The funds will be used to support private sector investment in renewable energy, energy efficiency, and other climate-friendly sectors.
“Proceeds from the bonds are earmarked for projects that reduce greenhouse emissions—for example, by rehabilitating power plants and transmission facilities, installing solar and wind power, and providing funding for new technologies that result in significant reductions in emissions,” said the IFC.
“We are ramping up our Green Bond programme to meet the growing demand for this asset class and enable investors to support climate-smart investment in developing countries,” IFC CEO Jin-Yong Cai said in a statement.
According to Cai, climate change is one of the most urgent development challenges in recent times, and only markets can mobilize the investment necessary for mitigation and adaptation.
According to the International Energy Agency, $5 trillion of investment is needed worldwide by 2020 in renewable power, energy efficiency, and cleaner transportation to contain rising global temperatures.
The United Nations estimates that 80% of the capital needed to address climate change will come from the private sector.
Green bonds, also known as climate bonds, are a relatively new asset class.
The IFC says it has issued $2.2 billion in green bonds since 2011 and 2012 fiscal year, it invested $1.6 billion in climate-related investments—more than 10% of the institution’s overall commitments for the year.
It adds that about 70% of IFC’s investments in the power sector involved energy efficiency and renewable energy.
By 2015 fiscal year, the IFC indicates that it expects to double its climate-related investments to roughly $3 billion per year.
By Ekow Quandzie