Go­ing Green

The lat­est in­vest­ment in green bonds by Bangladesh is a step to­wards en­sur­ing a cleaner, safer planet.

Southasia - - CONTENTS - By Mahrukh Fa­rooq

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;

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