Green Bonds as a more effective way of capitalizing the South African National Green Fund

• Main Author: Manthata, Olympus
• Other Authors: Biekpe, Nicholas
• Format: Dissertation
• Language: English
• Published: University of Cape Town 2018
• Subjects: Development Finance
• Online Access: http://hdl.handle.net/11427/28990

Greenhouse gas emissions are said to be on a very dangerous trajectory and the debate around man's industrial activity being the key cause of climate change seem to be receding. Governments around the world are mostly in agreement that something urgent needs to be done but the big question that remains is how to mobilize sufficient financial resources to address the enormous investment requirement to transition world economies towards greener growth and development. The United Nations through the United Nations Framework Convention on Climate Change (UNFCCC) has rallied countries together for a coordinated global response to the potential negative impact of climate change. The major challenge the UNFCCC through the conference of parties (COPs) is balancing the needs of developing countries with that of developed countries with regard to appropriate climate change response strategies, more especially about who should carry the financial burden. In its response to climate change, the South African government, through the department of Environmental Affairs has initiated the National Green Fund to assist the country in transitioning to a greener economy. The Green Fund has received R1.1 billion in direct fiscal support to invest in green initiatives for a 3 year period. However, it evident that R1.1 billion, though commendable, is a "drop in the ocean" when compared to the enormous amount of financial resources required to bring about the transition. It is therefore crucial that we explore appropriate financial mechanisms that are able to mobilize the required level of investment. It is in this regard that this study explored a broader base of potential financial instruments and mechanisms that can attract the much needed private finance. More specifically the study explored green or climate bonds as a more efficient and effective mechanism to use in capitalizing an initiative like the National Green Fund than is current dependent on direct fiscal support.