In News
- Recently, the Ministry of Finance has finalized the framework to issue Sovereign Green Bonds in line with global standards.
- The issuance would be in line with the Budget announcement.
About green bonds
- Meaning:
- Green bonds are financial instruments that generate proceeds for investment in environmentally sustainable and climate-suitable projects.
- The phrase green bond is sometimes used interchangeably with “climate bonds” or “sustainable bonds.”
- Projects :
- The proceeds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy.
- It would be used to fund renewable energy, energy efficiency, clean transportation, water and waste management, pollution prevention and control and green buildings among others.
- Equity is allowed only in the sole case of metro projects under the Clean Transportation category.
- Exceptions
- Nuclear power generation, landfill projects, alcohol/weapons/tobacco/gaming/palm oil industries and hydropower plants larger than 25 MW have been excluded from the framework.
- Targets
- The government intends to mobilise Rs 16,000 crore from the issuance of green bonds.
- Features
- These are rupee-denominated papers and will have a long tenure to suit the requirement of green infrastructure projects.
- Green Finance Working Committee (GFWC)
- The Ministry has constituted a Green Finance Working Committee (GFWC) with representation from relevant Ministries and chaired by Chief Economic Adviser.
- The committee will meet at least twice a year to support the Ministry of Finance with selection and evaluation of projects.
Significance of the move
- This approval will further strengthen India’s commitment towards its Nationally Determined Contribution targets, adopted under the Paris Agreement.
- It will help in attracting global and domestic investments in eligible green projects.
Source: IE
