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32 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2020 CREATING BUSINESS OPPORTUNITIES 33

Green Financing Transitioning to a Low-carbon Future

Our green initiatives are financed according to our Towngas Green Bond Framework. In late 2017, we became Towngas is helping to fulfil the demand for the energy required to power economic growth as well as reduce
the first energy utility in Hong Kong to issue green bonds. We obtain post-issuance stage certification from the emissions contributing to climate change. The challenge of sustainable energy presents an opportunity for the
Hong Kong Quality Assurance Agency (HKQAA) under its Green Finance Certification Scheme in order to reinforce
investor confidence. growth of our businesses, as we transition to a more sustainable business model:

More information about our Green Bond Framework is available on our corporate website.
City-gas City water Conventional fuels
Use of Proceeds

Our Green Bond was issued through a HK$600 million (ISIN HK0000375300) and a JPY2 billion
(ISIN XS1720566790) transaction under the Medium-Term Note Programme. Proceeds from the green bond of Smart energy City-waste Biomass fuels and
HK$734.4 million have been allocated to the following four waste-to-energy projects: systems treatment chemicals

Estimated Amount and
Project Category Location Equity Project Cost Ratio Allocated
(millions) (HK$ millions)
ISIN ISIN
HK0000375300 XS1720566790
Landfill Gas Utilisation Tseung Kwan O, 100% HK$350 145.0 35.0
Hong Kong (24.3%) (25.4%)

Kitchen Waste Processing Suzhou city, 55% RMB220 23.0 24.0
(Waste to Energy) Jiangsu province (3.9%) (17.5%) The Role of Natural Gas in Energy Transition

Hydro-treated Vegetable Oil Zhangjiagang city, 100% RMB935 400.0 56.0
(Waste to Energy) Jiangsu province (67.0%) (40.7%) As a leading energy supplier in Hong Kong and mainland China, we see natural gas as a critical component in the

Agricultural Waste to Green Tangshan city, 100% RMB355.5 28.9 22.5 transition from fossil fuels to renewables.
Chemicals and Paper Pulp Hubei province (4.8%) (16.4%)
Towngas has been working closely with commercial and industrial customers, such as hotels, hospitals and
commercial laundries, to switch from coal/diesel to gas. We are also promoting the use of gas-powered desiccant
Project Update
dehumidifiers to improve indoor air quality and reduce energy consumption, thereby lowering carbon emissions.
Estimated In 2020, we worked with Hong Kong Baptist Hospital to install the first integrated desiccant system for hospital
Project Category GHG reduction Project Progress
(tCO2e/yr) wards in Hong Kong. Having proved the greater effectiveness of these dehumidifiers over traditional versions, we
are planning to introduce them in mainland China, especially in hospitals and hotels.
Landfill Gas Utilisation 12,200 • In full operation in 2020
• Sent out 191TJ equivalent synthetic natural gas to town
In 2020, we extended our city-gas business in mainland China to 23 provinces, autonomous regions and
gas network in 2020 municipalities, and served approximately 31.81 million customer accounts. A new agreement was recently signed

Kitchen Waste Processing 5,900 • Officially commissioned in September 2020 with Shanghai Gas Company Limited (Shanghai Gas) to strengthen our business growth, profit potential and
(Waste to Energy) • Handled 92,000 tonnes of wastes in 2020 assets size, and promote the long-term growth of the natural gas industry. Shanghai Gas is the major energy
supplier to the city of Shanghai, with a share of more than 90 per cent of the local natural gas market.
Hydro-treated Vegetable Oil 259,000 • Officially commissioned in Q3 2020
(Waste to Energy) • Produced 88,000 tonnes of HVO in 2020 We are also expanding our own gas storage capacity on the mainland with the construction of a natural gas
• Received International Sustainability and Carbon storage facility in underground salt caverns in Jintan district, Changzhou city, Jiangsu province. Construction of
Certification for the fourth year this project is proceeding in phases. Total storage capacity will eventually reach 1.1 billion cubic metres, enabling
the Group to supplement gas supplies in eastern China during the peak winter period.
Agricultural Waste to Green 120,000 • In partial trial production and is expected to commence
Chemicals and Paper Pulp full-scale trial production in Q2 2021
• Expected to be commissioned in Q3 2021