India’s focus on renewables has pushed green bond sales to a record high of $3 billion this year, doubling from the year ago, as investors with dedicated funds prefer India over China, where funds aimed at green power have less strict norms of use. Sebi stipulates select sectors, including renewable and sustainable (wind, solar, bioenergy), clean public transportation, waste energy, recycling of water, bio-diversity that qualify as green or environment-free projects. Sebi has issued no specific instructions on the quantum of green bond proceeds usage, these sectors account for nearly 100 per cent utilisation of funds in purely environment free projects in India. On the other hand, Chinese regulator the National Development and Reform Commission (NDFC) allows issuers to use up to 50 per cent of bond proceeds to re p a y bank loans and invest in general working capital, a report by the Climate Bonds Initiative and China Central Depository and Clearing Company said. Internationally , at least 95 per cent of proceeds must be linked to green assets. Some China project types like “clean coal,“ fossil fuel power stations, select hydropower projects would not be considered green by international standards.
“Green bonds issued by Industrial Bank contain clean coal projects that are not in line with intentional green definitions,“ the report said.Indian companies have sold $2.97 billion worth of green bonds through 10 deals this calendar year compared with $1.3 billion in three deals in 2016, data from Dealogic, a data analytics company , showed. “We have seen a surge from Indian companies seeking certification from us to sell green bonds,“ said Sandeep Bhattacharya, India projects manager at Climate Bonds Initiative, an inter national investor-focussed non profit. Climate Bonds certi fies global standards for green bonds. It also ensures compliance standards for green bond funds and is working on mobilis ing the $100-trillion debt market for cli mate change solutions globally . “Indian companies have taken the highest number of certification for green bond sales among emerging markets. They look more compliant to global green bond standards when it comes to usage of green bonds proceeds,“ he said. Moody’s Investors Service estimates India would need to invest close to $150 billion over the next five years to meet its 2022 renewable targets (175 GW). So, India still has a lot of distance to cover. “India will require substantial capital, both domestic and foreign, to meet its renewable energy targets,“ said Abhishek Tyagi, vice president, Infrastructure & Project Finance, Moody’s Investors Service.“Domestic banks will continue to play a major part in financing the growth of India’s renewable energy sector but will be constrained by sectoral exposure limits and the existing stressed assets in their power sector portfolio.“
“A key source of funding is offshore debt capital markets including green bonds,“ he added. Greenko, Azure Power and Rural ElectrificationBSE -3.71 % Corpn are three of the largest issuers. Indian authorities are seen as being strict in ensuring fund deployments in cleanenergy projects. SBI, the country’s biggest lender, approved raising up to $3 billion over tranches, ET reported three weeks ago.