Electricity generation project finance as corporate loans

For investments in electricity generation, we do provide use of proceeds loan to such projects but only a small fraction of these loans rely primarily on the project’s cash flow for repayment. As such we classify all our electricity generation projects as corporate loans including for financed emissions calculation and reporting in our annual report. For the SBTi target setting - We will set target for 100% of electricity generation project but we want to maintain the same logic i.e, looking at the electricity generation projects as corporate loans. This means we will be counting also the share of electricity generation projects towards the 67% requirement set by the guidance for ‘Other’ corporate loans. Could you please let us know if this is ok?

Project finance is defined in the Near-Term Financial Sector SBT Guidance as a loan or equity with known use of proceeds that are designated for a clearly defined activity or set of activities (rather than to a company for general purposes), which sounds applicable to your case. Also, corporate loans to electricity generation companies have a 100% coverage requirement that is separate from corporate loans to other sectors so that would not count towards the 67% requirement anyway.

Thank you Howard for clarification. This helps

Best regards,

Hi @HowardS,

I have one follow up question- the target setting guidance states that both Scope 1 and Scope 2 emission must be included in the SDA for power generation. However, the SBTi tool only has 1.5 deg pathway with scope 1 intensity for power sector. Could you please confirm if it is ok to only include scope 1 in the intensity target for power generation sector?

Would anyone be able to help me with the follow-up question above? I would greatly appreciate your input as we are close to finalizing the targets

Hi Nikunj, for the power SDA only the Scope 1 input is available and thus can be used to model your target in the 1.5 aligned scenario.