TAQA Establishes New Green Finance Framework

Abu Dhabi National Energy Company (TAQA), one of the largest listed integrated utility companies in the region, on Wednesday announced that it has launched a new Green Finance Framework for the issuance of green bonds, sukuks, loans and other debt instruments.

Proceeds from such issuances will go to eligible green projects, including renewable energy, energy efficiency, sustainable water and wastewater management, clean transportation, and terrestrial and aquatic biodiversity. Projects that are being financed under the Framework will contribute to TAQA’s 2030 ESG targets and its long-term net-zero goal.

TAQA’s Green Finance Framework is aligned with global best practice set out under the four core components of the Green Bond Principles 2021 published by the International Capital Market Association (ICMA).

TAQA has also obtained a Second Party Opinion (SPO) from Moody’s Investor Services.

Moody’s has also assessed the framework and gave it a Sustainability Quality Score of SQS2 (Very Good), the second highest score under Moody’s SPO scoring framework which means it demonstrates a significant contribution to sustainability.

Jasim Husain Thabet, TAQA’s Group Chief Executive Officer and Managing Director, said that TAQA’s Green Finance Framework is an important mechanism to help the company finance the journey towards achieving our environmental, social, and governance (ESG) goals, as a low carbon power and water champion.

“This framework is further evidence of how serious we are about putting sustainability and responsible business practices at the heart of everything we do, as we also support the UAE in achieving its Net Zero by 2050 objective. Our own emission reduction targets are backed by a business plan and credible green projects that will see us play a key role in decarbonising the power and water sector as well as other industries in the UAE and around the world,” he averred.

In establishing its Green Finance Framework, TAQA has received support from Citi, Standard Chartered Bank, MUFG and HSBC as Joint Sustainability Structuring Banks alongside First Abu Dhabi Bank (FAB) as Sustainability Finance Framework Advisor.

ESG Strategy of TAQA

In late 2022, TAQA announced its 2030 ESG Strategy which included interim greenhouse gas (GHG) emissions reduction goals. A credible step towards achieving its net-zero ambitions by 2050, TAQA has committed to a 25% reduction of scope 1 and 2 emissions by 2030 across the Group, including a 33% reduction of UAE portfolio emissions compared to the 2019 baseline.

The broader ESG Strategy is built around six focus topics of climate change, water and effluents, occupational health and safety, diversity and equal opportunity, local community engagement and corporate governance.

TAQA has also committed to expanding its share of renewables to at least 30% of our total generation capacity by 2030. This goal has been accelerated with the acquisition of a 43% stake in Masdar’s renewables business, which brings us to over 28% of our portfolio coming from renewables.

Annual Report

According to its financial results for 2022, TAQA delivered a strong performance during the year which was underpinned by the execution of it its growth strategy, its contracted utilities business and an uplift in commodities prices.

The Group revenues were $1.36 billion, 10.3% higher than the prior-year period, primarily due to higher commodity prices within the oil & gas segment.

The Net income (TAQA-share) was $2.18 billion, an increase of $540 million, with greater contribution from the oil & gas segment and lower depreciation expense supporting bottom-line growth. The capital expenditure was $1.03 billion, 20.1% lower than prior year.

TAQA also made significant investments of $1.23 billion in 2022, relating to the acquisition of Masdar and the project to power and decarbonize ADNOC’s offshore production operations.

Free cash flow generation remained strong for the year at $3.7 billion, albeit 22.3% lower compared to the previous year, due to payment for TAQA’s investment in Masdar. Gross debt was $16.8 billion, down from $17.7 billion at the end of 2021, further improving the Group’s credit metrics.