Green Bonds


Green Bonds are used to raise money for environment and climate related projects. The financial instrument makes use of the debt capital markets to fund green initiatives. Governments and corporates are issuing green bonds to bring in capital. The World Bank is a major issuer of green bonds. As per a report from PwC, it is expected that 2021 will see the largest ever issuance of green bonds.

Green bonds are issued according to directives set by the Climate Bonds Initiative (CBI). The CBI is an international investor-focused not for profit organization that has set the certification and assurance standards for green bonds. This helps assure investors that the proceeds are being used for the right projects.

Could this system be built over a decentralized platform. There are 2 parts to this system. The part where money is raised based on a renting activity. And the second part, where the money is used to fund projects that help the environment. A blockchain could help bring access to a larger market for raising capital. Anyone could chip in to such an initiative. The blockchain would inherently secure the transaction and keep track of where the money is routed to.

Carbon Pricing

Carbon pricing puts a fee on activities that leads to greenhouse gas emissions. This is a way to incentivize businesses to make the right decisions for the environment as it will directly affect their bottom line. The price in itself reflects the effects of emission, i.e. costs to public, rising temperatures and sea levels, lower air quality etc. This can be used to generate revenue in the economy and can be used for other green initiatives, thus creating a virtuous cycle. In a way, everything businesses do that are harmful to the environment are subsidized- The associated costs doesn’t affect their bottom-line. Carbon pricing is a neat way to bring that back into the economic machine. This can also incentivize where investors put their money in. The carbon price could make it more expensive to run conventional companies, making green-tech companies more attractive.