plan.
The bond was 8.5x oversubscribed highlighting strong investor appetite to support the energy transition in the UK
, the same year as the COP26 summit
takes place in Glasgow. Cadent intends to use the proceeds
from the issuance of the bond to finance:
- the retrofitting of gas transmission and distribution networks
- renewable energy
- clean transportation
-
energy-efficient
buildings
[1] Paris Agreement/Accord signed by countries to keep the increase in the global average temperature to within 1.5°C above pre-industrial levels.