On 22 June 2018, Luxembourg adopted a law introducing
the option for Luxembourg covered bond banks to issue a new type of
asset: renewable energy covered bonds or lettres de gage
énergies renouvelables (the Renewable Energy Covered
Bond) into the existing framework of covered bonds issued
by Luxembourg covered bond banks (the Law of
2018).
Various covered bonds labelled as green have already been issued
in the last years, such as the Green Pfandbrief issued by Berlin
Hyp in 20151 , backed by mortgages over commercial
properties which received a green label. While these instruments
combined existing covered bond legislation with a certification
that the underlying assets qualified as green, no legal framework
existed before the Law of 2018. The Law of 2018 establishes for the
first time a real legal framework by introducing the Renewable
Energy Covered Bond into the Luxembourg legislation governing
Luxembourg covered bond banks.
