India to use first green bonds to finance climate projects

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India to use the domestic debt market to finance clean projects by launching first-ever green bonds that would prioritise funding solar power projects, followed by wind and small hydro projects. 

The revenues from green bonds will not be used to finance hydropower plants larger than 25 MW, nuclear projects, or any biomass-based power generation using biomass sourced from protected regions. 

As a component of overall market borrowing with the objective of using the revenues to create green infrastructure, finance minister Nirmala Sitharaman announced the idea to issue sovereign green bonds in the 2022–2023 budget.

These bonds are expected to be sold by the government between October and March for 160 billion rupees ($1.93 billion). 

Public sector projects will be chosen for green funding by a working committee on green finance led by the chief economist V Anantha Nageswaran. 

The committee will choose projects under the direction of environmental experts and officials of the ministry of environment, forests, and climate change.

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The panel will make sure that the bond revenues are distributed within 24 months of the date of issuance. 

The Indian government had requested assistance from the World Bank and CICERO Shades of Green, a Danish company that assists with environmental studies on green bond frameworks for the green bond framework.

(with inputs from agencies)
 

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