I have really been thinking a lot about how we could green the financing of infrastructure, given the amount of investments in infrastructure that will be flowing in via : ADB, World Bank, AIIB and NDB. One of the ideas I had was actually linking sustainability criteria with procurement, greening sources of finance and ensuring infrastructure was climate resilient.
I wanted to know whether you all had chanced upon any practical examples of this?
Also the attached document highlights some ways the Belt Road Initiative is leading in the green finance space. Interesting read- wondering whether this uses legitimate green finance instruments or a green wash. Keen to know your thoughts.
UPDATES as of 14.12.2017
Here are some interesting updates :
Forbes published an article evaluating the 'green' belt road initiative - excerpt from the article - https://www.forbes.com/sites/energyinnovation/2017/12/04/the-china-belt-and-road-initiative-could-help-or-hurt-clean-ene…
"China’s Belt and Road Initiative, the broad infrastructure and market-building initiative of the world’s second-largest economy, has a different feel than trade agreements initiated in the West – and it could have major implications for the future of energy across many parts of the world.That’s partly because unimpeded trade and financial integration are just two of five pillars of China’s ambitious plan for international collaboration. The other pillars are policy coordination, infrastructure connectivity, and people-to-people bonds. And in this program, the Chinese central government has issued guidance on promoting “Green Belt and Road,” to highlight how to incorporate the principles of resource efficiency and environmental awareness into the whole program, touting the need to “develop global energy interconnection and achieve green and low-carbon development.” The question is: Are the environmental protections real?"This question largely remains unanswered - however an interesting statement - China intends to spend more than $360 billion through 2020 on domestic solar and wind power, but given the current policy and market framework in China, energy from these new resources is often crowded out on the grid by coal-fired generation, despite being less expensive on a marginal cost basis. Another similar message :A report published this month by the Global Environment Institute (GEI) showed China is involved in 240 coal-fired projects totalling 251GW across the “belt and road” countries. That figure includes 52 in planning stages and 51 under construction, as well as those built since 2001.
Some notable actions/ proposals to see the green strategy materialize ;
1. proposal to establish “an international coalition for green development”, support adaptation to the impacts of climate change and boost science cooperation. Source
2. To support the innovation agenda, China will set up 50 joint laboratories, train 5,000 foreign scientists and fund 2,500 short-term research visits to China from abroad. Specifically on ecological and environmental protection, Xi promised “a big data service platform”.Source
3. Launched inaugural One Belt One Road (OBOR) Green Climate Bond that also carries Climate Bonds Certification.The bond will be listed on the Luxembourg Green Exchange (LGX (link is external)) of the LUXSE. Source
The use of proceeds for this bond will be dedicated to ICBC's global financing and refinancing of eligible green assets in four categories:
- renewable energy,
- low carbon & low emission transportation,
- energy efficiency &
- sustainable water resources management.
“ICBC officials said that the bank will push green credit business as a long-term development strategy, actively practice the "green development" and "green finance" concept and has committed to building into a leading green credit bank internationally with a good reputation.”
Discussion » The Belt and Road Initiative - greening infrastructure finance
The Belt and Road Initiative - greening infrastructure finance
I have really been thinking a lot about how we could green the financing of infrastructure, given the amount of investments in infrastructure that will be flowing in via : ADB, World Bank, AIIB and NDB. One of the ideas I had was actually linking sustainability criteria with procurement, greening sources of finance and ensuring infrastructure was climate resilient.
I wanted to know whether you all had chanced upon any practical examples of this?
Also the attached document highlights some ways the Belt Road Initiative is leading in the green finance space. Interesting read- wondering whether this uses legitimate green finance instruments or a green wash. Keen to know your thoughts.
UPDATES as of 14.12.2017
Here are some interesting updates :
Forbes published an article evaluating the 'green' belt road initiative - excerpt from the article - https://www.forbes.com/sites/energyinnovation/2017/12/04/the-china-belt-and-road-initiative-could-help-or-hurt-clean-ene…
"China’s Belt and Road Initiative, the broad infrastructure and market-building initiative of the world’s second-largest economy, has a different feel than trade agreements initiated in the West – and it could have major implications for the future of energy across many parts of the world.That’s partly because unimpeded trade and financial integration are just two of five pillars of China’s ambitious plan for international collaboration. The other pillars are policy coordination, infrastructure connectivity, and people-to-people bonds. And in this program, the Chinese central government has issued guidance on promoting “Green Belt and Road,” to highlight how to incorporate the principles of resource efficiency and environmental awareness into the whole program, touting the need to “develop global energy interconnection and achieve green and low-carbon development.” The question is: Are the environmental protections real?"This question largely remains unanswered - however an interesting statement - China intends to spend more than $360 billion through 2020 on domestic solar and wind power, but given the current policy and market framework in China, energy from these new resources is often crowded out on the grid by coal-fired generation, despite being less expensive on a marginal cost basis. Another similar message :A report published this month by the Global Environment Institute (GEI) showed China is involved in 240 coal-fired projects totalling 251GW across the “belt and road” countries. That figure includes 52 in planning stages and 51 under construction, as well as those built since 2001.
