Climate Bonds Blog
Media Release | Climate Bonds Initiative | PASS IT ON
CLIMATE BONDS: FAST-TRACK SOLUTION TO LOW-CARBON ECONOMY
The global bond market could play a central role in the fight against climate change, according to an international think tank.
Today the international Network for Sustainable Financial Markets launched the Climate Bonds Initiative, designed to foster the use of long-term debt to finance a rapid, global transition to low-carbon economy. The Climate Bonds Initiative is operating as an autonomous project supported the Carbon Disclosure Project.
Financial innovation is much underutilised in dealing with the climate threat, both at the micro- and macro-levels. At the micro-level, for example, it is still impossible in some countries to acquire even a simple mortgage with which to overcome the upfront capital cost of microgeneration. At the macro level, for example, there is considerable untapped potential for climate bonds.
How better to mobilise a low-carbon future rapidly than the large-scale issuance of long-term debt to overcome medium-term investment barriers to achieving economies of scale in manufacturing? How better to find a way for pension-fund trustees to manoeuvre around the current dysfunctional definition of fiduciary responsibility?
> Amazing scenes in the negotiator's Plenary today, with Tuvalu rep arguing and China resisting - both politely but in a very determined way - that a treaty has to limit global temperature increases to 1.5 degrees and to reduce CO2 in the atmosphere to 350ppm. No resolution yet.
> Hot news: Indonesia announced it's proposing a feed-in tariff for geo-thermal energy. Apparently they have 40% of the world's hot rock resources! See http://tinyurl.com/y9pm6t6
There is a real excitement in the air, with some 20 thousand people turning up from every corner of the world and a party atmosphere in the streets. The talk, however, is all climate:
1. Lord Stern in a speech a couple of nights ago talked of the stark choice we face between acting fast or sliding into disaster, and thus how important this Conference was to the future of the planet. Lord Giddens talked of the Copenhagen Conference being, with the sense of pressure for a global agreement and over 100 heads of States turning up, the first real gathering for global governance: an historic event.
December 2 2009
A big rise in borrowing through index-linked and long-dated government bonds would be the most effective action the Treasury could take to help hard-pressed defined benefit pension schemes, according to the industry's trade body.
The National Association of Pension Funds said that 80% of its members saw an increase in the issuance of long-dated and inflation-linked gilts as the government measure that would most help its members.
Pensions experts say protecting schemes against adverse market moves requires the purchase of long-dated and index-linked gilts, since these move in line with pension fund -liabilities.
For the past six months the Climate Bonds Initiative, working with a range of associated groups, has been pressing political parties in the UK to adopt policies for a "Green Investment Bank" and for "Green Bonds". (You can read more about these proposals in our Climate Bonds discussion paper).
In late November the UK Conservative's Shadow Chancellor announced that, if they win government, they will set up a Green Investment Bank to:
"design frameworks that provide the certainty and incentives to attract private sector investment in green technologies"
Climate war chest
www.brw.com.au | 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.