According to Sinopec news dated March 22th, Sinopec Green Energy, a subsidiary of Sinopec Star known as “SGE”, has successfully issued Xiong’an New District’s first “Carbon Neutrality” ABS green bond in Shanghai Securities Exchange with a size of RMB 300 million and a period of 3+2 years. Use of proceeds will be for enhancing geothermal development and utilization as well as R&D of geothermal technology.
Combining the concepts of “Carbon Neutrality” and “Xiong’an New District Development”, this “Carbon Neutrality” ABS green bond witnesses not only the debut of Sinopec’s geothermal business in the capital market, but also its efforts to actively promote Xiong’an New District development. It has offered an innovative approach to support geothermal industry growth of Xiong’an New District through green financing. Immediately after issuance, the bond received high recognition of investment institutions and active subscription from various investors.
A green bond is a type of financial instrument specifically earmarked to support climate or environmental projects. As a critical part of green financing, it not only facilitates capital’s access into green sector to satisfy the financing demand of green and low-carbon projects, but also accelerates the green and low-carbon transformation of enterprises. In April, 2021, Sinopec successfully issued its first green bond, equity funded carbon neutrality bond, with a scale of RMB 1.1 billion and a period of 3 years. Funds raised were for supporting photovoltaic, wind power, geothermal and other green projects. It was China’s first “Carbon Neutrality” bond in oil and gas industry.
SGE, the original rights-and-interests owner of the bond, is a joint venture established by Sinopec Star and Arctic Green Energy in 2006. With its head office located in Xiong’an New District, it specializes in geothermal development and utilization, and has more than 100 heat centrals serving for clean heating in 3 counties of Xiong’an New District. The total heating capacity of SGE has reached over 10 million sqm, capable of substituting 190,000 tons of standard coal and reducing 494,000 tons of carbon dioxide annually.
As a leader in domestic geothermal industry, Sinopec created “Xiongxian Model” for geothermal development and utilization in 2009, and established China’s first geothermal heating city of Xiongxian, Hebei province in 2017. In July, 2021, “Xiongxian Geothermal Heating” was listed by IRENA as a global showcase project. During the heating season between 2021 and 2022, there are totally 796 geothermal heat centrals in operation, with incremental heating capacity up by 18% compared with the previous season. To date, the geothermal heating area of Sinopec has reached 80 million sqm, accounting for 30% of the total geothermal heating area in China, capable of substituting 1.85 million tons of standard coal and reducing 3.52 million tons of carbon dioxide annually. Besides, Sinopec will co-organize the 7th World Geothermal Congress to be held in Beijing in April, 2023. It is the first time for China to host this international conference.