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Green bonds

The challenge

Green bonds direct investment towards renewable energy projects, but continued uncertainty over qualifying criteria for hydropower is stifling the sector’s access to this growing market. 

An innovative investment instrument, green bonds are fixed income loans for the finance and refinance of projects and assets that help address environmental and climate risks.

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The green bond market has grown rapidly in recent years, up from USD 11 billion of issuances in 2013 to over USD 167 billion in 2018. This is helping to shift much-needed investment towards a low carbon, sustainable economy.

Some issuers have however excluded proceeds from green bonds being used to finance or refinance hydropower projects due to a lack of clarity over appropriate sustainability standards.

 

Our strategy and action

IHA is working with partners to agree recognised eligibility criteria for green bonds to fund hydropower projects.

We are seeking international agreement on climate compatible criteria for hydropower projects, which are approved by the Climate Bonds Initiative (CBI) and stakeholders, and accepted by the hydropower sector.

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As part of the CBI’s Hydropower Technical Working Group (TWG) we are working with partners to develop the criteria covering climate mitigation, climate resilience and adaptation and adherence to broader environmental, social and governance good practice. Since its formation, the TWG has made substantial progress in developing the eligibility criteria, which are expected to be released in 2019.

IHA’s contribution draws upon the tools and guidelines which we have developed such as the Hydropower Sustainability ESG Gap Analysis Tool (HESG Tool). The tool is based on the framework of the Hydropower Sustainability Assessment Protocol and provides an action plan to help developers address any gaps against international good practice.  

 

Join the community

Members interested in learning more about green bonds can join the Markets and Finance Knowledge Network. 

Hydropower Pro

IHA members can join the Markets and Finance Knowledge Network in Hydropower Pro, our online member community.

In the online group, network members can connect with each other, exchange experiences and access essential resources, briefings and case studies.

For more information, please contact IHA senior analyst Nick Troja at nicholas.troja@hydropower.org

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