The City of Santa Fe has issued the first certified “green bonds” in New Mexico. The city says be designating specific revenue bonds as “climate or green bonds” companies can directly invest in environmentally friendly projects.
The bonds are worth $16.5 million and will be used to build an eco-friendly wastewater treatment plant. The purpose of designating the revenue bonds as “certified climate bonds/green bonds” is to allow investors to invest directly in bonds that finance environmentally beneficial projects, according to the city.
The $16.5 million in debt is for an eco-friendly wastewater treatment plant that will use the methane gas byproduct to generate electricity and heat. The first sale of green bonds in New Mexico was certified by the Climate Bond Initiative, an international nonprofit that promotes investments in projects to produce a low carbon and climate resilient economy.
“This plant’s energy savings is equivalent to taking 743 passenger cars off the road. It could provide the energy that 610 homes use for one year,” Mayor Alan Webber told The Bond Buyer, a national trade newspaper.
In talking points read to the mayor and city councilors Wednesday, Finance Director Mary McCoy called the green bonds an “important milestone in Santa Fe’s sustainability strategy and continued commitments to ecological resilience and carbon neutrality.”
The bonds, which were certified at the highest rating in February by the Climate Bonds Initiative, an international nonprofit seeking to mobilize the $100 trillion bond market for climate change solutions, will fund the City’s new eco-friendly wastewater system.
The event marked not only the first sale of green bonds in New Mexico, but the first sale of green bonds in the state certified by the Climate Bonds Initiative and the first time the global organization has certified an anaerobic digester as green.
The City had about a dozen new investors bidding on our bonds, citing the Green Bond status as the reason for bidding. There were $52 million of bids for $13.5 million issuance, $1.1 million of which were from local investors. The $13.5 million in green bonds will fund the new system over 20 years, at a time when interest rates are near historic lows.
The bonds will be used to replace the City’s antiquated wastewater system with an environmentally-friendly version. The new system will use the methane gas byproduct to generate electricity and heat. The City currently purchases most of the electricity to run the facility from PNM’s grid.
By using the waste heat to warm the anaerobic digesters, the City will eliminate the need to buy natural gas and flare the methane, a greenhouse gas. Combined with the facility’s existing solar panels, up to 94 percent of the wastewater plant’s operational energy requirements will come from renewable energy.
The City’s Finance Department recognized the project could qualify for green bond certification and that such a designation would align with Santa Fe’s Sustainable Santa Fe 25-Year Plan, which the City Council adopted in 2018. The plan lays out the City’s commitment to carbon neutrality and sustainability planning.
The City could have opted to self-certify, which is the lowest standard for green bonds. The Mayor instead went for the highest standard, which is Climate Bonds Initiative certification. To qualify, the firm First Environment had to verify that the project was green and that bond proceeds would be used to fund it.
Source City of Santa Fe