U.S. Green Building Council to Purchase First Green Bonds

U.S. Green Building Council to Purchase First Green Bonds

The U.S. Green Building Council (USGBC) has announced plans to purchase one of the first federally sanctioned Green Bonds being sold today on Wall Street.

The bonds, insured by XL Capital, and rated AAA, are the first of $2 billion allocated by the United States Treasury to four large projects around the country. This first issue totaled $238 million, and is being issued this week by the Syracuse Industrial Development Authority for the Destiny USA project in upstate New York.

Citi and Lehman Brothers are co-underwriting the ground-breaking bond issue to finance The Destiny USA project, which will be the world's largest green building and the first phase of a retail, hospitality and entertainment destination -- a "retail city" -- powered entirely by renewable energy. When complete, the Destiny USA project will total $20 billion.

"The U.S. capital markets can accelerate climate change solutions," said Rick Fedrizzi, Founding Chairman and CEO of the USGBC. "Our markets have size, speed, successful precedent, and the legal obligation to accurately reflect climate risk. Project financed deals like the Destiny USA bonds that have both strong ratings and climate positive attributes prove that large green developments and innovative land use can be an environmental, fiscal, and economically smart investment."

"I am thrilled that the first Green Bond is being issued in New York -- the financial capital of the world -- for a project in New York, one of the greenest states in the country," said Senator Charles Schumer (D-New York), who championed the Green Bonds proposal as an amendment to the American Jobs Creation Act 2004. "This marks the beginning of an era when sustainable design, energy conservation, and renewable energy sources get extra credit on Wall Street. Our country can continue to grow through climate positive initiatives like this one.

"When we created Green Bonds, the entire New York delegation, Republican and Democrat, came together to support a strong, sensible piece of public policy, which will help build a new sustainable economy in New York State and throughout the country" said Senator Hillary Clinton, an early architect of the original legislation. "This pilot program alone yields measurable impacts to the environment."

The pilot Green Bond program provides tax-exempt financing capacity for revolutionary energy conserving and environmentally beneficial development projects. Projects from around the country competed for the designation. Those selected, including Destiny USA, have committed to use all savings from this special class of bonds to integrate renewable energy and green construction techniques on a very large and visible scale, unlike anything that has ever been done before.

"The financing of the Destiny project using these new Green Bonds is groundbreaking and represents a step forward in addressing climate change in the U.S. because this project incorporates sustainable design, energy conservation and renewable energy sources on a large scale," said Citi Chairman and CEO Charles Prince. "As a leading drafter of the Equator Principles, and having committed to reduce our own greenhouse gas emissions, we welcome the opportunity to finance a project that is good for economic development and good for the environment."

The U.S. Green Building Council agrees. "Green buildings are becoming mainstream because it is good business," said Fedrizzi "The numbers tell the story -- there are currently 5372 new buildings filed for LEED certification, and that number grows every day. A real estate market shift doesn't happen unless it's profitable, and this green shift is no exception."

But projects using Green Bonds are going well beyond LEED certification. Collectively, the projects selected for the pilot have agreed to the following criteria:
  • Installation of 25 MW of fuel cell capacity, where both the electrical and thermal outputs of the fuel cells are creditable toward the 25 MW criterion;
  • Installation of 10.8 MW of PV nameplate electrical generation capacity;
  • Reduction of SO2 emissions by 10 tons/day; and
  • Displacement of 150 MW of peak electric load on the grid.
"These metrics represent a measurable impact on the environment in the U.S., and a tremendous shot in the arm for the fuel cell, solar and sustainable building materials industries," said Congressman James Walsh, author of the Green Bond legislation in the House of Representatives. "The energy sector can supply our next technological revolution, and we want the U.S. to be in the front of that curve."

"Today's bond sale is proof that this legislation is working." added Senator Schumer. "I will work with my colleagues in the House and the Senate to extend this program beyond the initial pilot project so that U.S. companies can lead the world in developing sustainable and renewable technologies."