Being able to fund municipal projects is key to provide public services and build a sustainable city. One of the tools cities have been using is the issuance of municipal bonds. The City of Johannesburg, in South Africa, issued its green municipal bond back in 2014. This article focuses on how the bond has contributed to sustainable public service delivery in recent years.
Project overview
Johannesburg’s green bond is embedded within the city’s 2040 Growth and Development Strategy. The goal under the pillar of sustainable services is to provide a resilient, liveable, and sustainable urban environment underpinned by the infrastructure of a low-carbon economy. These services include renewable energy, waste management, and sustainable land use, each of which requires substantial resources. Financing green projects is therefore a top priority for the city.
Johannesburg’s green bond was issued to finance green initiatives in public services, including transport, energy, and water management. The bond was valued at ZAR 1.5 billion, roughly USD 143 million and was 150% oversubscribed at launch.
The green municipal bond of Johannesburg served as a funding source to improve and expedite the implementation of the city’s climate change mitigation strategy. The core focus areas were constructing low-carbon infrastructure, minimising reliance on resources, and conserving natural resources.
Credit: the City of Johannesburg
Projects funded by the bond
The Johannesburg green municipal bond funded green projects across four categories:
- Energy
- Transport/climate change
- Household and building energy efficiency
- Waste management and wastewater
Below is a study on the impact of key projects, demonstrating the contribution of the green municipal bond in recent years.
Credit: the City of Johannesburg
Rea Vaya Bus Rapid Transit System Extension
The Johannesburg green municipal bond directly funded the Phase 1C extension of the city’s Rea Vaya BRT network, expanding and upgrading local public transport services. The physical work financed by the bond included the construction of 16 km of dedicated bus transit lanes, the establishment of 10 new stations, and the development of 5 km of safe, non-motorised walking and cycling paths. Additionally, the capital was used to procure and deploy a fleet of sustainably fuelled buses to service these new routes, creating a comprehensive, integrated mobility network across the city.
This infrastructure serves as a social intervention known locally as the “Corridors of Freedom.” As part of Transit-oriented Development, the BRT network connects residents to jobs, linking townships that previously had inadequate opportunities to the Central Business District.
Before the BRT, many low-income residents spent over two hours in transit and up to 20% of their income on fragmented, informal taxi commutes. Today, the expanded network carries roughly 56,000 daily passengers, saving users an average of 14 minutes each way and cutting their transport costs.
The project also delivered direct economic empowerment by retraining informal minibus taxi drivers to operate the new fleet, formalising their employment.
Environmentally, the rollout of 150 new dual-fuel buses, the conversion of 30 buses to biogas, and the deployment of 152 hybrid buses have improved the city’s air quality, with carbon emissions projected to fall by 1.6 million tonnes.
Credit: the City of Johannesburg
Energy efficiency
The Johannesburg green municipal bond financed the implementation of a biogas-to-energy project and the rollout of 42,000 smart water metres and 43,000 solar water heaters. These projects aim to distribute and utilise electricity more efficiently.
The biogas-to-energy project transforms methane emissions from wastewater and landfill waste into energy, supplying 1.1 megawatts of electricity to the Northern Water Treatment plant. The plant currently treats 1 billion litres of sewage per day at six wastewater treatment works, with the potential to produce 9.6 megawatts per day of electrical energy. Moreover, Johannesburg benefits from the saved cost of purchasing electricity and mitigating methane gas emissions.
Johannesburg also uses biogas fuel to expand its dual-fuel bus fleet, further reducing the environmental impact of the city’s transport sector.
The installation of solar water heaters has three main impacts:
- Saving the equivalent of 22.5 gigawatt-hours of electricity per year.
- Reducing household electricity consumption and cost. Water heating accounts for 39% to 50% of total household electricity consumption in South Africa.
- Reducing reliance on unsafe water-heating methods, such as indoor coal burning, eliminates household safety hazards and improves respiratory health.
Credit: Guascor Energy
Lessons learnt
The experience of Johannesburg illustrates how financing mechanisms, like municipal green bonds, can bridge the local public service funding gap while simultaneously advancing global climate goals. A municipal bond is a viable option for local governments to consider for climate finance. Understanding these financing mechanisms and how to access available funding opens the door to improved public service delivery and sustainable projects, transforming visions into tangible impacts
