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Sinopec's first green bond issuance

Author : PCEC

14 April 2021

On April 2, China Petroleum & Chemical Corporation successfully issued a "green bond" for the first time. The equity-funded carbon neutral bond issuance scale is 1.1 billion yuan (£122m) and the issuance period is 3 years. The raised funds will be used in the company's green projects such as photovoltaics, wind power, and geothermal. This is also the first carbon neutral bond issued by a domestic oil and gas company in China.

Photovoltaic power in Shengli oil field - Image: Sinopec
Photovoltaic power in Shengli oil field - Image: Sinopec

The "green bond" fundraising projects include more than 70 new energy projects such as photovoltaic power generation, wind power generation, and geothermal heating that Sinopec has deployed across the country. It hopes to reduce carbon dioxide emissions of 362,800 tonnes a year, save 156,200 tonnes of standard coal, reduce sulphur dioxide emissions by 93.35 tonnes, reduce nitrogen oxides by 98.07 tonnes, and reduce smoke and dust by 18.68 tonnes, fully demonstrating that Sinopec is promoting new energy substitution and accelerating structure. The carbon neutral bond has received a positive response in the inter-bank market and has been fully recognised by investors from many parties.

Sinopec said that the group will accelerate the low-carbonisation process and strive to achieve carbon neutrality 10 years ahead of the national target. For the first time, the company incorporated "cleanliness" into its vision goal, stepped up the replacement of natural gas and electricity, vigorously developed green hydrogen refining, and continuously increased the proportion of low-carbon raw materials.

Sinopec will also look to cultivate the development of a circular economy and reduce the carbon footprint of products throughout their life cycle, and actively participate in global methane emission reduction actions. By 2025, methane emission intensity will be reduced by 50%, megaton-level CCUS demonstration projects will be built, carbon-neutral forests, carbon-neutral gas stations and other distinctive carbon-neutral models will be developed.

In the context of China's proposed carbon peak by 2030 and carbon neutrality by 2060, the company will move towards net zero emissions, ensure that carbon dioxide peaks before the national carbon peak target, and strive to be 10 years ahead of the national target.

After entering 2021, China National Energy Corporation, China Huaneng Group, China National Nuclear Corporation, Three Gorges Group, China State Grid and many other central state-owned enterprises have issued special bonds for carbon neutral or new energy projects.

On March 3, China Three Gorges Corporation successfully issued the first batch of carbon-neutral green corporate bonds of 1 billion yuan (£111m) on the Shanghai Stock Exchange, with a term of 3 years, and no less than 70% of the raised funds will be used for the construction of the Jinsha River Baihetan Hydropower Project.

On March 24, the first phase of 2021 green medium-term notes (carbon neutral bonds) of State Grid Corporation of China was successfully issued in the inter-bank bond market with a term of 2 years and raised funds of 5 billion yuan (£555m).

China Huaneng Group's 2021 first phase of green corporate bonds (specially used for carbon neutrality), the public issuance of no more than 40 billion yuan (£4.4bn), the bond term is 2 years. The bonds raised will be used for photovoltaic power generation, wind power, hydropower, etc., and will focus on the construction of green industry projects with carbon emission reduction benefits in the field of carbon emission reduction.

The first phase of China National Nuclear Corporation's 2021 green corporate bonds will be publicly issued no more than 20 billion yuan (£2.2bn), with a bond term of 3 years. No less than 70% of the current bond amount is intended to be used for the funding requirements for the preliminary construction of the Xudabao nuclear power project and the repayment of loans from financial institutions in the preliminary stage of wind power and photovoltaic power green and low-carbon projects.

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