Private investors pump $1.9 billion into WA’s decarbonisation plan

The West Australian government has raised $1.9 billion (USD 1.31 billion) with the issue of its first green bond to fund major projects with “positive environmental outcomes” including the decarbonisation of the state’s main electricity grid as it prepares to abandon coal-fired power by the end of the decade.

WA Treasurer Rita Saffioti said the “use-of-proceeds” bond will go to financing state investments in major projects geared towards decarbonisation of the electricity grid. This includes wind farms, electric vehicle charging infrastructure and rebates, standalone power systems, and batteries.

Among the projects in line for funding is the 500 MW/2,000 MWh battery energy storage system to be built by state-owned power provider Synergy near the coal town of Collie in the state’s southwest and a 200 MW/800 MWh battery to be built at the site of the decommissioned Kwinana power station south of Perth.

The government bond issue, which matures in July 2033, attracted widespread attention with Saffioti confirming that more than $6 billion in bids were received from more than 60 domestic and international investors.

“The green bond issue was heavily oversubscribed, highlighting the confidence investors have in our commitment to deliver projects with positive environmental outcomes and our strong financial performance,” she said.

Saffioti said the bond issue followed two years of work by the Western Australian Treasury Corporation (WATC) to demonstrate the state’s environmental, social and governance (ESG) credentials to an expanding pool of investors.

Global investors are increasingly aware and interested in ESG performance and the WATC’s efforts will assist in keeping the state’s cost of borrowing lower by expanding the pool of potential investors, the treasurer said.

“The successful issue of the state’s inaugural green bond is a key milestone in the evolution of our borrowing program,” she said. “It reflects the state government’s significant investments in initiatives that deliver positive environment, social and governance outcomes.”

The WATC said the growing popularity of green bonds reflects a global shift towards more sustainable investment practices and the increasing recognition of the importance of addressing environmental challenges.

Victoria was the first Australian jurisdiction to issue a sovereign green bond, raising $300 million through its first in 2016.

The Australian government has announced it will launch the nation’s first sovereign green bond in mid-2024 in a bid to prompt private investors to finance its own decarbonisation efforts.