BayernLB

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August 2018

10 August
BayernLB takes part in Climate Bonds Initiative

BayernLB is teaming up with Climate Bonds Initiative, an international non-profit organisation, and is thereby taking on an active role in developing the market for climate and green bonds. The CBI works towards getting the international bond market to focus more on climate protection financing. In addition to providing the latest market data, the CBI sets high, transparent market standards. Issuers can have their climate bonds certified under the Climate Bonds Standard. For investors, this certification is solid proof that the issuer intends to use the funds to finance a project that will demonstrably make a positive contribution to climate protection.

Climate bonds are a subset of green bonds, which are currently among the fastest growing in the asset class of bonds. BayernLB expects an issuance volume of some USD 210 bn for the current year, following the approximately USD 157 bn in issues for 2017. Over the past three years BayernLB has gained vast experience both in structuring and placing green securities for customers, and in issuing its own bonds. The Bavarian bank participated in, for example, the issue of a green Schuldschein by the wind turbine manufacturer Nordex – the first note loan of this kind to be certified by the Climate Bonds Initiative.

08 August
Munich Re withdraws from coal business

Against the backdrop of climate change, Munich Re is withdrawing to a large extent from capital investments in coal and its insurance. In the future, the world’s largest reinsurer is no longer going to invest in shares or bonds of companies which generate more than 30 percent of their turnover with coal. For individual-risk transactions as well, coal power plants and mines in developed countries will no longer be insured. Munich Re is looking to align its climate strategy with the goal of the Paris Climate Agreement, namely to limit the global rise in temperature to well below 2 degrees Celsius.

08 August
Forecast: EEG surcharge not set to increase any further

The think tank Agora Energiewende does not anticipate any further increase of the EEG surcharge for next year. At the moment, it is forecasting a figure of 6.7 to 6.9 cents per kilowatt hour of electricity. This year's surcharge for the promotion of renewable energies is 6.79 cents, therefore the considerable increase in the surcharge which experts predicted last year has not materialised.

The surcharge is used to promote the expansion of renewable energies. All electricity customers have to pay it, while discounts are in place for certain industry sectors and businesses. The four network operators in Germany each determine the amount of the surcharge every year on October 15th.

01 August
German Cabinet passes TEHG amendment bill

The German Federal Government has passed a bill amending the Greenhouse Gas Emissions Trading Act, or TEHG. The amendment lays the groundwork for keeping EU emissions trading afloat over the coming trading period (2021 to 2030) in Germany. By passing the bill, Germany is transposing the new EU emissions trading directive, which went into effect last April.

The key points of the reform are as follows:

  • It will be applied in all 28 EU countries plus Iceland, Liechtenstein and Norway;
  • It will incorporate about 12,000 energy-intensive plants and aviation companies that provide services between the above-mentioned countries in order to cover about 45 percent of greenhouse gas emissions in the EU;
  • A linear reduction factor will be introduced: the cap on the total volume of emissions will be cut by 2.2 percent annually;
  • It will double the number of certificates withdrawn from the market every year due to oversupply to 24 percent. They will be stored in a market stabilisation reserve.

The application procedure for distributing the certificates free of cost will begin in Spring 2019.

July 2018

10 July
German Federal Environment Ministry launches another subsidy programme for municipal climate protection projects

Municipalities, municipal companies, sports clubs and other organisations now have until 30 September 2018 to apply for a climate protection project subsidy under the “Local Authorities Guideline”. The programme promotes projects aimed at devising and implementing new climate protection strategies. It also subsidises energy-saving measures for schools and kindergartens. More information at: Application climate project protection subsidy

3 July
Germany breaks new record in renewable energy

In the first half of 2018 Germany generated 104 billion kilowatt hours of electricity from wind and solar energy and hydroelectric and biomass plants – a new record. This is the first six-month period ever to see the 100 billion kWh mark exceeded. Over half of the electricity generated by these renewable energy sources – some 55 billion kWh – came from wind farms. Solar farms accounted for around 21 billion kWh, with biomass facilities trailing close behind at roughly 20 billion kWh of power. These figures, released by E.on, do not include the electricity generated by privately owned photovoltaic plants, which is used directly and not fed into the grid.

