New Delhi: India on Wednesday approved the final Sovereign Green Bonds framework to further strengthen India’s commitment towards its Nationally Determined Contribution (NDCs) targets, adopted under the Paris Agreement.
The framework will help in attracting global and domestic investments in eligible green projects.
“The proceeds generated from issuance of such bonds will be deployed in Public Sector projects which help in reducing carbon intensity of the economy” said the Ministry of Finance.
The Framework comes close on the footsteps of India’s commitments under “Panchamrit” as elucidated by the Prime Minister, Narendra Modi, at COP26 at Glasgow in November, 2021.
India adopted an ambitious Nationally Determined Contribution (NDC) under the Paris Agreement on a ‘best effort basis’ keeping its developmental imperatives in mind.
Under the updated NDCs targets, India announced to reduce Emissions Intensity of its GDP by 45 percent by 2030, from 2005 level and achieve about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.
Also set the target to achieving the target of net zero emissions by 2070 and the reduction of total projected carbon emissions by one billion tonnes from now to 2030.
The approval is fulfillment of the announcement in the Union Budget FY 2022-23 by the Union Finance Minister that Sovereign Green Bonds will be issued for mobilising resources for green projects.
Green bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects.
The Ministry said, the issuance of Sovereign Green Bonds will help Government of India (GoI) in tapping the requisite finance from potential investors for deployment in public sector projects aimed at reducing the carbon intensity of the economy.
“By virtue of their indication towards environmental sustainability, green bonds command a relatively lower cost of capital vis-à-vis regular bonds and necessitates credibility and commitments associated with the process of raising bonds” it said.
India’s first Sovereign Green Bonds framework was formulated and as per the provisions of the framework, Green Finance Working Committee (GFWC) was constituted to validate key decisions on issuance of Sovereign Green Bonds.
Further, CICERO, an independent and globally renowned Norway-based Second Party Opinion (SPO) provider, was appointed to evaluate India’s green bonds framework and certify alignment of the framework with ICMA’s Green Bond Principles and international best practices.
“After due deliberation and consideration, CICERO has rated India’s Green Bonds Framework as ‘Medium Green’ with a “Good” governance score” it said.
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