Green Bonds: EU vs. India
Praveen Anant
Catalysing solutions to the problems of the people and the planet profitably. <All Views Personal>
Members of the European Parliament adopting EU Green Bond (EuGB) Standard is exciting news for me at https://esgbroadcast.com/broadcast/eu-parliament-adopts-european-green-bond-standard/.
However, a comparative insight reflects this green as a grey.
European Union (EU):
- Introduces the "European Green Bond" label aligned with the EU's taxonomy framework.
- Taxonomy amended to include gas and nuclear-based energy generation as sustainable activities.
?? Concern: Investors might inadvertently back fossil or nuclear energy projects, deviating from what's traditionally considered 'green'.
India:
1) Introduces Framework for Sovereign Green Bonds in June 2023: Sets the obligations of the Government of India as a Green Bond issuer.
- Solely supports India's NDC, focusing on projects like solar, wind, biomass, and hydropower.
- No backing for fossil or nuclear energy.
2) Introduces Green Deposits Framework by RBI: Guides banks in raising direct funds for green activities and financing related projects.
- Centered around India's NDC.
- Aims to fund projects promoting energy efficiency and reducing carbon emissions.
- No backing to coal and nuclear.
Key Takeaway: While both aim for sustainability, their approaches differ. India's route and fundraising for energy transition to achieve net-zero by 2070 looks purely green. Meanwhile, the EU's route looks gray - its state-backed policies and frameworks include raising funds for fossil and nuclear in the name of green.
I wonder, even if the EU was under pressure to secure its energy demand in the wake of geo-political turmoil, instead of amending the EU Taxonomy, could it have created a separate fundraising framework and tools for fossil and nuclear for a few years, which would have been clear to investors and to the world?