KiwiRail is to be the recipient of the world’s first shipping loan to be certified by the Climate Bond Initiative (CBI), the company claimed.
The $350 mill loan facility will be used to finance the purchase of the two recently ordered Interislander ferries.
CBI is used worldwide by bond issuers, governments, investors and financial markets to prioritise investments, which genuinely contribute to addressing climate change.
It uses rigorous scientific criteria to label bonds, loans and other debt instruments to ensure they are consistent with the goals of the Paris Climate Agreement.
KiwiRail Group CEO, Greg Miller, said he was delighted by the CBI certification, which is further endorsement of the company’s commitment to hitting its carbon emissions reductions targets.
To gain CBI certification, KiwiRail had to demonstrate a clear path for fuel and propulsion systems to achieve zero carbon emissions by 2050, which supports both the company’s and the New Zealand Government’s objectives.
“The new ferries themselves are a huge leap forward in design, efficiency and comfort,” Miller said.
“These ferries are making a 50-year advance in technology. We’re going from ferries, which are well over 20 years old, to state-of-the-art, future-proofed ferries, which will last 30 years, and carbon emissions reduction has been a big part of the design.
“Once Interislander’s three old ferries are phased out, the new ferries will achieve a 40% reduction in Interislander’s carbon emissions by operating on a combination of diesel, battery and shore power.
“From the start, 30% of each crossing, including port time, will be battery and shore powered.
“Through smart design of the hull and machinery space, the new ferries have been future-proofed to allow us to increase battery use over time so we can run entirely on battery and shore power, or to use other low-carbon fuel sources as they become commercially available and have a reliable supply line.
“Reducing fuel consumption will have financial benefits, as well as environmental. Our energy bill is around $80 mill a year and is rising, so investing in low-carbon assets like the new ferries will be good for KiwiRail and the environment,” he said.
An improved and optimised hull design has resulted in wake energy reduction of more than 50% lower than the maximum allowed in the Marlborough Sounds, and means less energy is needed to power the ferries. Using azimuth thrusters also mean that the ferries are highly manoeuvrable, which improves safety and reliability.
CBI CEO, Sean Kidney, explained; “Rapid de-carbonisation of transport is vital for emissions reduction, with shipping being a critical part of the sector. This world first certification for shipping by KiwiRail and their partners marks the adoption of international best practice for green finance and they are to be congratulated.”
KiwiRail’s debt facility to support its $550 mill ship purchase is financed by its banking partners, Westpac NZ (facility agent), Société Générale (green loan co-ordinator), Bank of America and National Australia Bank.
The new ferries are being built by Hyundai Mipo Dockyard and the first is due to enter service in 2025 and the second in 2026.
“Achieving this certification has taken a lot of work, starting with the Naval Architect OSK-ShipTech’s initial future-proofed design work for the new ferries and investigations into green fuel sources including future carbon emission reduction modelling. Ernst & Young and Russell McVeagh, alongside our banking partners, have worked with us to achieve this world first,” Miller added.
The purchase of the ferries is part of a $1.45 bill investment programme, which will also see redevelopment at the ports of Wellington and Waitohi Picton.