SOVEREIGN GREEN BONDS

TOPIC: Economy

Context- Despite govt’s climate focus, grants to key adaptation fund are sliding.

The Union Budget 2022-23 emphasised sovereign green bonds and thematic funds for blended finance in areas including climate action.

Concepts-

Sovereign Green Bonds:

Green bonds, issued through the Reserve Bank of India, will be part of the government’s overall borrowing programme and used for projects leading to a less carbon economy.
The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.
The announcement is in sync with India’s commitment to achieving net-zero carbon emissions by 2070.

Green Bonds:

Green bonds are issued by companies, countries and multilateral organisations to exclusively fund projects that have positive environmental or climate benefits and provide investors with fixed income payments.
The projects can include renewable energy, clean transportation and green buildings, among others.
Proceeds from these bonds are earmarked for green projects. This is unlike standard bonds, the proceeds of which can be utilised for various purposes at the discretion of the issuer.