Category: Finance

Capital Markets Can Power Southeast Asia’s Sustainable Pandemic Recovery

Asia and the Pacific as a whole was already behind schedule in terms of meeting the goals by 2030, and the pandemic has set the region back further. One way in which governments can compensate for this is to mobilize private capital for sustainable investments. In Southeast Asia, countries have already made significant progress in this area. In September 2021, the cumulative value of ASEAN-labeled green, social, and sustainability bonds issued in Southeast Asia reached $16.4 billion.

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China’s Green Finance Agenda

China has pledged to be carbon neutral by 2060. It’s a huge ambition and will require a vast amount of domestic and international investment. China’s statement that it will be carbon neutral by 2060 will require an estimated US$21 trillion in investment, according to research from Tsinghua University in Beijing. The Chinese green bond market is the second largest market outside of the US in terms of issue size and capacity.

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How finance is driving Australia’s green transition

Finance is playing a significant role in encouraging Australia’s push towards net zero, with companies that commit to climate targets finding it easier to attract investment and raise capital, according to Jo Spillane, Global Head of Private Capital Markets at Macquarie Capital. Spillane says that one of the main vehicles through which this is happening is Australia’s pension funds, or superannuation (super) funds as they are known locally.

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Renewable Energy Financing Mechanism in European Union

To support renewable energy projects and incentivise the uptake of renewable energy sources (RES) across Europe, the EU has established a novel RES financing mechanism (REFM), under which Member States will make voluntary financial contributions to support new renewable energy projects in EU countries interested in hosting such projects, through competitive tenders for investment or operating aid.

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Green Capex in Infrastructure

Increasingly we believe investors and broader stakeholders will look more closely at how much Green Capex is being funded and how funding, cost structure and innovation will impact execution towards Net Zero, Clean Water and broader Infrastructure goals. We expect Green Capex will primarily be funded by the private and public sectors, though for some products like residential solar, appliances and electric vehicles, individuals will play an important role.

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Greening India’s Homes and Vehicles with Low-Cost Finance

Pursuing low-carbon development is central to India’s Paris Agreement climate goals. In this pursuit, net-zero energy buildings (NZEBs) and electric vehicles (EVs) are the two high-leverage areas. The ability to deliver vast emissions reductions across rural and urban settings has brought NZEBs and EVs to the center of the climate change mitigation agenda. In the Indian context, vehicles and homes also have the distinction of being the two most important purchases consumers make.

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Green Bond Market in China

China has, for the last 6 years, been one of the world’s largest green bond markets and yet, the market in 2020 was bumpy. Total Chinese green bond issuance in the domestic and overseas market reached USD44bn (RMB289.5bn), representing a 21% decrease from the USD55.8bn (RMB386bn) achieved in 2019.

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Greening Southeast Asia’s Economy

A new narrative has emerged around climate action and global actors are responding. SEA is gaining importance as a critical piece of the global Net Zero solution. There is renewed recognition of the untapped potential of SEA’s natural capital as carbon sinks, and MNCs who have committed to Net Zero recognize they cannot deliver their climate goals without supporting change in SEA across their local supply chains. Put simply, the world cannot achieve Net Zero without SEA coming along on the journey.

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Funding Climate Technology to Achieve Net Zero

As the window to prevent irreversible damage to the planet from climate change becomes smaller and technological advances accelerate, they are finally aligning. Innovation is key to delivering net zero carbon emissions. The right investment conditions are now present to enable ground-breaking “climate tech” ideas to come to fruition.

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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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