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ManagEnergy is a technical support initiative of the Intelligent Energy - Europe (IEE) programme of the European Commission which aims to assist actors from the public sector and their advisers working on energy efficiency and renewable energy at the local and regional level.

The municipality of Örebro in Sweden issues their own green bonds to finance infrastructure aimed at combating climate change through reduced energy consumption

A perfect fit

In October 2014, Örebro Kommun, rated AA+ by Standard and Poors, issued 5 year bonds of SEK 750 million (82 million euro / 104 million USD), to support the funding of projects aimed at facilitating the transition to low-carbon and climate-resilient growth.

‘The purpose of issuing green bonds is to further expand Örebro Municipality’s capital, while we want to give investors the opportunity to invest sustainably and responsibly’, says Mats Rodenfelt,  Head of Finance of Örebro Municipality.

The rapidly growing global market in green bonds reflects investors’ appetite for supporting environmentally innovative and socially responsible projects; the Climate Bond Initiative reported that in 2014, 36.6 billion USD worth of green bonds were issued – more than three times as many as in 2013. Indeed, Örebro municipality increased the amount of the green bond fund from SEK 500 million, as originally intended, to SEK 750 million, due to investor demand. This forms a part of the municipality’s SEK 6 billion MTN (medium term note) program.

Formerly the preserve of financial institutions such as the World Bank and SEB, who developed the concept, green bonds are increasingly being issued  to finance action at local government level (13% of green bonds issued in 2014); the development of national municipal bond agencies has been particularly important in this regard.

DIY and diversification to support the transition to a clean-energy future

By issuing green bonds in their own right, local municipalities such as Örebro are soliciting investment in infrastructure to greenproof their communities’ futures. Mats Rodenfelt explains why  Örebro  issued their own bonds rather than going through Kommuninvest, the Swedish municipal bond agency: The municipality’s internal bank has … different finance sources (mainly MTN-program, short term commercial program and Kommuninvest) because we want to reduce financial risks. And to have different finance sources is a way of reducing the risk.’

From a municipality’s point of view, these bonds represent an ideal tool for raising the capital required to invest in a clean-energy future, and for increasing awareness of climate-related issues. The importance of this kind of investment is shown by the International Energy Agency’s report of May 2014, estimating an additional investment of 44 trillion USD is needed globally by 2050. The issuing of green bonds by municipalities could become an important step in financing the world’s transition to a low-carbon economy at a local level.


Örebro Kommun is well positioned to take this venture in the financial markets (after Gothenburg and Sundbyberg, Örebro is the third Swedish municipality to issue their own green bonds), since its credentials on the sustainable development front are impressive, and credibility is key from the point of view of investors in green bonds.

Örebro, a town with a population of 140,000, was ranked third out of 290 Swedish municipalities in 2014 in the environmental magazine Miljöaktuellt’s annual league table of Swedish municipalities’ environmental work.  Biogas-powered buses operate on the city’s streets, using biogas created from the population’s waste produce. In the municipality’s Climate Plan are targets of reducing the per capita carbon footprint by 50% by 2020 and 90% by 2050 (with reference to 2008).  Already, between 2008 and 2013, they reduced electricity consumption by 24% ; the target was to reduce it by 20% by 2020 !  They have formed a development company, together with the neighbouring municipality Kumla, to increase the production of wind power and they aim to produce all their own electricity by 2020.

Robust and transparent procedures

An audit done by the Norwegian climate research association CICERO (Center for International Climate and Environmental Research) rated Örebro’s Green Bond Framework highly for providing a ‘progressive, clear and sound framework for climate-friendly investments’. Also, they praised the way in which projects are ‘supported by comprehensive environmental and climate plans with quantified targets that are monitored and followed up on an annual basis’.

In terms of transparency and accountability, Örebro Kommun has established sound policy.  An annual investor letter, publically available, is published with details of the progress of the projects funded and the funds are kept in an earmarked account.

Sustainable development on the ground, in the air, under water

97% of the projects funded by this green bond are directed at mitigation activities. Over half of the funds is going directly towards renewable energy infrastructure (SEK 400 million on wind turbines and SEK 16 million on a solar power plant). Three of the four other projects funded are construction projects whose outcomes are directed towards energy efficiency (with some generation of renewable energy on a micro scale therein), including new school buildings in Vintrosa as well as student accommodation and a passive building for rental housing in Pärlöken. Lastly, SEK 18 million is going towards a water treatment project to reduce nitrogen emissions to Lake Hjälmaren, Sweden’s fourth-largest lake, thus reducing eutrophication in the Baltic Sea.

Foundations for the future

The Vintrosa school buildings are being built to a "Silver" certification under the building standards of Miljöbyggnad (Sweden Green Building Council), and there will be on-site generation of solar energy. According to Hanna Arneson, Green Economy Strategist with the municipality, ‘The building project at the Vintrosa school is also made in cooperation with the Swedish tax agency, focusing on “clean construction”, a project to promote sound … competition and discourage economic crime.’ The Pärlöken passive building for rental housing and the Student City student accommodation projects are developed by ÖBO (Örebro bostäder, ‘Örebro Residences’), the housing corporation owned by the municipality.

Mats Rodenfelt says, ‘We are very happy with the response from the investors and others. It has been a good way to highlight the environmental work within the municipality …. We will certainly issue more green bonds in the future.’

Further information

Read more about energy performance targets in Örebro’s green building criteria

Read more about green bond principles