THE Hong Kong and China Gas Company (Towngas) on November 14 announced the issuance of its inaugural green bonds in dual-currency amounting to HK$600 million (US$76.90 million) and 2 billion yen (US$17.60 million). This represents the first green bond from a Hong Kong energy utility company.

The deals attracted a strong investor demand and the Hong Kong dollar tranche was upsized from the original amount of HK$500 million. The bonds are issued under Towngas’ US$2 billion medium-term note programme and its new green bond framework, which is in line with the Green Bond Principles 2017.

The proceeds will be used to invest in Towngas’ waste-to-energy projects, including its landfill gas utilization project at South East New Territories landfill and other eligible green investments that demonstrate the company’s strong dedication to sustainable development and the fight against climate change.

In China, the group’s current projects include biomass and waste treatment projects, as well as water treatment projects.

Towngas’ green bond framework is prepared in accordance with the international standards and has been reviewed by global ESG and corporate governance research and rating provider, Sustainalytics.

Credit Agricole CIB acted as the green structuring adviser in relation to the green structuring, preparation and distribution, as well as sole placement agent for the transactions.

Sustainability is central to Towngas group’s identity as a business and is critical to all aspects of its operations. While it originally produced its products using less clean feedstock such as coal and heavy oil, it has moved away from these over the course of the last 40 years.

The group says it is now committed to playing a leading role in protecting the environment by mitigating greenhouse gas (GHG) emissions. Natural gas, a cleaner feedstock, now comprises around 60% of its fuel mix in Hong Kong. Naphtha takes 38% and landfill gas the remaining 2%.

When the South East New Territories landfill comes into operation in late 2017 or 2018, the proportion of naphtha in the fuel mix is set to decline to around 35% and landfill will increase to 5%.

Towngas has achieved a 23% reduction in GHG emissions per unit of gas produced from its gas production in Hong Kong since 2005. The group says it is its intention to continue reducing its per unit emissions in Hong Kong by optimizing its fuel mix and investing in further new energy projects as opportunities arise.