June 2018

18 June
Petersberg Climate Dialogue 2018 to address climate protection and social justice

At the joint invitation of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and the government of the Republic of Poland, ministers and other government officials from around 35 countries are meeting in Berlin on 18 and 19 June for the Petersberg Climate Dialogue IX. The conference is focussed on the implementation of the Paris Climate Agreement and the preparations for the upcoming Climate Change Conference in Katowice, Poland. Under the motto “Changing together for a just transition”, social aspects relating to climate protection will be on the agenda for the first time. The International Trade Union Confederation, or ITUC, will be taking part in this discussion. More at: Petersberg Climate Dialogue

14 June
Climate Action Report 2017 adopted

On 13 June the Cabinet of Germany adopted the Climate Action Report 2017. According to the report, Germany can reduce its CO2 emissions to around 32% of the 1990 figure by the year 2020. A 40% reduction was the original goal. If it weren’t for the “Climate Action Programme 2020”, adopted in 2014, this discrepancy would be even wider, according to the German government. The report lists around 110 individual measures, along with the amount of CO2 that is expected to be prevented by each in the year 2020. The report is available in pdf format under: Climate Action Report

May 2018

23 May
EU Commission: initial outcome of EU Action Plan for sustainable finance

In March 2018 the EU Commission unveiled its Action Plan for sustainable finance. The Commission has recently presented some of the first concrete results of the Plan, stressing in the process once again the financial market’s role in the pursuit of the Paris climate objectives. The proposals that were also presented have to do with the planned standardisation of the system for classifying sustainable activities, as well as with the requirements imposed on institutional investors in terms of taking environmental, social and governance (“ESG”) factors into their capital-investment decisions. The EU Commission has furthermore installed a series of mechanisms for checking how ESG aspects may be integrated into professional consultation for retail customers. For more information, go to: http://europa.eu/rapid/press-release_IP-18-3729_de.htm

8 May
BayernLB anticipates USD 210bn for the green bond market in 2018

In 2018 BayernLB is expecting further growth for green bonds. With USD 86.7bn worth of issues in 2016 and USD 156bn last year, the experts at BayernLB are expecting another increase this year – to USD 210bn.

7 May
BayernLB releases green bonds study

BayernLB Research has released a new study on the current political climate for green finance and the recent developments on the green bond market (“Green Bonds: Mächtig Rückenwind für die neue Asset-Klasse”). The bottom line: whether for investors or issuers, there are a number of arguments to be made for green bonds. At present, however, growth of the asset class is hampered by the lack of standardisation and the resulting greater need on the part of investors for analyses. On the other hand, the strong tailwind from the political side – and in particular from the EU action plan published in March 2018 – could prompt changes in this area.

4 May
BayernLB adds sustainable infrastructure fund to its product line

BayernLB helps its customers in their quest for a sustainable investment and is therefore now selling a fund for which Encavis Asset Management AG selects, audits and keeps tabs on the renewable-energy plants. Encavis Infrastructure Fund II, SICAV-RAIF Renewables Europe II invests in renewable-energy plants, with an eye towards a balanced and diversified portfolio. The assets that it invests in are mostly solar and wind farms in Europe, especially Germany, Austria and France.

April 2018

30 April
Climate meeting begun in Bonn

In the run-up to the World Climate Conference in Katowice, Poland, this December, representatives from over 190 countries are meeting in Bonn from 30 April to 10 May to discuss the measures to be taken under the Paris Agreement. The participants are looking to come up with standardised rules for measuring and reporting greenhouse gas emissions in every country. The purpose of such rules is to ensure comparability among the countries’ contributions to climate protection as well as transparency in ascertaining which country has made which contribution.

17 April
BayernLB is providing support in placing the largest ABN AMRO green bonds to date

ABN Amro Bank NV has issued its third and largest green bond to date under the joint management of BayernLB, ABN Amro, DZ Bank and SEB. The returns from the issue will be used exclusively to finance and refinance wind farms and to improve the energy efficiency of buildings. The seven-year bearer debenture with an issue volume of €750 million, an account size of €1.25 billion and a 0.875% coupon was subscribed to by around 100 investors, 80% of which are explicitly sustainability-focused investors.

12 April
Finland is ending coal-fuelled energy generation in 2029

Finland’s Minister of the Environment, Kimmo Tiilikainen, has announced that the Scandinavian country will ban the use of coal in generating energy from 2029. According to the Minister’s statement, the Finnish government is also looking into a subsidy scheme that will reward companies for stepping away from coal ahead of time.

3 April
Energy transformation exhibition at the German Centre Shanghai

From 13 April to May 30 2018, the German Centre Shanghai is hosting an exhibition about the energy transformation in Germany. The exhibition is organised by the German Federal Foreign Office and the German Association for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit, or GIZ) and demonstrates the steps that Germany is taking towards an environmentally friendly energy supply. China is among the more than 60 countries worldwide that have taken the German Renewable Energy Sources Act (EEG) as a model for developing their energy policy. The German Centre Shanghai was founded in 1994 for the purpose of promoting foreign trade and has been a subsidiary of BayernLB since 1996.

February 2018

27 February
European Council approves reform of EU emissions trading

The European Council has formally approved a reform of the emissions trading system for the period after 2020. An important element of the reform is that the cap on the total volume of emissions will be reduced by 2.2% annually (linear reduction factor). Emissions trading is a central component for achieving the EU climate goals. The system operates in all 28 EU countries plus Iceland, Liechtenstein and Norway. It limits emissions from approximately 11,000 heavy energy-using installations and airlines operating between these countries and covers around 45% of the EU’s greenhouse gas emissions.