Green Bonds for Sustainable Development

By Anonymous
By Puja Meiyammai S,
(Image source: Smart Prosperity Institute)

What are green bonds? How can they tackle major environmental issues faced by India and save the environment for the future generation?

In the early years, institutions like banks and non-banking sectors financed environmental projects. However, a huge investment requirement for these projects made it financially unviable. Thus, the concept of green bonds came into existence to keep these projects on track.

Green bonds are fixed income financial instruments that are lined up in the process of promoting and implementing climate change and environmental solutions. The funds are raised by issuing bonds to investors who are interested in financing green projects. The green bonds assure the investors of prompt repayment of the amount that is borrowed by remunerating them with either fixed or variable rate of return. Second, they create positive public relations and help in diversification of investors.

The green bond market in India has been flourishing for the past three years. It came to existence in 2015 when YES Bank issued the bond for solar and wind energy projects with an amount of $1.1 billion. The green bonds issued in India are certified by the United Nations Framework Convention on Climate Change (UNFCCC). Following this, in January 2016 SEBI announced the official green bond requirements for India and made it the second country to establish a national-level guideline plan next to China. Successively, a circular containing disclosure norms was sent out with all the information about the issuance and listing of green bonds in India.

In the Union Budget session of 2018, it was proposed that only A-rated green bonds are to be accepted for investment and not AAA-rated bonds. This was to help the corporate bond market expand further as green bonds are sub-sets of corporate bonds. As of 2019, India holds 8th position in the green bond market with a market value of $7 billion. India has announced a target of 175 gigawatts of renewable energy capacity that is to be achieved by 2020 and currently we have only 30 gigawatts. In order to achieve this target, India will need a large amount of money. Additionally, since we are a developing economy we need to be careful in selecting investors, especially in the backdrop of the USA recently withdrawing from the UNFCCC Paris agreement. Due to this exit, pressure on the developing economies has increased as now they would not be able to get investors from the USA, which forces them to find more domestic investors to increase the source of funds. In order to be successful in finding domestic investors, India needs to overcome the barriers like lack of proper measures for this nascent financial instrument, consider diversification of sectors and try to include national institutions, as till date only state and state-owned institutions are the issuers of green bonds. Also, it should come up with new ideas to attract more domestic investors. After rectification or overcoming these barriers, India would be able to use these bonds to tap more resources and use them wisely than the other developing economies with properly equipped technologies.

(Puja Meiyammai S was a Research Intern at Centre for Public Policy Research. Views expressed by the author is personal and need not reflect or represent the views of Centre for Public Policy Research)

Comments

Post a Comment

Popular posts from this blog

CPPR's social media presence on Blockathon makes a mark!

By Anonymous
Image
by Shonit Nayan US Consulate General, Chennai; with Centre for Public Policy Research (CPPR), Maker Village and Kerala Startup Mission (KSUM) organized 'Blockathon for Change' to address the societal issues of migrant labourers using blockchain technology. Migrant labourers are often a disadvantaged and vulnerable group because of associated socio-economic and cultural issues. In India, massive interstate migration of labourers poses serious predicaments warranting immediate attention both at the ground level and policy level. The first-of-its-kind hackathon in India was designed to beneficially employ the blockchain technology for offering comprehensive solutions to mitigate problems related to migrant labour. While interning at CPPR, I got an opportunity to be a part of my first hackathon. I learned how social media platforms were extensively used to create buzz for the Blockathon and blockchain technology. CPPR
Read more

Latin Catholic community of Kerala: Role in 2016 Assembly Elections

By Anonymous
Image
By Dr D Dhanuraj & Sambhavi Ganesh Latin Catholics (LC) in Kerala number about 20 lakhs with 2 Archdioceses (Verapoly and Trivandrum), and 9 Dioceses. They have a significant presence in Ernakulam, Thiruvananthapuram, Kollam, Alleppey, and Thrissur districts. This community is politically influential, which, through its socio-political wing Kerala Latin Catholic Association (KLCA) and Christian Service Society (CSS), protects its interests. Traditionally, Christians in Kerala have supported the UDF alliance and same is the case with the LC also. The major reasons for support are- The professed atheism of the communist party-backed LDF. The involvement of the church in health and education sectors, which the LDF opposes due to its anti-commercialization view. The ‘abstinence’ stance taken by the LDF over alcohol prohibition unlike the clear pro-ban position of the Congress. Even though the LC continued to support UDF during the early yea
Read more

Street Food Vending Policy- A case study of Kochi

By Anonymous
                      Prepared by Sidharth. S. Kumar, intern at Centre for Public Policy Research Street food vendors have been a part of Kochi’s food culture since time immemorial. These vendors run street eateries which are popularly known among the inhabitants as ‘thattukada’. Thattukadas serve palatable indigenous flavours. They daily feed several thousands of customers belonging to various segments of the society and age groups. Street food is a treasure house of local culinary traditions and is increasingly playing an important role as an enhancer and force multiplier of tourism sector. [1] These vendors operate, mostly, at evenings or nights. They cater to the needs of night travellers, labourers and immigrant bachelors and were even successful in promoting the fast food culture in the city. The youth of the city also choose to eat out at a street eatery due to the night ambience available there. They provide easy access to food for the inhabitants at reasonable prices
Read more