Saturday, December 4, 2021

California’s Climate Accomplishment Missed at COP26

(The following commentary by Michael Paparian was originally published by CalMatters here

If you’re a fan of platitudes, promises and pledges, you weren’t disappointed in the U.N. Climate Change Conference in Glasgow, Scotland. But at least one significant positive action by the state of California went largely unnoticed.

In fairness, COP26 overall was viewed as a modest success, but it fell well short of what we need to do to combat climate change, making positive actions taken by governments such as California even more important to not only showcase but to emulate elsewhere.

I was among the 30,000 in attendance, and California was well represented. The state is treated in many circles like a major country. Though Gov. Gavin Newsom cancelled his trip at the last minute, the lieutenant governor and dozens of other California administration officials, legislators, scientists, activists and others were there. 

California has much to be proud of in accomplishments and planned actions. During COP26, California pledged to stop selling gas cars by 2035, joined a coalition pledging to phase out fossil fuels and touted the many policies and programs that make California a climate leader.

California Natural Resources Agency Building


But most of the California leaders at COP26 missed one of the most significant accomplishments of Newsom’s administration.

Just two days into COP26, the state sold its first ever climate-certified bond for more than $465 million. In doing so, the state confirmed that a major infrastructure project is fully aligned with the climate goals of limiting global warming to 1.5 degrees centigrade or less. The certification is hard to come by and is backed by scientifically credible analyses that a project is climate friendly and consistent with the infrastructure we need in the climate-challenged world.

Bonds are used to fund infrastructure projects, from water and wastewater facilities to transportation systems to schools, hospitals, buildings and much more. However only a small, but growing fraction of the $450 billion in annual state and local bonds in the U.S. are labelled green. And an even smaller fraction is climate certified.

The project financed by the recent climate certified bond is the new California Natural Resources Agency building. Not only will it be among the greenest office buildings ever built, it will use “zero net energy.”  In other words, through an agreement with the Sacramento Municipal Utility District to use solar energy, the building will produce as much renewable energy as it uses.

Investors recognize that, for term stability, they need to steer their funds toward climate friendly projects. Green bonds verified by an independent third party provide one signal of climate friendliness. A green bond that is also climate-certified shows investors that the project has been fully and rigorously vetted for climate impacts.

By joining this growing list of climate-certified bond issuers, including LA Metro, BART, Stanford University, the San Francisco Public Utilities Commission and others, the state is demonstrating one more commitment to climate solutions.  Given the seriousness of the climate threat, at some point soon all infrastructure projects should be climate friendly and all bonds used to finance those projects should be climate certified.

The state is the largest issuer of government bonds in the country. Municipalities and other states look to California for indications of what they should do in the marketplace. By issuing a climate certified bond, California is showing that everyone should integrate their infrastructure, climate and financial policies.

For many, bonds are a boring topic. But as society moves toward climate solutions, we should be sure that, when we finance infrastructure, those projects should contribute to a healthier climate. Newsom deserves credit for doing so with the recent bond issuance and has set the precedent for stronger linkage between climate and finance in the future.

Hopefully Newsom will build on this financial precedent. As state Treasurer Fiona Ma said, the Natural Resources Agency bond “puts a public face on California’s efforts to lead the discussion on climate change through innovative public finance.”

Tuesday, July 17, 2018

Green Bond Pledge – A Climate Finance Framework for Cities & Sub-nationals

Linking Action Agendas to Financing Strategies

As I write this, I’m breathing the smoke from yet another intense California fire. Although I’m over 50 miles away, we’ve been warned to stay indoors to avoid health problems. This fire is approaching 100,000 acres burned; a milestone that has been met all too often in recent years.

Our California fire season used to be mainly in the late summer and fall, after a dry spell. It’s now approaching year-round, as California becomes hotter and drier due to climate change.

It’s no coincidence that 2017 was the second warmest year in California’s record. 43 people lost their lives in California in 2017 due to fires which consumed over 1.3 million acres and resulted in $180 billion in suppression, insurance and recovery costs. Very large fires used to happen rarely, but now happen with regularity. Fifteen of the twenty largest California fires since 1930 have happened after 1999.

As California builds and finances the infrastructure for the future, new fire stations are clearly an essential part of the mix and with the state embracing green finance principles; it’s no surprise that the latest local financing for fire stations was accomplished with green bonds.

Rendering of San Rafael fire station to be built with green bond
(Source:  Official Statement for Bond)

This is a small, real economy example of green bonds financing the infrastructure needed in a climate challenged world.

