Climate bonds story in BRW magazine

Climate war chest  |  November 5–11 2009 | page 8

“Climate bonds” are the way to ramp up investment in climate-change response, in the same way that war bonds funded military spending in the two world wars, a non-profit group established to promote investment in renewable energy says.

A spokesperson for Climate Bonds Initiative, Sean Kidney, says in response to a recent report highlighting the urgent need for emissions controls that investors need an option to invest in renewable energy without compromising returns.

“They have to be equivalent investments,” he explains.

For climate bonds to work, governments must provide long-term contracts for renewable energy companies at today’s fossil fuel prices, plus the consumer price index for a period of 40 years, Kidney says.

Although renewable fuel companies will lose money initially, they will make good profits as their technology reaches a bigger scale and becomes more efficient, providing returns to investors at the end of the bond period.

There are many precedents for such programs to deal with social issues.

“The London sewers were built using bonds, ending cholera, and the last of the war bonds was only back in 2005,” he says.

The group is mounting a pilot, lobbying governments and establishing standards to govern the authenticity of climate bonds.

Kath Walters