COP27, Green bonds and Greenwashing - Issue #30
News of the Week
COP27 is underway. As we said last week, loss and damage has made it to the agenda.
As with previous COPs, a small platoon of climate journalists have travelled over to file on the proceedings. Here is The Wire’s Aathira Perinchery, filing daily dispatches on Sharm El-Sheikh.
By the end of this week, we should have a clearer sense of the yields from COP27. For now, a couple of announcements from India have made headlines. It has said, firstly, that the world needs to phase down all fossil fuels – that the west cannot double down on gas while exhorting developing countries to quit coal. Second, the country has announced Sovereign Green Bonds (SGBs). Money raised through these will be exclusively used for building green infrastructure.
However, the announcement left sectoral experts unimpressed. “According to media reports, no tax-free status or any concessions are proposed on these SGBs, and its terms are expected to be the same as... other government securities borrowings,” wrote Sandeep Hasurkar. This is a problem. As Hasurkar, who wrote a very illuminating book on the collapse of IL&FS (he used to work there), writes: “The green transition presents the single largest energy transformation since the electricity and combustion engine revolution of the early 20th century. It is also required to be done at an unprecedented scale, level of complexity, competition, and shorter span of time than ever before in human history.
” The design of India’s green bonds, however, is not likely to net the large sums needed for the transition.
The first tranche of Green Bonds, as things stand, is expected to raise $2 billion. To put that number in perspective, India needs USD 223 billion to meet its 2030 climate targets. And so, in his blog post, Hasurkar discusses how Green Bonds can be turbocharged. Read him.
Other news. India is losing moderately dense mangroves. Ola wants to launch electric bikes before electric cars. Adani has picked up a 49.38% stake in liquid storage facility company Indian Oiltanking Ltd. KKR is investing $400 million in Serentica, which works on industrial decarbonisation in India. Following a request from the Indian Solar Manufacturers Association (ISMA), India’s commerce ministry has terminated an anti-dumping investigation into import of solar cells from China, Thailand and Vietnam. This represents an about-turn. The investigation started last May after ISMA complained about solar cells being dumped in India. Curious.
Yet other news. All of a sudden, India is facing a domestic glut of LNG. Given high prices, industrial gas customers in India are buying far less gas than usual – they are shifting to cheaper fuels like domestic gas or oil products. The fallout? Storage tanks, like the ones at Dahej and Hazira, are nearly full. “A drop in LNG shipments to India could push down global gas prices,
” says Bloomberg.
Last week also saw two extraordinary instances of greenwashing.
The first came from Sembcorp. To reduce its carbon footprint, it sold two coal-fired power plants to an Omani group for $1.5 billion. The company told shareholders that the sale would lower its greenhouse gas emissions intensity by 38%, more than enough to dodge the penalties attached to the company’s sustainability-linked bonds. But the firm financed the sale of the assets with a 15-year loan and retains “substantial” liabilities and “operational influence” over the business, found Anthropocene Fixed Income Institute, a London-based think tank. (As an aside, think of green bonds with penalties for missing transition targets).
The second instance came from India. The country’s environment ministry has granted an in-principle clearance for the diversion of 130.75 sq km of forest in Great Nicobar Island for a Rs 72,000 crore project that seeks to build the equivalent of a Macau -- a transhipment port, an airport, a power plant and a greenfield township. Nearly 8.5 lakh trees will be cut from the island’s old forests. In tandem, India has committed in its NDC to create an additional carbon sink of 2.5-3.0 billion tonnes of carbon dioxide equivalent through additional forest and tree cover by 2030, said Union minister for Environment, Forest and Climate Change, Bhupender Yadav, on Tuesday.
Nicobar is just an instance. India is making it easier for projects to come up on forestland. There is a lot of talk about how the world should instantly halt fresh fossil fuel expansion. We need a similar end to large-scale deforestation.
Climate Long-reads
1. Liberals Are Finally Realizing That Deindustrialization Was a Disaster for the Working Class. (Jacobin)
2. A corruption scandal has ensnared the French energy minister. (Investigate Europe).
3. “If COP27 is to truly deliver for Africa, this should start with recognising the vast differences between livestock in the Global North and South. Viewing livestock and its climate impact in developing countries through the same lens as livestock in the Global North is, at best, inaccurate, and at worst, actively harmful.” (Al Jazeera)
4. How Nepal Grew Back Its Forests. (NYT)
5. Other countries are making progress. “The three coalition parties forming the German government on Friday agreed the country should leave the Energy Charter Treaty, making it the biggest economy to announce it's quitting the embattled deal. “We are consistently aligning our trade policy with climate protection and are withdrawing accordingly from the Energy Charter Treaty," Franziska Brantner, a parliamentary state secretary in the economy and climate ministry, said in a press release. The pact, designed in the 1990s, allows international investors in energy projects to sue governments for profits lost due to policy changes. It’s now viewed as a major threat to national climate plans to shut down coal plants or limit production of oil and gas." (Politico)
Book of the Week
Threatening Dystopias: The Global Politics of Climate Change Adaptation in Bangladesh
The book uses fieldwork in Bangladesh to look at the political economy of climate change adaptation. Here is a review.