Irish Sovereign Green Bonds NTMA Investor Relations Team October - PowerPoint PPT Presentation

Irish Sovereign Green Bonds NTMA Investor Relations Team October 2018 Photo from National Development 1 Plan 2018-2027

Contents 1. Ireland’s Sovereign Green Bond (“ISGB”) 2. Policy background 3. Eligible Green Projects 4. Ireland leads the Euro Area recovery 5. Public finances much improved 6. Structure of Irish economy is sound 7. Appendix 2

Government commitment “Climate action is a top priority of this government. Future generations depend on the actions we take today. Project Ireland 2040 sets out our ambitions in regard to building a sustainable, low-carbon society, ambitions that can only be realised by working together with communities, businesses and individuals. ” Tao aoiseach Leo Leo Var aradkar “This Government fully recognises the challenge we face in relation to Climate Action and has set out a clear strategy to address this challenge through the National Mitigation Plan and National Adaptation Framework. Our ambition to fund these strategies through the National Development Plan is clearly outlined and this includes a commitment to invest in achieving a transition to a low carbon and climate resilient economy.” Min inister for or Fin Finance Pasc aschal l Don Donohoe [On The National Development Plan] “For Ireland, this represents a huge leap forward in our approach to addressing climate action, both in the scale of our ambition and the funding that we’re making available, as a government to meet the challenges.” Min inis ister for or Com Communications, , Cl Clim imate Acti tion an and En Environment Den Denis Naughten 3

Ireland’s Sovereign Green Bond Ireland’s Framework is fully aligned to the 2018 Green Bond Principles

Overview • Ireland is committed to the transition to a low carbon, climate resilient and environmentally sustainable economy by 2050. • Ireland has a strong statutory, policy and investment framework in place in order to achieve this transition. • Ireland’s Government plans to issue a green bond, which will be underpinned by the Irish Sovereign Green Bond Framework (“Framework”) and aligned with the Green Bond Principles (2018). • Eligible green project categories for the proceeds of the green bond issue include: Sustainable water and waste management, clean transportation, environmentally sustainable management of living natural resources and land use, renewable energy, energy efficiency and climate change adaptation projects. • Sustainalytics has provided a Second Party Opinion on the Framework. 5

Ireland did not have the funds for green spending until now – because of the severe crisis of 2008-2012 Gross National Income* at current prices Government capex (% of GNI*) at historic (1995=100) low, only recovering from 2018 320 7% "Celtic Tiger" Bubble Credit/Prop Recovery 300 1994-2001 Burst erty Bubble 280 6% 260 240 5% 220 200 180 4% 160 140 3% 120 100 2% 80 60 40 1% 20 0 0% 1995 2000 2005 2010 2015 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: CSO, Eurostat 6

Rationale for and features of Ireland’s green bonds • Ireland believes green finance, including Irish Sovereign Green Bonds (“ISGBs”) will play a key role in financing transition to a low carbon, climate resilient and environmentally sustainable economy. • Ireland plans to diversify its funding base by adding to this substantially growing market segment and match the preference of investors. • ISGBs will fund eligible green projects that generate a positive environmental benefit. • ISGBs will rank pari-passu with each other and with Irish Government bonds. • Investors will not bear any risk in respect of Eligible Green Projects. • Ireland’s Green Bond Framework is attached to the bonds. • An equivalent amount to proceeds will be spent on eligible green projects. 7

Irish Sovereign Green Bond Framework Aligned with the ICMA Green Bond Principles, 2018 Project Evaluation and Use of Proceeds Selection Process Sustainable Water, Clean Transportation, Energy Working Group established by Government: Efficiency, Climate Change Adaptation & others NTMA, DPER, DCCAE & DFIN Management of Reporting Proceeds Pending its allocation to Eligible Green Projects, Ireland Annual Allocation Report & will temporarily hold proceeds in its Central Fund. Biennial Eligible Green Project Impact Report 8

Irish Sovereign Green Bond Framework External review by Sustainalytics 9 Source: Sustainalytics Second Party Opinion

Policy background Ireland’s National Development Plan 2018 – 2027 sets out € 23 billion of spending on green projects

Ireland's timeline of sustainability initiatives Cut CO 2 emissions from electricity, buildings & transport by at least 80% by 2050 January 2018 December 2017 July 2018 April 2014 Ireland’s National Policy Annual Transition Position on Climate Statement 2017 Action and Low Carbon Development Green Bond Framework approved by the Government of Ireland 2014 2016 2017 2015 2018 2019 December 2015 July 2017 February 2018 April 2018 Climate Action and Low Carbon Development Act, 2015 11

National Mitigation Plan A pathway to achieve targeted level of decarbonisation • 106 supporting actions / projects. National Policy Position objective for • Addresses emissions across the 2050: • economy: Built Environment, Reduction in carbon emissions of Electricity, Transport, and Agriculture, at least 80% (compared to 1990) Forestry & Land-Use. by 2050 across electricity • A ‘living document’ updated annually generation, built environment and through Annual Transition Statement transport sectors. • • Cabinet Committee and National An approach to carbon neutrality Parliament Oversight. in the agriculture and land use • Formal update at least every five sector, including forestry, which years. does not compromise capacity for sustainable food production. Supported by National To ensure that progress in Dialogue on Climate Action implementing the NMP is robust, a • Provides an opportunity to progress report will be published each create awareness, year under the 2015 Act, to be engagement and included in the Annual Transition motivation to act (locally, Statement. regionally and nationally) NMP recognised by IMF PIMA Report in relation to the challenges presented by (2017) as good practice example of climate change. investment-relevant information. Source: National Mitigation Plan 12

Eligible Green Projects

Irish Sovereign Green Bond Framework Examples of eligible green expenditures Estimated Estimated Annual Amounts Eligible Green Categories Examples of Eligible Green Projects Percentage 2018 2018 € Million • Clean water and wastewater treatment projects 1 Sustainable Water and 540 31% Wastewater Management • Rural Water Programme • Public and sustainable transport Investment Programme • Low emission vehicles incentives & infrastructure, and alternative fuels 2 • Clean Transportation Public programmes incentivising modal shift away from private 710 40% car use • Public Service Provision Payments • Afforestation programme Environmentally Sustainable • Grants, subsidies, and support schemes designed to reduce 3 Management of Living Natural 270 15% agricultural environmental impacts Resources and Land Use • Operation of the Environmental Protection Agency (EPA) • Support scheme for renewable heat 4 • Renewable Energy Research and development for the commercialization of 10 1% renewable energy technologies • Built Environment / Energy Energy efficiency programmes (including heating, retrofit, 160 9% 5 Efficiency insulation) • Climate Change Adaptation Flood relief and other risk mitigation programmes 70 4% 6 TOTAL € 1,760 Source : Department of Public Expenditure 14 and Reform.

National Development Plan (NDP) 2018 – 2027 Projected Exchequer spending on green projects 1 in 5 euros in the NDP to be spent on green projects Transition to a Total: € 23 Sustainable Low carbon Management Sustainable billion and Climate of Water and Mobility Resilient (13% of Environmental Society € 8.6 billion Resources GNI*) € 6.8 billion € 7.6 billion Source: National Development Plan 15 2018-2027