Report highlights 2 Egyptian projects among major clean energy ventures in N.Africa
A report by Energy Capital & Power highlighted two Egyptian projects – Suez Wind Power ...
Egypt among 19 emerging-market states relying on green bonds’ proceeds to fund clean energy projects
Egypt is among 19 emerging-market countries funding renewable energy and mass transit from the proceeds of green bonds, according to the World Bank.
Countries began turning to green and sustainable bonds to fund sustainable development after both the Sustainable Development Goals (SDGs) and the Paris Agreement on climate change were adopted in 2015.
Since 2016, 19 emerging market governments from Chile to Uzbekistan have issued green, social, and sustainability bonds to help fund climate action, promote a just transition from fossil fuels, and deliver on their Sustainable Development Goals (SDGs), including goal #7 – clean energy.
In 2020,Egypt’s $750 million sovereign green bond was the first in the Middle East and North Africa. It also raised funds for investments in clean transportation and sustainable water management. A key project is the Cairo Monorail, which will have the capacity to carry more than a million passengers a day. The system will reduce carbon emissions and road traffic while cutting traffic deaths and injuries and is projected to create up to 4,000 jobs during construction and 450 permanent jobs.
The bond also financed investments in sustainable water and wastewater management projects benefiting 16.9 million people.
As of January 2023, green bonds have raised $2.5 trillion globally to support green and sustainable projects. Emerging market governments have raised $74 billion, representing 2% of total green, social and sustainability bonds issued globally.
The potential for growth is significant. By way of context, green bonds were developed in 2008 in response to growing concern about climate change and sustainability. A group of Swedish pension funds approached the World Bank seeking a liquid, tradeable, fixed income product that would support climate-friendly solutions. That moment paved the way for the first green bond issued by an institution – the World Bank — and today’s green bond market. The processes used by the World Bank to issue more than 200 green bonds in 25 currencies are now international best practices, known as the Green Bond Principles, and have been adopted by the financial markets.
As the market of these bonds has grown, investors have become more conscious of the overall impact of their investments.
“Investors are not going to buy a green bond that has a negative impact on the community — or they’re not going to buy a social bond that is going to harm the environment,” said Farah Imrana Hussain, who heads the World Bank Sustainable Finance and ESG (environmental, social and governance) Advisory Services. “These are really great instruments because they give the issuer the opportunity to make sure they are financing things that have a positive impact on the environment plus in the surrounding communities.”
Lupin Rahman, global head of sovereign markets at Pacific Investment Management Company (PIMCO), explained the advantages of these bonds this way “Emerging market green bonds are an attractive and growing opportunity for fixed income investors, as issuers are distinguishing their sustainability credentials with enhanced targets and clear frameworks to tackle climate transition and climate risks, as well as broader sustainability goals.”
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