HPAS/ N.T. Allied Mains 2022-23 Answer Writing Challenge: Model Answer

Question: What are green bonds? (4 marks, 60 words)

Answer: 

INTRO

• Green bonds are bonds issued by any sovereign entity, inter-governmental groups or alliances and corporates with the aim that the proceeds of the bonds are utilised for projects classified as environmentally sustainable.
• The framework for the sovereign green bond was issued by the government on November 9, 2022.

BODY

• Green Bonds have emerged as an important financial instrument to deal with the threats of climate change and related challenges.
• According to the International Finance Corporation (IFC), a World Bank Group’s institution, climate change threatens communities and economies, and it poses risks for agriculture, food, and water supplies.

• In August last year, the government said it stands committed to reduce Emissions Intensity of GDP by 45 per cent from the 2005 level by 2030, and achieve about 50 per cent cumulative electric power installed capacity from non-fossil fuel-based energy resources by the same year.
• In line with the commitment to significantly reduce the carbon intensity of the economy, the Union Budget 2022-23 made an announcement to issue Sovereign Green Bonds.

• The government will use the proceeds raised from Green Bonds to finance or refinance expenditure (in parts or whole) for various green projects, including in renewable energy, clean transportation, energy efficiency, climate change adaptation, sustainable water and waste management, pollution and prevention control and green buildings.
• In renewable energy, investments will be made in solar, wind, biomass and hydropower energy projects.