The Government of India will issue its first-ever green bond this month, according to an announcement by the Reserve Bank of India, with plans to raise approximately US$2 billion to support green infrastructure projects aimed at reducing the carbon intensity of the economy.

The issuance is planned in two 80 billion rupee ($970 million) tranches, including both 5- and 10-year maturities, with auction dates scheduled for January 25 and February 9.

India’s entry into the green bond market follows the government’s introduction in recent years of a series of climate-related goals, including a pledge made at the 2021 COP26 climate conference to reach net zero by 2070. In August 2022, the government followed up with a strengthened Nationally Determined Contribution (NDC), including commitments to reduce emissions intensity by 45% and to transition to approximately 50% electric power from non-fossil-based sources.

India’s goals include reaching 500 GW of non-fossil energy capacity and reducing carbon emissions by one billion tonnes by 2030. Earlier this month, the cabinet approved India’s National Green Hydrogen Mission, its strategy to establish India as a major green hydrogen production hub, with plans to reach 5 million tonnes of production, along with over $2 billion in incentives for related infrastructure and production.

In November, the government published its Sovereign Green Bonds framework, outlining eligible use of proceeds from green bond issuances, as well as project selection and evaluation, management of proceeds, and reporting obligations. The framework includes a broad range of eligible green project categories, including renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, pollution prevention and control, green buildings, sustainable management of living natural resources and land use, and terrestrial and aquatic biodiversity conservation.

Additionally, the framework also lists a series of excluded projects, such as those involving the extraction of fossil fuels. The Excluded Project category also includes nuclear power generation and hydropower plants larger than 25 MW.

The offering comes as issuances of green, social, sustainability and sustainability-linked (GSSS) bonds have grown to a record share of global bond volumes, reaching 16% of the overall market in Q3 of 2022. While bond market volatility has pressured GSSS volumes in recent quarters, issuances continue to outpace those of the broader bond market. Last week, the government of Hong Kong raised US$5.8 billion in a green bond offering, upsizing the issuance in response to strong demand, with the deal drawing more than $36 billion in orders.

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