{"id":84701,"date":"2024-06-05T00:00:00","date_gmt":"2024-06-05T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/climate\/2024\/06\/05\/australias-first-green-bond-draws-high-demand-europes-steel-industry-is-struggling-to-decarbonize\/"},"modified":"2024-06-05T00:00:00","modified_gmt":"2024-06-05T00:00:00","slug":"australias-first-green-bond-draws-high-demand-europes-steel-industry-is-struggling-to-decarbonize","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/climate\/2024\/06\/05\/australias-first-green-bond-draws-high-demand-europes-steel-industry-is-struggling-to-decarbonize\/","title":{"rendered":"Australia\u2019s first green bond draws high demand + Europe\u2019s steel industry is struggling to decarbonize"},"content":{"rendered":"

Australia\u2019s first green bond met with high demand: <\/strong>Australia\u2019s debut sovereign green bond has attracted over three times the AUD 7 bn (USD 4.7 bn) worth of debt that is set to mature in June 2034, Bloomberg<\/a> reports. The green bond \u2014 with an average yield of 4.295%, which is around 1.5 basis points below Australia\u2019s May 2034 bond \u2014 garnered such high demand likely due to a lack of green assets in the country, according to macro rates strategist at RBC Capital Markets Robert Thompson. Premiums on green debt are rare as governments and corporations globally turn to sustainable finance for cheaper funding costs. <\/p>\n

And there\u2019s more to come: <\/strong>Australia plans on issuing more green bonds with different maturities in the future. The country plans on using the proceeds from green bonds to support the energy transition, mainly through hydro-power and marine renewable energy. Nuclear energy is excluded, according to the government's green bond framework (pdf)<\/a>. Australia is currently one of the highest emitters among developed countries and has been slow in meeting its Paris Agreement pledges, but has placed high hopes in its new green bond and expects it \u201cto be well sought after and trade with a greenium,\u201d says senior portfolio manager at Jamieson Coote Bonds James Wilson. <\/p>\n

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EUR bns in government subsidies are not enough to keep Europe\u2019s steel industry on the <\/strong>path to achieving net zero goals<\/strong>, The Financial Times<\/a> reports, citing research<\/a> by the World Benchmarking Alliance (WBA). Carbon emissions from heavy industries like steel must decline three times faster than the current rate if they are to meet the 1.5 C target by 2030, WBA says. <\/p>\n

The top companies have received over EUR 8 bn:<\/strong> The European Commission has given steel producers over EUR 8 bn in state aid since 2022 to help reduce carbon emissions, FT writes, citing NPO Aria. Europe\u2019s largest steel producer ArcelorMittal received EUR 3 bn worth of subsidies for decarbonisation projects to swap out coal for natural gas and then hydrogen. German firms like Thyssenkrupp and Salzgitter have been given EUR 2 bn and EUR 1 bn in commitments respectively. <\/p>\n

Global demand for steel is on the rise + it\u2019s key for the energy transition:<\/strong> Currently, steel production is at more than 1.8 mn metric tonnes annually \u2014 accounting for about 7% of greenhouse gas emissions \u2014 with demand expecting to grow as steel will be used for projects like wind turbines, electrolysers, and EVs, Reuters<\/a> writes. Nearly 50 new near-zero projects have been announced with delivery dates as early as next year, yet 70 will be needed<\/a> to be operational by 2030 in order to meet demands and align with net-zero goals. <\/p>\n

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