Investment projects

June 2021

Borrowing for green expenses

Moscow will be the first Russian region to issue green bonds. The funds received from the Offering of these bonds will be used to finance and refinance urban environmental projects, primarily to reduce emissions from vehicles. We explain what green bonds are and what specific projects will receive investments.
Bond. Green bond
The first green bonds were issued by the European Investment Bank (EIB) in 2007. Climate Awareness Bonds – were intended to finance renewable energy and energy efficiency projects.

In 2008, the International Bank for Reconstruction and Development (IBRD), a member of the World Bank Group, issued bonds labeled "green". A year earlier, a group of Swedish pension funds approached the bank: they wanted to invest in projects that would have a positive impact on the climate. But there were no clear ways to search and select such projects, and the World Bank found how to do this. In addition, for the first time, it applied an independent assessment in the selection for compliance with environmental requirements. As a result, about 2.85 billion Swedish kronor were used to finance green projects in the agricultural sector, waste recycling in forestry. So green bonds have become a rapidly growing segment of the securities market.
GREEN BONDS ARE ISSUED TO FINANCE ENVIRONMENTAL PROJECTS. THE BASIC PRINCIPLES ARE FORMED BY THE INTERNATIONAL ORGANIZATION "INTERNATIONAL CAPITAL MARKETS ASSOCIATION" (ICMA) AND ARE CALLED GREEN BOND PRINCIPIES (GBP). COMPLIANCE WITH THESE PRINCIPLES CERTIFIED BY A VERIFICATION COMPANY (USUALLY CREDIT RATING AGENCIES)

Investing in the future
The City of Moscow Government approved the issuance of green bonds at the end of April this year. Earlier, the concept of the issue was approved, the document complies with the principles of ICMA green bonds, as well as methodological recommendations for the development of investment activities in the field of green finance in the Russian Federation, developed by "VEB.RF".

The proceeds from the placement of green bonds will go to key urban environmental projects. So, in 2021–2023, the city is waiting for the renewal of the bus fleet of Moscow, as well as the construction of the Big Circle Metro Line (BCL).
REPLACING ONE DIESEL BUS WITH AN ELECTRIC BUS PROVIDES:

  • REDUCTION OF POLLUTANT EMISSIONS
    BY 260.5 KG PER YEAR FOR THE EURO-4 CLASS
    AND BY 189 KG PER YEAR FOR THE EURO-5 CLASS»;
  • REDUCTION OF CO2 EMISSIONS BY ANAVERAGE OF 60.5 TONS PER YEAR
Electric buses
According to experts, today, 93% of harmful emissions in Moscow come from cars, therefore, first of all, urban environmental projects are aimed at solving the problem with transport.

So, one of the tasks is to replace diesel buses with electric buses. Today, about 600 electric buses are running along the city streets, and it is planned to purchase more than 1.5 thousand by 2023.

The second task is the construction of the Big Circle Line of the Moscow metro. The length of the line will be 70 km. According to the concept of green bonds, the funds are planned to be used to finance the construction of 18 stations and 43.8 km of lines, as well as the reconstruction of three stations and four kilometers of BCL lines.

According to experts, at least 10 thousand cars will stop going to the city streets every day, due to the opening of traffic on new sections of the BCL in 2023, which will lead to a decrease in emissions of pollutants by 885.5 tons per year, and carbon dioxide – by 20.9 thousand tons per year.
THE MAIN REASON FOR ISSUING GREEN BONDS IS THE GLOBAL TREND TOWARDS PRESERVING THE ENVIRONMENT AND REDUCING IMPACT
E-mail: pressprom@mos.ru
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