Sub-national Action on the Global Agenda

Sub-national government use of green bonds is increasing dramatically and so is their recognition of the link between infrastructure finance, climate resilience and adaptation.

The Green Bond Pledge launched in March by ex-UN climate chief, Christiana Figures, is a way to demonstrate local commitment to discussing and addressing climate impacts on infrastructure while assuring that project financing uses green bonds where applicable.

It’s another step for cities and municipalities in connecting their climate action conversations with their capital raising strategies and balance sheets.

This is already happening in California where state and local government agencies issued more than $4.15 billion in green bonds last year; surpassing all previous years. The bonds are helping finance everything from sustainable water, fire stations and mass transit projects to energy efficient hospitals, green schools and climate-resilient infrastructure.

Overall a record USD12bn of green municipal bonds were issued across U.S. in 2017 with New York State finishing the year ahead of California in the Top 10 list out of the 20 states who issued green. They stand out among the lower 48 states.

Yet, green bond leadership at the local level, particularly in U.S. with its huge muni bond market, isn’t woven more broadly into local climate action agendas.


The Global Green Bond Surge

2017 saw a wider global surge in green bonds. For the first time, close to $161 billion in green bonds were issued globally.

But, is the growth fast enough to tackle our climate needs? Not yet, though there is hope.

Gothenburg, Sweden received awards as a trail-blazing early issuer of green bonds for green projects. Cape Town is using green bonds for clean water and electric buses. Mexico City issued a green bond for various sustainability projects, hence, local governmental leadership examples are emerging country by country.

At the COP23 Climate Summit in Germany last fall, mayors and city representatives from local governments came together to show world leaders their commitment to accelerating climate solutions. Several federations of local agencies have been facilitating these efforts, with not-so-catchy acronyms like: R20, ICLEI, C40, Under-2 Coalition, Compact of Mayors, UCLG and more.

These groups showcased innovative steps to reduce fossil fuel use, create sustainable cities and accelerate their national climate agendas. From the U.S. the “We are Still In” Coalition showed that actions at the local and state level can make up for the present lack of national leadership.

Prime Minister of Fiji and COP23 President Frank Bainimarama
(Bonn, Nov 2017 photo by Michael Paparian)

"We can draw from the power and enthusiasm of local and regional leaders in the mission to tackle climate change.” said Prime Minister of Fiji and COP23 President Frank Bainimarama, speaking to local leaders at the COP23 Summit. “So many of you have already demonstrated how to make decisions and implement them."

Resilience and adaptation at a local level

What’s common at many sub-national levels is a growing realization of the need for resilience in both local communities and their infrastructure.

For some communities, water quality, scarcity and efficiency have come to the fore, in others, flood mitigation, storm surge and ocean rise is a growing threat. Transport, sustainable development and clean energy are common themes in almost every city.

What’s lagging in many of the local activities is a connection and commitment to green finance.

The critical link is finding the right pathways to aligning balance sheets and infrastructure investment with climate action outcomes.

Why a Green Bond Pledge?

Just as many local governments have committed to 100% renewable energy, 100% green buildings and other measures over time, local governments can increasingly link their climate ambition with investment via a commitment to issuing more of their bonds as green bonds.

This is the space that the Green Bond Pledge is designed to open up.

The Pledge helps bring the political and climate policy objectives of cities and municipalities closer to financial and investment areas.

The Pledge allows local governments to demonstrate to investors and the financial markets that they are committed to best practice related to their infrastructure projects.

This is a change that can be made fairly easily. With a staged, progressive and prudent implementation into capital raising policies, it is possible, overtime, to integrate local capital allocation and investment decisions with climate goals.

<<< NOTE:  The Green Bond Pledge is not currently taking new signees >>>>

The Last Word

Local governments are well positioned to lead their peers, national governments, corporations and the finance community by committing to a broad green bond policy objective for their infrastructure.

Supporting the development of green finance is consistent with the stance global leaders are taking with regards to international finance, banking sector and big pension and sovereign wealth funds.

If the green pipeline grows wider and longer, investors will respond.

Local governments have demonstrated their influence in terms of moving the marketplace for clean energy, clean transportation, green buildings and more.

These local governments can also now urge the financial markets to shift more rapidly towards climate solutions by saying “yes” to the Green Bond Pledge.

Christiana Figueres discuses cities and climate at COP23 in Bonn
(Nov, 2017, photo by Michael Paparian)

In March Christiana Figueres from M2020 placed a challenge before all bond issuers: city, corporates and banks, to begin the green transition in their borrowing programs, by committing to the Pledge and start a new a new green finance conversation.

