 |
|
New year greetings from Neufin! We’ve entered the new year with renewed spirits to work on our mission – deploy $10 billion in climate finance by 2028. In this edition of our monthly newsletter we will discuss our expectations from India’s upcoming union budget and bring to you the latest developments from the world of climate finance. |
We’re also excited to share that we’re in Singapore on January 23, 2024. Write to sarthak@neufin.co to schedule a meet. |
|
|
What to expect from India’s Green Budget for 2024 |
The Indian union government will release its interim budget on February 1, 2024 – setting the tone for the year in sustainable finance. In a bid to continue mobilising climate finance in the country, the government is expected to propose issuance of sovereign green bonds worth at least $2.41 billion as part of its borrowing program. |
The national target of achieving 500 GW of renewable energy by 2030 is the primary driver of the country’s sustainability initiatives. Key stakeholders from the renewable energy space including power producers emphasise the need for increased capital expenditure in bioenergy, solar, and wind projects, along with crucial investments in green hydrogen and battery storage. We also expect the budget to include measures addressing the $1.13 billion solar panel import dependence by allocating funds towards indigenous development, technology transfer, and incentivising local manufacturing. |
Further proactive measures to establish India as a Battery Energy Storage System (BESS) hub, such as reduced electrolysers duties, increased PLI allocation for batteries, and revised GST rates can be expected. We can also expect developments towards lowering costs associated with the production of Sustainable Aviation Fuel (SAF). This expectation is in line with the government’s move towards reducing carbon emissions in the aviation sector. The Indian government has unveiled indicative targets for blending SAF with Aircraft Turbine Fuel (ATF). Aligned with the national commitment to achieving net zero emissions by 2070, the government aims to increase the blending percentage progressively over the coming years. According to official announcements the government has set targets to achieve 1% blending of SAF for international flights. This percentage is expected to double to 2% by 2028 and reach 5% by 2030. |
Anticipating a clear government direction, we look forward to facilitating foreign green investment through carbon market instruments such as Article 6.2 of the Paris Agreement and the voluntary carbon market. At the recent Vibrant Gujarat Global Summit, 2024, finance minister Nirmala Sitharaman stressed on the need to build upon the existing Green Credit Scheme to mobilise voluntary climate action from the private sector. Taking a cue from the finance minister’s address, we can expect announcements regarding further developments on the Indian Carbon Market framework and the Green Credit Scheme. |
Nudging the union government to take more concrete measures to promote Compressed Biogas (CBG), industry stakeholders have been advocating for increased central subsidies or Viability Gap Funding for CBG plants – and the budget may address these demands. These measures, coupled with fuel offtake guarantees will unlock the potential of CBG as a clean fuel source. |
Our overall expectations align with India’s Nationally Determined Contributions and what is required for the country to propel itself towards a sustainable future. We will publish a detailed review of the budget and it’s impact on climate finance in next month’s newsletter. |
|
|
Neufin’s carbon offsets portfolio for traders |
Introducing our latest interface for carbon offset buyers – our portfolio of curated carbon projects with offsets available for sale. This dedicated portal will showcase the latest project inventory with prices updated regularly. |
Interested buyers can also explore the project details, media, and attributes through a detailed listing page. In case you have a specific requirement for a project type/geography/volume or price, we can source them for you based on your customised requirements. You can also bookmark this page for future reference! Ready to test it out? |
|
Neufin launches support for I-REC trading |
We launched support for trading of I-RECs last quarter. Our network covers buyers and suppliers for India, UAE, and South-East Asia I-RECs. We’re now actively onboarding buyers and sellers onto our ecosystem. |
Reach out to shrey@neufin.co if you’re interested in partnering with us. |
|
|
India’s Green Bond environment sees a positive trend |
Since 2015, the Indian government and many Indian corporations have been promoting lending and financing via green bonds. On January 4, 2024 the State Bank of India (SBI) raised $250 million through the issuance of green bonds maturing in 2028 via private placement. India Infrastructure Finance Company Ltd (IIFCL) is planning to raise $250 million through its maiden green bonds in the next six months to fund sustainable projects. |
The Government of India first came out with a Green Bond Framework in 2022 and then issued the first tranche of its first sovereign green bond worth $980 million. On February 9, 2023, the government announced the issuance of another $968 million in sovereign green bonds. |
|
Switzerland, Thailand conclude first Article 6.2 deal |
Switzerland and Thailand have completed the transfer of Article 6.2 carbon credits, marking the first ever for deal for emissions reductions under the Paris Agreement. Article 6.2 of the Paris Agreement sets out a system of national accounting for greenhouse gas emissions, with common principles that countries can adopt to allow cross-border exchange of credits. |
Swiss-based KliK Foundation purchased the first ITMOs from the Thai company Energy Absolute Public Co. Ltd. for the Bangkok E-Bus Program. The deal involves the purchase of 1,916 ITMOs which were credited to KliK Foundation’s account in the Swiss Emissions Trading Registry on December 15. |
|
Avoiding physical damage from climate change can yield positive impact of global GDP |
According to the latest climate scenarios from the Network for Greening the Financial System, a group of 127 central banks and financial supervisors working to manage climate risks and boost green investment, making an orderly transition to net zero by 2050 could result in global gross domestic product being 7% higher than under current policies. |
Transitioning to a low-carbon economy will have negative impacts on demand from higher carbon prices and energy costs. But these can be partially offset by recycling carbon revenues into government investment and lower employment taxes. Most importantly, lowering emissions will reduce the physical impacts of climate change, which lowers macroeconomic costs. |
|
|
|
Carbon credit price for the past month |
Price per credit: $3.32/tCO2e (-3.2%MoM) |
Based on top 500 projects globally by volume of credits retired. |
The overall price per carbon credit has decreased by 3.2% over last month (when it stood at $3.43). The end of December saw a large number of retirements – double the global monthly average – as companies closed their books for the final quarter of 2023. Household devices credits in particular can be seen making a slight comeback with prices up 9% MoM. Nature-based solutions continue to trend in the same range, down 1.8% from last month’s $3.84. Prices for standardised tokens having significantly decreased towards the end of 2023, are now recovering, with CBL’s N-GEO token up 85% WoW to $0.37 per credit. |
|
|
|
EV Investment and Finance Show 2024, New Delhi |
|
|
|
|
|
World Sustainable Development Summit 2024, New Delhi |
|
We will be on the ground and would love to meet. Please email arshiya@neufin.co to arrange a meeting. |
|
|
|
COP28 left the climate community in a minor state of flux with the failure of key negotiations. However, this year has started with a few critical developments, including the world’s first successful Article 6.2 transaction. While we seek clarity on Article 6 frameworks globally, India’s domestic sustainability ecosystem is eagerly waiting for the government to release the green budget for the financial year 2024-25. We are particularly keen to see more concrete steps being taken to formalise India’s domestic carbon market for the mobilisation of domestic funds towards voluntary climate action. These key decisions will set the tone for climate action for year to come. |
We’ll be back with more interesting updates next month. Team Neufin |
