Adani Green Energy (Adani Green) and Tata Power are set to raise funds via green bonds to finance their new projects. Adani Green will raise $1 billion via green bonds, Tata Power is intent on raising $320 million via sustainability-linked loans, say bankers.
Adani Green fund plans to launch the bonds by December, Tata Power – on the other hand - will raise funds in October, reports suggest.
So far in this calendar year, Indian entities have raised $1.79 billion via green bonds, far less than $4.9 billion raised during the same period of 2021, a media report suggests.
The flurry of green bonds is not an aberration but very well aligns with the government’s vision as announced by Finance Minister Nirmala Sitharaman during the Budget speech on Feb 1, 2022.
She announced that the government will issue sovereign green bonds as a part of the overall market borrowings this fiscal. She said that the proceeds would be deployed in public sector projects which would help reduce the intensity of carbon footprint of Indian economy.
What are green bonds?
Green bonds were first launched in 2007, and have been growing rapidly since then. A green bond is a fixed-income instrument meant to facilitate specific environmental projects. They are usually given with tax incentives to woo the investors.
According to an article published by RBI, India started issuing green bonds since 2015. And as of Feb 12, 2020, the outstanding amount of green bonds in India was US$16.3 billion.
Green Bonds Issuance Since January 1, 2018:
Also, India issued green bonds of about US$8 billion since January 1, 2018, which constituted about 0.7 per cent of all the bonds issued in the Indian financial market.
These bonds are prevalent in a number of markets worldwide. As a matter of fact, the World Bank is one of the major issuers of green bonds and has issued 164 variants of green bonds amounting to $14.4 billion in order to fund projects relating to renewable energy, agriculture, clean transportation and land use.
If seen from the investment point of view, they are just like another government or corporate bond.
There is a lot of optimism from these bonds. Even Sitharaman also emphasised that green energy and clean mobility, that can be financed through these bonds, have a great potential to enable sustainable development.
