Hitachi Zosen Green Bonds
On September 21, 2018, Hitachi Zosen became the first Japanese manufacturer to issue green bonds. The proceeds from the Hitachi Zosen Green Bonds is used to purchase materials for the construction and refurbishment of EfW plants.
As a company sustained by the environmental sector, we will contribute to realizing a recycling-oriented society by further promoting the introduction of environment-friendly facilities. This business policy and the need for diversification of financing methods coincided, leading us to issue green bonds. The purpose of issuing bonds must be specified, and after a great deal of consideration we selected two green projects: "Rebuilding and construction of Kyoto City Nambu Clean Center No. 2 Plant" for Kyoto City and "Construction and operation of new EfW plant" for Kikuchi Environmental Preservation Association (Kumamoto Prefecture). The funds raised will be used for expenses such as purchasing materials for the project.
To be eligible for green bonds, the environmental benefits of the green project must be “specifically” disclosed. We clearly presented the benefits according to the specified items, such as what kind of production process the project will have and how much CO2 reduction can be expected. It was not easy because it was an ongoing project, but we worked with the project managers to respond. We thus issued the "Hitachi Zosen Green Bond", the first of its kind in the Japanese manufacturing industry.
Here is the current state of things.
Overview of Hitachi Zosen Green Bonds
| Issuer | Hitachi Zosen Corporation |
|---|---|
| name | Hitachi Zosen Corporation 26th Debenture Bonds (Hitachi Zosen Green Bonds) |
| date of issue | September 21, 2018 |
| Condition decision date | September 14, 2019 |
| Issuance period | 3 years |
| Issue amount | 5 billion yen |
| Interest rate | 0.24% per year |
| Use of funds | Served as working capital for expenses such as purchasing materials for waste incinerator power plants ordered by the Hitachi Zosen Group |
| Green Project | 1.Kyoto City Nambu Clean Center No. 2 Plant 2.EfW Plant for Kikuchi Environmental Preservation Association |
| Corporate bond rating | BBB＋（JCR） |
| Lead underwriter | Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. Nomura Securities Co., Ltd. |
| Green bond structuring agent(Note 1) | Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. |
Someone who supports the issuance of green bonds through the formulation of a green bond framework and advice on getting a second opinion.
Overview of projects and status
(1)Rebuilding and construction of Kyoto City Nambu Clean Center No. 2 Plant (provisional name)*
It is characterized by having a facility that turns food waste into biogas as well as generating electricity from waste with high efficiency.
We aim to recover the maximum energy from waste and reduce CO2 emissions more than conventional waste incinerator power plants.
| Client | Kyoto City |
|---|---|
| Project | Rebuilding and construction of Kyoto City Nambu Clean Center No. 2 Plant (provisional name) |
| Contents | Design and construction of waste treatment facility, administration office, and environmental learning facility (including dismantling of existing facility and construction of exterior and other ancillary facilities) |
| Description | Treatment capacity 500 t/day (250 t/day x 2 stoker-type incinerators), power output 14,000 kW Sorting and resource reuse facility: 180 t/6 hrs Biogas generation facility: 60 t/day (30 t/day x 2 lines) |
| Completion | September 30, 2019 |
| Current Status |
Completed at the end of September 2019, currently in operation. |
- *The name of the factory is the name recorded at the time of receiving the order.
(2)EfW Plant for Kikuchi Environmental Preservation Association
The association plans to build a new waste incinerator power plant in order to promote permanent and reliable waste treatment in light of future trends in the association's area and sustainable waste treatment. We received an order in 2018 as a representative firm.
| Client | Kikuchi Environmental Preservation Association |
|---|---|
| Project | Construction and operation of new EfW plant |
| Contents | Design, construction, and operation for 20 years after completion of EfW plant |
| Description |
|
| Completion | March 31, 2021 |
| Current status | Completed at the end of March 2021, currently in operation. |
- *The name of the factory is the name recorded at the time of receiving the order.
Allocation of proceeds
The table below shows the status of fund allocation as of March 31, 2020.
| Beginning balance | 5,000 |
|---|---|
| Kyoto City Nambu Clean Center No. 2 Plant | △4,366 |
| EfW Plant for Kikuchi Environmental Preservation Association | △634 |
| Balance at the end of the period | 0 |
Evaluation by an outside body
In order to ensure the eligibility and transparency for this green bond and to improve its appeal to investors, we obtained a second party opinion on green bond eligibility from DNV GL Business Assurance Japan (a pioneering international organization for risk management) before issuing the bonds. In addition, we received a regular green bond review in July 2020, confirming that we maintained eligibility.
Impact reporting
Hitachi Zosen Corporation will continue to disclose the following indicators for each of the EfW plants receiving allocations of the proceeds, as long as the corresponding green bonds remain.
- 1Annual power output (MWh/year)
- 2Annual GHG emissions saved (t-CO2/year)
The environmental benefits of the eligible green project, to which the proceeds from the Hitachi Zosen Green Bond issued in September 2018 were allocated, are as follows.
| Facility name | Annual power output *1 *3 MWh / year |
Annual GHG emissions saved (CO2 reduction amount) *2 *3 t-CO2 |
|---|---|---|
| Incinerator facility | 50,795 | 16,966 |
| Biogas facility | 4,266 | 1,425 |
| total | 55,061 | 18,390 |
- *1Power generation (MWh): Operation record from July 2019 (after power generation started) to March 2020 (about 9 months)
- *2CO2 reduction amount (t-CO2): Power generation (MWh) x CO2 emission factor (t-CO2 / MWh)
In calculating the carbon dioxide emission reduction, the reduction can be reproduced with the CO2 emission factor of the Ministry of the Environment, based on the Act on Promotion of Global Warming Countermeasures
We use the emission factor of Kansai Electric Power Company (0.334t-CO2 / MWh, 2018), which reflects the adjustment of the environmental value due to the fixed energy purchase system. - *3Based on the operation record from July 2019 (after power generation started) to March 2020 (about 9 months) because it has had less than one year of operation
The power generation output and environmental benefit (CO2 reduction amount) are calculated.
- *The environmental benefit (CO2 reduction amount) of the Kikuchi Environmental Conservation Association's new environmental plant will be announced after completion and operation.