The Global Climate Action Summit, (GCAS) in San Francisco in September provides an ideal platform for city and municipal governments to announce their support for the Pledge before an audience of the world’s biggest investment funds.

I can’t think of a better time to respond.

Want to know more?

Green Bond Pledge Webinar: 26th July, 2018

12:00 PM EDT/09:00 AM PDT/17:00 PM BST

This webinar, co-hosted by CDP and Climate Bonds Initiative, will introduce the Green Bond Pledge. Speakers will outline the Green Bond Pledge’s role to foster debate around finance for low carbon, climate resilient urban infrastructure as a part of cities’ plans to help the US to meet its Paris Accord emissions goals.

We will also share information on the upcoming Global Climate Action Summit (GCAS) in San Francisco and Green Bond Pledge announcements in support of maintaining climate momentum across states and cities.

Webinar Registration is here.

The Green Bond Pledge will also be highlighted as a major commitment local governments can make to the Global Climate Action Summit Sept. 13-14 in San Francisco. For information on the Climate Action Summit, see

Monday, December 4, 2017

California Leads USA in Muni Green Bond Issues

As recently discussed in the California Green Finance blog (here), California government agencies are issuing green bonds at a record pace.  More green bonds have been sold in 2017 than all prior years combined and the total for all green bonds issued by California governments has topped $5 billion.

Newly released data from the Climate Bonds Initiative shows that California leads all other states on green bond issues that have closed, followed closely by New York State at $4.73 billion, Massachusetts at $2.83 billion, and Washington State at $1.9 billion, with Connecticut, Indiana, Colorado, Iowa, Illinois & Ohio all under $1 billion (Top 10 ranking below). 

Cumulative Amount Issued (USDbn)
Top 10 Rank Nov 2017
New York

California green issuers ranges from large institutions such as the California Infrastructure Bank and the City of Los Angeles to school districts in Fremont and San Diego to the Mid-Peninsula Open Space District.  The chart below shows the range of California issuers and the total of all green bonds they have issued.  The prior CalGreenFinance post showed the individual issues and the general project descriptions (here).

California Cumulative Muni Green Bond Data Through Nov, 2017

Total All Issuances
State of California IBank
City of Los Angeles
San Francisco Public Utilities Commission
Los Angeles Metropolitan Transit Authority
California Health Facilities Financing Authority
Bay Area Rapid Transit (BART)
State of California Treasurer's Office
East Bay Municipal Utility District
California Pollution Control Financing Authority
City and County of San Francisco
Los Angeles County Sanitation District
San Diego Unified School District
San Diego County Water Authority
Santa Monica Public Finance Authority
Midpeninsula Open Space District
Port of Los Angeles
Fremont Union High School District
City of Long Beach
Trinity Public Utilities District
City of Napa

A growing number of California issuers have also followed international best practice in gaining Climate Bonds Certification for their green issuance, including Bay Area Rapid Transit (BART), SFPUC and Los Angeles MTA

California leads other state in green bond issues, but
New York has issued more CBI Certified green bonds

“California has long been a national standard bearer in areas ranging from advancing civil rights to protecting our natural resources," says State Treasurer John Chiang.  "In that same vein, the State of California and its municipalities lead the U.S. in the use of green bonds, raising more than $5 billion in affordable capital to both curb climate change and build critical infrastructure.  The achievement is laudable but not enough considering how the United States still lags behind Europe, Asia, and South America in taking advantage of climate-friendly green bonds to finance the conversion of a fossil-fuel based economy to a carbon-free alternative.”

State Treasurer John Chiang

“I am working to change that equation by hosting a major green bonds symposium in February," says Treasurer Chiang.  "I am assembling the nation’s foremost experts to come up with ways to turbocharge this innovative, new market, with an eye toward unlocking its latent potential to pay for billions of dollars in investments to protect our planet from global warming.”

More information on Treasurer Chiang's Green Bond Symposium can be found at:  Green Bond Symposium

“Capital flows are moving in the right direction from diverse municipal issuers of every size across the state," said Justine Leigh-Bell, Director of Market Development for the Climate Bonds Initiative. The focus on water, energy and waste is very encouraging. The challenge now is to increase the number of green issuers across the state and encourage repeat issuance.”