Some notable actions/ proposals to see the green strategy materialize ;
1. proposal to establish “an international coalition for green development”, support adaptation to the impacts of climate change and boost science cooperation. Source
2. To support the innovation agenda, China will set up 50 joint laboratories, train 5,000 foreign scientists and fund 2,500 short-term research visits to China from abroad. Specifically on ecological and environmental protection, Xi promised “a big data service platform”.Source
3. Launched inaugural One Belt One Road (OBOR) Green Climate Bond that also carries Climate Bonds Certification.The bond will be listed on the Luxembourg Green Exchange (LGX (link is external)) of the LUXSE. Source
The use of proceeds for this bond will be dedicated to ICBC's global financing and refinancing of eligible green assets in four categories:
“ICBC officials said that the bank will push green credit business as a long-term development strategy, actively practice the "green development" and "green finance" concept and has committed to building into a leading green credit bank internationally with a good reputation.”
Dear Leela,
thank you for opening this essential topic for discussion.
Designing infrastructure development in a more sustainable way brings great scope for carbon emission savings, during works and in operation/end of life.
(1) Do I understand correctly that you are looking to get practical examples of green government procurement criteria for public works contracts?
Such criteria would be a fantastic way to incorporate (a) green(er) construction materials which can be easier dismantled re-used/recycled/etc. at the end of use/end of life stage, (b) environmental conscious implementation of the works process, and (c) taking into consideration resources consumption and environmental footprints during the use and maintenance phases (e.g., if we are talking roads: reducing emissions from traffic through corresponding road surfaces, and robustness of the road).
For Indonesia, I remember, some years back there was a larger project funded by Millennium Challenge Corporation (MCC/MCA) looking into improving public procurement. This included, if I am not mistaken, sustainability criteria for selected products and procurement processes; not sure if that addressed services such as for infrastructure... DKI Jakarta has a green building code applicable for new buildings, perhaps you can get some leads from IFC who are in charge for this.
(2) Have you already looked into sample sets of criteria that are being used, or that are proposed to be used, in more advanced countries and/or municipalities? (3) Who are the leaders in sustainable infrastructure procurement?
I'll have a look into the pdf on the Belt Road Initiative you provided, and come back on it in a separate message.
Best regards
Karin
Hi karin merle and Pasquale Lucio Scandizzo- thank you so much for your insightful responses that have kept the discussion alive. I was looking at this from the perspective of tackling green outcomes from project conceptualization and design stages, ie. exante rather than expost. usually a lot of the safeguarding and environmental management design systems are established post the project has been designed and commissioned. Lets say there is a need to build public infrastructure for roads in a remote area in East Kalimantan where some of the most biodiverse forests are present. The building of this infrastructure will lead to higher deforestation in surrounding areas as land utilization would take place. Before project is procured, could the government assess which areas the road would lead to least damage versus measures to reduce deforestation after the project has already been commissioned, designed and allocated areas?
Hi Leela, Pasquale, Jordon, and everyone,
as we discussed China’s "Belt and Road Initiative" in the context of sustainability and green finance, I thought it was worth mentioning that the Industrial & Commercial Bank of China (ICBC) – which is the world’s largest bank just issued its first green a One Belt One Road Green Climate Bond. The size issued amounts to USD 2.1 billion.
The Climate Bond Initiative covered the story here, and highlights the ramifications of the bond here.
It’s worth noting a few extra points – Global Capital reports the bond was issued in three tranches: a EUR1.1bn 3-year floating rate note, a USD450m 3-year floating-rate note and a USD400m fixed rate note. All tranches were oversubscribed - with the EUR 1.1bn tranche receiving EUR1.8bn in orders! Pricing was tighter than expectations.
The bond was listed at the Luxembourg Green Exchange (LGX) (see listing).
Find analytic information on the green bond framework, verifier’s report and CICERO second opinion here.
Attached is ICBC's Green Bond Framework for your perusal.
Best wishes
Karin