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Monday, October 2, 2023

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Abu Dhabi National Energy Company launches green financing framework for Sukuk and other debt instruments

Abu Dhabi National Energy Company (TAQA) has launched its Green Finance Framework for the issuance of green Sukuk, bonds, loans and other debt instruments with proceeds being channeled toward eligible green projects in line with its 2030 ESG targets and net-zero aspirations.

“TAQA’s Green Finance Framework is an important mechanism to help us finance the journey towards achieving our environmental, social and governance goals, as a low carbon power and water champion…

“Our own emission reduction targets are backed by a business plan and credible green projects that will see us play a key role in decarbonizing the power and water sector as well as other industries in the UAE and around the world,” Jasim Husain Thebet, group CEO and managing director of TAQA, remarked.

Proceeds from green financings under the framework will be channeled toward financing or refinancing, with a three-year look-back period; and eligible green projects under the renewable energy, sustainable water and wastewater management, energy efficiency, clean transportation and terrestrial and aquatic biodiversity categories.

In addition to assets, capital expenditures and operational expenditures, eligible green projects may also include equity investments into entities. Proceeds of green financing may be channeled toward equity participation in entities which attribute a minimum of 90% of their revenues to one or more eligible green project categories, or ‘pure play companies’.

In the case where the equity investment is not traceable to an underlying eligible project, it will be limited to 5% of the proceeds allocation.

According to the framework, TAQA’s equity investment in Abu Dhabi Future Energy Company, or Masdar, which it undertook in 2022, falls into the category of pure play company equity investment. Through the acquisition, TAQA gained a 43% controlling stake in Masdar’s renewables business as well as a 24% stake in its green hydrogen venture.

With a second-party opinion assessment from Moody’s Investors Service of ‘SQS2 Sustainability Quality Score (very good)’, TAQA has named Citi, Standard Chartered, MUFG and HSBC as the joint sustainability structuring banks while First Abu Dhabi Bank was appointed as the sustainability financing framework advisor.

The establishment of the Green Finance Framework follows the announcement of TAQA’s 2030 ESG Strategy late last year, under which it committed to reduce its Score 1 and 2 emissions by 25% by 2023 group-wide. It also committed to a 33% reduction of its UAE portfolio emissions as compared to its 2019 baseline.

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