The last five years has seen significant growth in climate-related infrastructure financing, but the election of Donald Trump raises new questions to that expansion. In the first of a new series of articles for InfraNews, S&P Global Ratings’ Head of Environmental and Climate Risk Research, Michael Wilkins, explains how, despite obstacles, environmentally-friendly infrastructure investment can continue to evolve.
Although global climate finance flows have increased by almost 15% since 2011-2012, a potential shift in the environmental agenda from the world’s largest project finance debt issuer, the US, certainly raises fears for progression. The Clean Power Plan (CPP) – introduced in 2015 with the aim of reducing carbon emissions from US-based power plants — is the primary energy infrastructure policy under threat. Should the plan pass, it would greatly benefit renewable investment and an unprofitable nuclear fleet – which remains a competitor to carbon-emitting coal and gas. However, the CPP remains unimplemented as it awaits Supreme Court review, the outcome of which will be influenced by Trump’s appointment of Supreme Court Justice.
Despite Trump, many US states will continue to have an appetite for building renewable energy infrastructure, for which much of the financing is expected to come from green bonds (bonds whose proceeds must be for sustainable use). As green energy build continues, investors will look for a more standardised method of reporting and certifying bonds’ “greenness” – one that accurately evaluates the environmental impact of projects over time. For this reason, S&P Global Ratings has developed an assessment which rates green bond governance, and the environmental benefits to be derived.
Read the article (with a subscription) at InfraNews.