Justine Leigh-Bell of Climate Bonds Initiative

“Our previous data at the end of Quarter 3 had New York State in front, but California has just nudged ahead to reach the landmark $5 billion figure for municipal green bonds," said Leigh-Bell. "The foundation is there to lead US states again and be first to reach $10 billion. We expect the State Treasurer’s February 2018 Green Bonds Symposium and Governor Brown’s Global Climate Action Summit later in 2018 will both provide sub national, national and international momentum around green investment to address climate change.”

Monday, November 13, 2017

California Green Muni Bonds Top $5 Billion

More 2017 Issuance Than All Prior Years Combined

2017 is a record year for California green bond issuances by government agencies.  And, the year isn't over yet.  In 2017:

  • More green muni bonds have been issued than all prior years combined. 
  • There have been nearly $3 billion in bonds issued this year, compared to about $2 billion from 2013 through 2016 combined.
  • More and more issuers are entering the marketplace.  The City of Long Beach, Los Angeles Metropolitan Transit Authority and the Fremont Union High School District are among the newest issuers.
  • The state of California, through the Treasurer's Office, IBank, Pollution Control Financing Authority and Health Facilities Financing Authority is the largest green muni bond issuer
State Treasurer John Chiang is looking into ways to expand the green bond market further.  He has partnered with the Milken Institute and Environmental Finance to hold a symposium February 27-28, 2018 at the Milken Institute in Santa Monica. More information on Treasurer Chiang's green bond efforts can be found at Treasurer Chiang Green Bond Symposium.

Below is a summary of all California green muni bond issuances to date. (note:  slight correction to chart made 11/28/2017)

California Green Muni Bond Issuances
IssuerDate*AmountGeneral Purposes
State of California10/7/2014$300,000,000Mass Transit, Clean Water, Energy Efficiency
San Francisco Public Utilities Commission5/20/2015$32,025,000Renewable Energy
City of Los Angeles6/4/2015$188,755,000Wastewater, Digester, Water Purification
East Bay Municipal Utility District6/17/2015$74,335,000Clean Drinking Water, Conservation, Flood Protection, Renewable Energy, Biodiversity
City of Los Angeles6/30/2015$100,835,000Wastewater, Water Purification, Digester
San Diego Unified School District1/5/2016$100,000,000Energy Efficient Buildings, Renewable Energy
IBank4/28/2016$410,735,000Clean Water, Water Pollution Control
San Francisco Public Utilities Commission5/24/2016$240,580,000Clean water, wastewater
San Diego County Water Authority6/23/2016$98,945,000Water Efficiency
Midpeninsula Open Space District9/22/2016$57,410,000Open Space Acquisition, related
Port of Los Angeles10/13/2016$35,205,000Open space, habitat, green building
City of Napa10/20/2016$12,500,000Recycling and materials recovery facility
Los Angeles County Sanitation District11/16/2016$170,265,000Reclaimed water projects, sewage system Improvements
San Francisco Public Utilities Commission12/14/2016$259,350,000Clean water projects (Climate Bond Certified)
IBank3/23/2017$450,000,000Clean Water, Water Pollution Control
California Health Facilities Financing Authority5/3/2017$408,390,000for Kaiser Hospital** System green buildings
City of Los Angeles (Taxable and tax-exempt)5/24/2017$450,150,000Sewage system upgrades
Bay Area Reapid Transit (BART) (taxable and tax-exempt)6/1/2017$384,735,000Rapid Transit (Climate Bond Certified)
California Pollution Control Financing Authority6/14/2017$228,165,000for CalAg manufacturing rice-straw to fiberboard plant
East Bay Municipal Utility District6/22/2017$185,355,000Water quality, recliamed water, environmental enhancements
City of Long Beach6/28/2017$25,985,000Enviornmental improvements at port of Long Beach
Fremont Union High School District7/11/2017$31,170,000Green buildings
Santa Monica Public Financing Authority9/14/2017$68,565,000Green buildings
Los Angeles Metropolitan Transportation Authority10/31/2017$471,395,000Mass Transit (Climate Bond Certified)
San Diego Unified School District11/1/17$59,000,000Green buildings
Trinity Public Utilities District11/1/17$20,835,000Hydroelectric Project (some taxable)
City & County of San Francisco11/9/17$171,405,000TransBay Transit Center (Taxable; Climate Bond Certified)
2014 Subtotal$300,000,000
2015 Subtotal$395,950,000
2016 Subtotal$1,384,990,000
2017 Subtotal to date$2,955,150,000
* Dated per MSRB
** companion taxable non-muni green bond for $575 million also issued)
Total All Issuances$5,036,090,000(prepared/updated by Michael Paparian Nov 28, 2017)