The latest investment in green bonds by Bangladesh is a step towards ensuring a cleaner, safer planet.
Bangladesh invests in green bonds to spur national growth.
According to the National Aeronautics and Space Administration ( NASA), human beings release up to 40 billion tons of carbon dioxide ( CO2) into the atmosphere each year which amounts to about an average of 5.5 tons for every person on the planet. In a recent study on carbon emissions emitted globally, China, the U.S, the European Union and India ranked as the top four nations responsible for up to 60% of carbon dioxide emissions. The U.S alone emitted nearly 5.23 billion tons of CO2 in 2013.
In response to this alarming situation, the World Bank along with the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, Inter-American Development Bank and the International Monetary Fund (IMF) have vowed to work more closely with the private and public sector to help mobilize resources for its Strategic Framework for Development and Climate Change. Out of the many countries working towards minimizing the impact of environmental change as a result, Bangladesh has emerged as one of the few to engage in innovative practices geared towards the accomplishment of this initiative.
Recently, Bangladesh Bank announced its plans to invest a part of the country’s foreign exchange reserves in ‘green bonds.’ Identical to traditional bonds in structure, risks and returns, capital raised from the issuance of green bonds helps to fund projects related to climate change, such as, clean energy, energy efficiency as well as the mitigation of effects caused by changes in the atmosphere. According to the Climate Change Initiative, an investorfocused, not-for-profit organization that aims to mobilize capital for the purpose of investment in ‘green’ or eco-friendly projects, Bangladesh Bank will be the first national bank to use its foreign exchange reserves for investment in green bonds.
“Smaller clean energy and adaptation projects in least developed countries usually fail to attract largescale investments,” said Bangladesh Bank Governor, Atiur Rehman, in a recent statement. “One of the possible reasons for this is the comparatively large per unit investment required.” He further explained how the severe lack of basic infrastructure, such as power and roads, in such countries creates problems for businesses looking to invest in various projects, resulting in many of them missing out on the accumulation of much-needed capital. “Thus, a project developer may have to invest in the construction of basic infrastructure in addition to funds invested for the project itself. This ultimately results in fewer returns for the investor.”
In recent years, the rise in carbon dioxide emissions has resulted in a much warmer planet with rising sea levels; a threat scientists and environmentalists have been trying to make the global community realize for many years. By design, Earth’s land and oceans are able to absorb half of all carbon emissions, thereby maintaining the balance needed to make the planet inhabitable. Yet, man’s insatiable desire to continuously expand by cutting down forests and building concrete jungles has only led to further complication of the issue.
According to the NASA study, deforestation is responsible for 3 billion tons of atmospheric CO2 every year, which is equal to almost half of the emissions from up to 1.2 billion cars. The absorption of CO2 by the Earth’s oceans has also reached the tipping point with 90% of heat trapped by greenhouse gases being taken by the ocean’s current all the way down to its depths. This has resulted in oceans becoming warmer and more acidic, thus threatening marine life.
“Passing the 400 [carbon dioxide level] mark reminds me that we are on an inexorable march to 450 ppm (parts per million) and much higher levels,” explains Dr. Michael Gunson, Global Change and Energy Program Manager;