The Clean Energy Finance Corporation (CEFC) and MaxCap Group have announced a new partnership to provide green loans to commercial property owners and developers who are committed to reducing their carbon footprint.
What is a green loan?
A green loan is a type of financing that is specifically designed to support projects that have positive environmental or climate benefits. Green loans are aligned with the Green Loan Principles, which are voluntary guidelines developed by the Loan Market Association and the Asia Pacific Loan Market Association.
Green loans can be used for a variety of purposes, such as improving energy efficiency, installing renewable energy sources, reducing water consumption, enhancing waste management, or increasing biodiversity.
How does the partnership work?
The CEFC and MaxCap have established a $200 million green loan facility, which will offer lower interest rates and longer loan terms to eligible borrowers. The facility will target commercial real estate projects that achieve at least a 4-star rating under the National Australian Built Environment Rating System (NABERS) or a 5-star rating under the Green Star rating system.
The CEFC and MaxCap will also work together to provide technical assistance and guidance to borrowers on how to improve their environmental performance and achieve their green loan objectives.
Why is this partnership important?
The commercial real estate sector is one of the largest contributors to greenhouse gas emissions in Australia, accounting for about 18 per cent of the national total. By providing incentives and support for green building practices, the CEFC and MaxCap aim to help the sector transition to a low-carbon future and deliver benefits for the environment, the economy, and the community.
According to CEFC CEO Ian Learmonth, the partnership will “help accelerate the decarbonisation of Australia’s commercial property sector, which has a vital role to play in meeting our net zero emissions target by 2050”.
MaxCap Group CEO Wayne Lasky said that the partnership will “provide a competitive edge for our borrowers who are looking to develop or own high-quality, sustainable assets that meet the growing demand from investors and tenants for greener buildings”.
What are some examples of green projects?
The CEFC and MaxCap have already financed two green projects under the new facility. The first one is a $32 million loan for the development of a 6-star Green Star office building in Adelaide, which will feature solar panels, rainwater harvesting, electric vehicle charging stations, and high-performance glazing.
The second one is a $25 million loan for the refurbishment of an existing office building in Melbourne, which will upgrade its NABERS rating from 2.5 stars to 4.5 stars by installing LED lighting, smart meters, efficient chillers, and low-flow fixtures.
Both projects are expected to reduce their carbon emissions by more than 50 per cent compared to standard buildings.
