Financing for geothermal heating and cooling propels Oberlin ahead in the climate landscape.
There’s traditional, and then there’s just old. Oberlin College and Conservatory, founded in 1833, has plenty of both. But the heating and cooling system currently fueled by natural gas –– with its wheezing steam heat, the leaky and collapsing pipes –– at 100 years, is just plain old. Expensive repairs, annoying disruptions, costly damage –– and old-world climate-warming emissions.
Fast forward. As part of its goal to be carbon neutral by 2025, the Ohio-based college recently broke ground on a $140 million project that will replace the old heating and cooling system with cutting-edge emissions-free geothermal HVAC. They financed the bulk of the project and related infrastructure with green bonds, Oberlin is also tapping into the huge demand for sustainable investments and getting in on the low cost of borrowing that comes with it. Smart!
An $81 million green bond, with Climate Bonds certification (that’s the gold standard) combined with a traditional bond for another $30 million, will finance the conversion of Oberlin’s 440-acre campus to geothermal heating and cooling, a system that draws on the earth’s natural underground temperatures to replace traditional fossil fuels. Entirely renewable.
As part of its goal to be carbon neutral by 2025, the Ohio-based college recently broke ground on a $140 million project that will replace the old heating and cooling system with cutting-edge emissions-free geothermal HVAC.
This issue illustrates the savings from going green. The two tranches of bonds are nearly identical in structure –– both are taxable and have a 30-year tenure, both are unsecured general obligation bonds. The $80 million in green bonds carry an interest rate of 2.87%, while the traditional bonds carry a 2.92% rate. That’s a greenium.
The new heating-cooling system at Oberlin will also put in place pipes with an efficient, low-temperature distribution system that will save 5 million gallons of water and reduce operating costs by more than $1 million a year. Meanwhile, campus buildings are being upgraded for efficiency. The savings from these improvements are expected to cover the investment in just over a decade.
(For a deeper dive into how geothermal energy systems work, check out this great explainer by National Geographic.)
Oberlin was early to the sustainability movement among colleges and universities. In a sustained campaign, it reports a 67% reduction in its carbon footprint since 2007. Campus electricity is from renewable sources –– a solar array on campus and hydro through Oberlin Municipal Light and Power Systems (OMLPS). Completion of the geothermal heat and cooling project pushes the institution within 11% of carbon neutrality, according to Oberlin’s 2020-21 sustainability report.
To tackle the last 11% of carbon emissions by 2025 will take some creativity –– and for that, the college plans to continue to harness the ample brainpower and drive of its students and faculty.
“Together [faculty, staff, students and trustees] have also used this project to create a comprehensive set of new opportunities for students, from experiential clean energy curriculum to future internships,” said Oberlin president Carmen Ambar. “[And] given that more than 300 of our admitted students have already expressed interest in environmental studies, that becomes an important new part of the Oberlin education and experience.”