The International Renewable Energy Agency (IRENA) has lately published a series of renewable energy finance briefs looking at tools to scale up renewables. Renewable energy finance: Green bonds highlights green bonds as an innovative instrument that can help channel substantial global capital into renewable energy and other green assets
March 05, 2020. By News Bureau
In the face of the optimistic renewable energy investment trends over the past decade, annual investments in renewable energy power alone need to double until 2050 to meet climate goals.
To assign enough capital to drive the world’s transition to a low-carbon economy, a set of financial solutions need to be developed and taken advantage of by policymakers, investors and financial institutions.
The International Renewable Energy Agency (IRENA) has lately published a series of renewable energy finance briefs looking at tools to scale up renewables. Renewable energy finance: Green bonds highlights green bonds as an innovative instrument that can help channel substantial global capital into renewable energy and other green assets.
By connecting the gap between providers of capital and green assets, green bonds can help governments raise finance for projects to meet climate targets and are enabling investors to achieve sustainability objectives. Like conventional bonds, green bonds allow the bond issuer to raise funds for specific projects or ongoing business. The “green” label tells investors that the funds raised will be used to finance environmentally beneficial projects.
IRENA’s brief shows that the volume of green bond issuances has been growing nearly constantly since 2014. The green bond market started a little over a decade ago with the European Investment Bank’s first issuance of a Climate Awareness Bond in 2007, which allocated EUR 600 million ($670m) to 14 renewable energy and energy efficiency projects. Since then, the green bond market has grown substantially, particularly in the past 5 years, with 2019 issuances reaching a record of $270bn.
Along with the growing amount of capital raised, the market also expanded a growing variety of issuers from different regions – firstly from Europe, then North America, and increasingly from Asia-Pacific and to a smaller extent from Latin America and Africa. Issuers and currencies in which green bonds are offered have also seen diversification. From a market driven primarily by multilateral development banks and development finance institutions, green bonds are now issued by public and private institutions, including governments, government agencies, as well as private corporations and financial institutions.
Today, renewable energy is present in around half of all green bonds issued. However, green bonds remain well below their potential and too small to drive the global shift to renewables. Even though progress to date has been impressive, the green bond market continues to offer enormous growth potential.
The cumulative issuances of green bonds are below $1 trillion, while the global bond market is valued at around $100 trillion, accounting for less than 1 per cent of cumulative global bond issuances. To grow the green bond market, co-operation between policy makers, standard setters, capital providers and investors is essential. IRENA’s brief highlights specific coordinated actions that various stakeholders can take to untap the potential of green bonds.
Some of the suggested actions comprise:
AI will move from being a good-to-have technology to a must-have technology
We Need to Create Employment Opportunities that would Inspire Women to Join Clean Energy Space
There Must be a Penal Mechanism on Discoms for Delay in Signing PPAs, Payments Release
India’s Power Sector Must be Financially, Physically Resilient to Secure Investments it Needs