KOCHI: The Kerala Infrastructure Investment Fund Board (KIIFB), the state government’s special purpose vehicle (SPV) for executing core sector projects, is all set to raise Rs 1,000 crore this financial year through green bonds. Green bonds are debt securities designated to finance environment-friendly projects. “The preparatory work is expected to be completed by the end of this month,” said a senior official.
KIIFB’s move follows the Union Budget 2022-23 announcement regarding the issue of sovereign green bonds in keeping with the ambition to significantly reduce the carbon footprint. The proceeds will be deployed in public sector projects that will help reduce the carbon emission intensity of the economy, said a source, adding that the green infrastructure bonds will be issued in the domestic market.
In March 2019, Kerala became the first Indian state to issue ‘masala bonds’ when KIIFB raised Rs 2,150 crore on the London Stock Exchange. Green bonds are another novel fundraising plan of KIIFB. “The rise of green bonds provides a promising mechanism for sustainable finance, which is especially important for creating sustainable infrastructure in Kerala through KIIFB, to bridge the investment gaps on climate-friendly green projects,” says an internal document.
According to the document, the preliminary procedure for KIIFB’s green bonds is in progress in terms of project identification, and institutional arrangements have been made.
‘Climate change most critical challenge of 21st century’
Some of the environmentally sustainable projects that can be financed by the green bonds include the production of energy from renewable sources like solar, wind, biogas, etc; clean transportation that involves low greenhouse gas emissions; energy-efficient projects like green building; waste management that includes recycling, efficient disposal, and conversion to energy, etc.
Sources pointed out that climate change has been recognised as one of the most critical challenges faced by the global society and economy in the 21st century. Recognising this, the financial sector can play a pivotal role in mobilising resources and their allocation to green activities/ projects. Hence, green finance is also progressively gaining popularity in India, the source said.
Green finance
Green bonds are debt securities designated to finance environment-friendly projects
Some of the projects that can be financed by green bonds
Production of energy from renewable sources like solar, wind, biogas, etc
Clean transportation that involves low greenhouse gas emissions
Waste management that includes recycling, efficient disposal, and conversion to energy