Category: Finance

ADB’s Green and Blue Bonds Framework

The green and blue bond program enables the Asian Development Bank (ADB) to support its developing member countries seeking to deliver environmentally sustainable growth to help reduce poverty and improve the quality of life of their people. Both green bonds and blue bonds would include investments such as construction of new assets, as well as maintenance, enhancement, improvement or repair of existing assets. Green bond- and blue bond-eligible projects would exclude lending to financial intermediaries.

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Green bond market in South Africa

Green bond issuance in South Africa has been patchy with strong issuance early on followed by small volumes in the intervening years and a bumper year in 2019. Encouragingly, there has been a good diversification of issuers including banks and cities. Supportive regulation is critical and can take the form of direct support for green bonds (subsidies etc.) or, more importantly for the energy sector, through strong and consistent policy support across planning, finance, procurement and energy.

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Renewable energy investment expectations in the US

American Council on Renewable Energy (ACORE) launched its “$1 trillion 2030 campaign” in 2018 to achieve $1 trillion in private sector investment in renewable energy and grid technologies by 2030 in the US. In June 2021, it released a report titled, “Expectation for Renewable Energy Finance in 2021-2024: Growing confidence in the Aftermath of the Pandemic”. The report assesses progress on the campaign and presents the results of two new surveys of professionals who actively finance or develop projects in the renewable energy sector.

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How Pension Funds Can Help Electrify Africa

As nations in sub-Saharan Africa advance their industrialization and economic growth agendas, renewable energy infrastructure is increasingly at the forefront of discussion. The cost of solar-battery electricity systems has fallen significantly in the past decade, making renewables the cheapest form of electricity generation in many parts of the globe. Recent African Development Bank projects have shown it to often be the least-cost resource in sub-Saharan Africa as well.

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Public Market Financing Lifts RE Investment to New First-Half Year Record in 2021

The latest data on renewable energy investment in the first half of the year, drawn from BNEF’s database of deals and projects, show that a decline in investment in new renewables projects was offset by a jump in equity offerings of renewable energy companies. New equity raised on public markets hit a record high at $28.2 billion in 1H 2021, as did venture capital and private equity commitments to renewable energy companies at $5.7 billion.

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Improving Renewable Energy Finance in Indonesia: Municipal Green Bonds

Green awareness in the industry is poor, according to market participants. Because of the regulation, some people have started to have green portfolios. Investors were also found to have little knowledge about or experience with renewable energy. Many market participants feel that there aren’t enough profitable renewable projects in the pipeline for municipal governments and that the Indonesian financial services authority may demand the underlying project to run first, even before the bond is issued, to ensure that the project is real.

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Adani Green acquires SB Energy India

Until now, Adani Green Energy Limited (AGEL) had been focusing on renewable energy capacity expansion through greenfield investments. With this strategy, its renewable energy portfolio grew substantially, from only 0.3 GW in 2015-16 to 14.8 GW in 2020-21. However, recently, it signalled its strong interest in augmenting its renewable energy exposure through acquisitions as well. In May 2021, AGEL acquired SB Energy India, which has 4.95 GW of renewable assets, through an equity purchase worth $625 million (about Rs 46 billion).

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Financing Tools for an Equitable Transition to a Clean Economy

Regulated electric utility companies in the United States hold nearly $160 billion in fossil generation assets on their books—investments approved by their regulators that will need to be repaid by their customers. Utilities will likely need to accelerate the retirement of most of these assets or transition them to low-carbon operation by 2030 to meet the NDC emissions target.

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Banking on Green: A Green, Resilient Recovery Needs National Green Investment Banks

Collectively, the world needs to invest trillions of dollars over the next 15 years to meet climate targets. Much of this investment is needed in emerging and developing countries. At the G7 Summit, the leaders of the world’s seven wealthiest democracies rightly placed climate change high on the agenda. As observers point out, however, the leaders’ renewed pledge to mobilize US$100 billion in international climate finance does not go nearly far enough. And details are scarce on what G7 countries will do in practice to accelerate North-South climate finance flows (or, increase access to it).

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Has China Set the Bar Too Low on Carbon-Neutral Bonds?

The success of China’s diverse policy initiatives in reducing greenhouse gas emissions will play a factor in its progress toward achieving the Paris Agreement. The PBOC has taken the lead on green finance while voicing worries about the stability of China’s financial institutions as a result of substantial systemic exposure to mismanaged carbon-intensive assets. Inevitably, the PBOC will be called upon to play a significant role in roiling the market.

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Bond structures for financing a sustainable recovery

Recovery Bonds link a country’s borrowing to the targeted deployment of capital, designed to facilitate a low-carbon sustainable recovery that can bring economic, social, and climate priorities together. This paper lays out a prospective blueprint to facilitate the issuance of Recovery Bonds, focusing on two potential use cases: sovereign green bonds as part of issuances financing recovery, and bonds linked to fossil fuel subsidy reform (FFSR).

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How demand for renewables drives M&A activity

As seen in the EY Power Transactions and Trends Q1 2019 report, clean energy deals continue to dominate the M&A universe, making up 56% of deal volume and 61% of deal value in Q1 2019. Stakeholders across the power and utilities value chain continue to drive the need for more renewables:

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Financing offshore wind in APAC

With governments in the APAC increasing their focus on developing low-carbon economies, offshore wind is being included as a key component of their energy transition strategies. Several Asian countries such as China and Japan have achieved early success in offshore development. China, which has already surpassed its 2020 target of 5 GW of offshore wind energy, is now looking to achieve 26 GW by 2024. Countries such as South Korea and Taiwan have set ambitious targets while Vietnam and Australia are actively putting in place regulatory frameworks to promote offshore wind.

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Financing distributed renewable energy in India

In the report titled, “The Future of Distributed Renewable Energy in India” published by the Climate Policy Initiative in May 2021, the benefits and market potential of India’s DRE sector are outlined, the current policy and institutional landscape is examined, and recommendations are provided for different stakeholders. REGlobal provides an extract of the report related to financing of DRE projects in India.

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Stepping-up the U.S.’s Global Climate Finance Commitments

During the investment segment of the Leaders Summit on Climate last week, President Biden announced the U.S.’s international climate finance plan. The plan outlines how the US will scale-up international climate finance, with some top-level indications of how much they are aiming to provide over President Biden’s first term. These are smart investments for America that will spur clean energy opportunities around the world, reduce the costs of disasters, and help avoid conflicts.

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Brown assets might be the next subprime

The momentum towards greening the economy implies transition risks that represent new threats to financial stability. The risk of a run on brown assets, similar to that seen during the subprime crisis, can have widespread destabilising effects.

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Australia to remain an attractive investment hotspot for renewables

Both domestic and foreign investors point to a slightly more favourable outlook for state versus federal policy, APAC-based investors in particular (96%). European investors are the notable exception with 66% expecting state policies to be supportive versus 81% for federal policies. Australia-based investors are marginally less positive about government support than they were in the previous survey with 91% anticipating supportive policies from state government and 85% from federal government, versus 90% overall (federal and state) in the 2019 study.

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