Northern Gas Networks launches green bond to support hydrogen transition
Northern Gas Networks has launched its first green bond, in a bid to raise capital to prepare for hydrogen heating. The move comes as Hitachi Capital UK prices its own debut green bond at $40m.
Launched today, the Northern Gas Networks (NGN) bond has a ten-year term and is aiming to raise £1m. The firm has selected Abundance Investment to oversee the process and, as with other Abundance products, investors will need to pledge a minimum of just £5.
Funds raised through the bond will be used to help NGN create gas infrastructure that is more efficient immediately and ready for the hydrogen transition in the coming years. The firm is targeting net-zero ahead of the national deadline and is planning to trial 100% hydrogen in an unoccupied section of the network by the end of 2021.
Specifically, bond proceeds will be used to upgrade pipework from metallic mains to polyethylene – a switch that will be necessary as hydrogen blends become more commonplace. NGN has already upgraded three-quarters of its pipework and the bond proceeds will help to transition the remaining quarter.
The move comes as the Government prepares to publish its Hydrogen Strategy and its Heat and Buildings Strategy. Both had been due last year but faced Covid-19 related delays. edie understands that publication shortly after Easter is now likely.
“The UK energy sector is facing an exciting transition, and, whilst the focus is often placed on how energy production must change, the networks that distribute our energy must change too,” NGN’s chief executive Mark Horsley said.
“Working in collaboration with our regulator, Ofgem, central government and the energy industry across the UK, our research is proving that hydrogen offers a safe, affordable and deliverable net-zero solution, and with this investment we want our customers to be involved in this important transition.”
Hitachi Capital UK
Another green bond success story this week comes from financial services giant Hitachi Captial UK. The firm has issued a $40m bond with a three-year term, that will be used to fund projects like electric vehicle (EV) leases and charging infrastructure and renewable energy generation.
A single investor, Dai-ichi Frontier Life Insurance, has taken all of the bond notes. This firm manages assets totalling 8.9 trillion Japanese Yen (£6bn).
Hitachi Captial UK said the bond will help it deliver its vision of converting 100% of its 62,500+ funded car and small van fleet to EVs this decade and of continuing to support GRIDSERVE with its UK-wide rollout of Electric Forecourts.
Bond proceeds will be spent in line with the company’s own Green Financing Framework. Sustainalytics has confirmed that the Framework is compliant with the ICMA’s Green Bond Principles.
“Issuance of our first green bond marks another key milestone in our wider vision of financially supporting clean transportation and renewable energy projects which help accelerate electric mobility and address climate change,” Hitachi Capital UK’s chief executive Robert Gordon said. “Through our Green Financing Framework, utilising our financial strength and expertise, our intention is to issue further green bonds aligned to our commitment that 20% of our assets will support sustainable business projects over the next five years.”
Legal & General
In other green corporate finance news, Legal & General Investment Management (LGIM) has unveiled plans to link executive remuneration to progress against its net-zero target.
The firm is targeting a net-zero portfolio of managed and owned assets by 2050, with an interim ambition to halve the emissions of its £85bn retirement portfolio and £95bn proprietary owned investment portfolio by 2030.
This week, these goals were built upon with a commitment to add progress against climate targets to LGIM’s executive remuneration scorecard. The scorecard determines the size of bonuses paid out annually.
A recent report from PwC revealed that 45 of the FTSE100 firms are now linking executive pay packages to at least one of their Environmental, Social and Governance (ESG) targets.