Climate bonds for hydropower
Climate bonds and green bonds are examples of the emerging instruments for project finance and investment in the energy sector that could be used for hydropower. They are fixed-income loans created to specifically finance projects and assets that help address and reduce environmental and/or climate risks. In 2016, over USD 80 billion of labelled green bonds were issued, nearly doubling the previous year but the market is still in its infancy.
Last year the Climate Bonds Initiative, an investor-focused not-for-profit, launched a Hydropower Technical Working Group to develop criteria for climate-compatible hydropower investment. The group is taking a robust science-based approach to develop simple and transparent criteria that identifies hydropower investments that deliver climate mitigation and incorporate measures to address resilience and adaptation impacts. The draft criteria are expected to be published by mid-2017 for public consultation and be ready for use by the market in 2018.
IHA will join representatives from industry, the finance sector and various international NGOs, to discuss the outcomes of the working group and what it will mean for the future of hydropower project financing.
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