A week after London’s newly-elected mayor Sadiq Khan announced plans to further crack down on air pollution, the company that makes the city’s iconic black cabs said that it has raised $400 million through the sale of green bonds to electrify its taxi fleet.
Zhejiang Geely Holding Group or ZGH, which owns London Taxi Co., said Friday that it had raised the large sum to finance to “the development of zero-emission capable vehicles.” The funding announcement comes after the company revealed its next generation of cabs, called the TX5, in October in London at an unveiling attended by Chinese President Xi Jinping. ZGH expects to launch the new vehicle—a battery-powered hybrid with an aluminum body—in the U.K. at the end of next year and in international markets in 2018.
ZGH is up against a 2018 deadline to get cleaner cabs on London’s roads. That’s when the city’s new “Ultra Low Emission Zone” goes into effect for licensed taxies and private hire vehicles. To travel within that area, all vehicles will need to meet exhaust emissions standards or pay a daily charge.
Last week, as part of his first policy announcement, Mayor Khan, who was elected May 5, said that he wants to increase the size of the low emission zone beyond its footprint in central London and perhaps put it into effect a year earlier than planned. As it stands now, the zone will apply to all cars, motorcycles, vans, minibuses, and coaches starting in September 2020. “I have been elected with a clear mandate to clean up London’s air—our biggest environmental challenge,” he said, adding that inaction by his predecessor Boris Johnson had made the city a “laughing stock” on the world stage.
ZGH’s funding came through a green bond sale, a kind of financing where the proceeds must go to environmentally friendly projects. Green bonds have become increasingly popular among investors who want to back projects that accelerate the shift from “dirty” energy to renewable and clean technology. Bloomberg New Energy Finance says this year could see almost $56 billion of green bonds issued, up from $46 billion—a record—in 2015. ZGH said its green bond sale was the first-ever by a Chinese automaker in an offshore market.