Indonesia raises $1.25bln for green tourism in first Asian sovereign green bond sale
Indonesia has become the first Asian country to sell "green" bonds internationally in a $1.25 billion deal
Luky Alfirman, head of the Budget Financing and Risk Management office at Indonesia’sFinance Ministry said that the proceeds from its green bonds would be used to finance projects such as renewable energy, green tourism and waste management.
The government has also said it will take up more projects to address climate change mitigation and adaptation, which requires alternative financing.
Globally, $155.5 billion of so-called green bonds were sold last year, according to the London-based Climate Bonds Initiative. But only a handful of governments have themselves sold such deals, where the proceeds are earmarked for investment in environmentally friendly projects.
Indonesia is considered one of the world’s top emitters of greenhouse gases, particularly due to its regular devastating forest fires blamed on clearing land for agriculture. President Joko Widodo has committed to cut emissions by at least 29 percent by 2030 and approved a two-year extension to a moratorium on issuing new licences to use land designated as primary forest.
Indonesia has also set targets to cut the use of dirty coal in energy and aims for renewables to make up nearly one-quarter of its energy mix by 2025 from around 12 percent at present, with around 1,800 MW of wind projects targeted for completion.
But despite such commitments environmentalists say more needs to be done to meet its targets and prevent repeats of the massive forest fires in 2015, often blamed on the draining of peatland forests and land clearance for crops such as palm oil.
Documentation for the new bonds said Indonesia had confirmed no financing would go to fossil-fuel based infrastructure, nor projects involving the burning of peat. But it did warn that some projects may still include "an element of deforestation."
Global green bond issuance hit a record for the fifth consecutive year in 2017 and bankers expect further growth in the market this year.
In Asia, Chinese and Indian companies have led the way in tapping the green market to finance environmentally friendly projects but governments had until now stayed away. Worldwide, countries to have sold sizeable amounts of green bonds include Poland – the first-ever – and France.
Source Reuters
Valere Tjolle
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