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Hyundai Issues First Korean Corporate Green Bond for Hybrids and Electric Vehicles

Hyundai Capital Services, the subsidiary of Hyundai Motor Company that provides loans and leases for new Hyundai and Kia cars, issued a $500m green bond.  The green issue is the first corporate Korean green bond and it’s also number three on the list of green bonds issued for green vehicles following Toyota’s two green issues for hybrid and EVs.

Late last year, the Climate Bonds Initiative (CBI), with input from the SLoCaT Partnership and member organizations, finalised the Climate Bonds Standard for Low Carbon Transport, which includes eligibility criteria for low-emission passenger vehicles. The CBI Technical Working Group and public consultation process both concluded that private vehicles should meet emissions thresholds, based on data from the International Energy Agency’s mobility model and the Global Fuel Economy Initiative.

For cars to be considered green under the Climate Bonds Standard for Low Carbon Transport, they must meet, or be below, a maximum emissions level of 85-90 grams of CO2 per passenger kilometre travelled (g CO2/pkm).  The Hyundai and Kia hybrids in this green bond are all under a 110 g CO2/pkm maximum, as compared to top performing petrol and diesel cars, which struggle to meet this emissions level.

Although Hyundai's bond is not a certified bond, (as it was released before CBI published its transport criteria), it is an interesting development for the transport market with its modest hybrid component, and one that can lead to more ambitious issuance in the future by Hyundai and other auto manufacturers, aided by the further guidance of the Climate Bonds Standard for Low Carbon Transport.

CBI's emissions threshold for low carbon transport will decrease over time as part of a trajectory to achieve a 2-degree (or better) average global temperature increase by 2050. As we get closer to the mid-point of the century, we need vehicle technologies to improve to achieve lower and lower emissions across all modes of motorized transport. These thresholds apply to hybrid vehicles that use both fossil fuels and electric technology for motive power, but it’s much easier to classify all electric or fuel cell vehicles as green under the Climate Bonds Standard.

We can’t wait for 20-30 years until we’ve transitioned all electricity grids to green energy sources before developing and adopting low emission vehicles technologies; we need to use the time now to get our automobile technologies up to scratch so we can develop highly efficient vehicles by 2050.  Thus Hyundai’s green bond issuance for hybrid and electric vehicles is financing technology crucial for a transition to a 2-degree future.

For more information:

Source: http://www.climatebonds.net/2016/03/green-bond-market-report-korea-hyundai-inaugural-500m-hybrids-evs-china-bank-qingdao-rmb-4bn#sthash.coPTd99H.dpuf

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