Green finance has revolutionised the financial industry at great length. In recent years, its sub sectors including banking, credit and microfinance have been at the forefront of adopting environmental friendly practices. It is reported that the global green bond market reached £258 billion in 2019. In fact, economies around the world are expected to inject $90 trillion by 2030 to achieve their global sustainable development and climate objectives. London is currently considered as the hot bed for green finance development. That said, India ranked the second largest market for green bonds with $10.3 billion worth of transactions in the first quarter of 2019.
The green bond market has grown to more than $100 billion of bonds issued annually. Due to its rapid development, green finance has ample commercial opportunities for financial services organisations globally. Despite rapid growth, a large amount of windfall is needed to support transition to a low-carbon world.
Qatar is fostering sustainable global growth through green finance
Qatar is one of the Gulf nations to have strictly vowed to curb air pollutants and reduce carbon emissions to address climate change. The government of Qatar has implemented several clean energy projects and initiatives to contribute towards its sustainability goals. The country’s Ministry of Municipality and Environment plays a pivotal role in cooperation with international organisations and bodies concerned with environment and climate change. It is one of the few nations to sign agreements such as the United Nations Framework Convention on Climate Change in 1996, the Kyoto Protocol in 2005 and the Paris Agreement in 2016, which it ratified in 2017.
In this context, Qatar’s premium Doha bank has been actively involved in green financing. As a part of the Qatar Vision 2030, the bank has rolled out a special green car loans facility exclusively for purchasing environmentally-friendly vehicles. This move is anticipated to encourage customers to purchase energy friendly vehicles for building a sustainable and efficient environment. Other developments of the bank include the launch of internet banking, paperless banking, SMS banking, ATM banking and phone banking. Doha bank has also implemented its own channels such Doha Souq, eremittances and online bill payments. Furthermore, the bank has introduced a green credit card and green account under its belt.
Doha Bank has an exclusive green banking website dedicated to promoting environmental safety within the community by catering to both public and private sectors. Earlier this year Qatar National Banks’ QNB Group launched QNB Green, Social and Sustainability Bond1 to approve projects related to energy efficiency, clean transportation, renewable energy sustainable water and wastewater management, environmentally sustainable management of living natural resources and land, affordable housing, pollution prevention and control, socio-economic advancement and empowerment and green buildings.
Qatar’s ambitious efforts to transition toward sustainability has led to the implementation of compressed natural gas (CNG) as a fuel in the transport sector. It aims to deploy CNG as an alternative fuel in the country’s transport system. This initiative provides increased fuel security and develops the local gas distribution network in the country. Additionally, CNG usage will curb the effects of greenhouse gas emissions. The country’s Hamad International Airport has been awarded the Level 3 ‘Optimisation’ status in the Airports Council International (ACI) Airport Carbon Accreditation programme making it the first airport to receive this recognition. The award has been given to the airport authorities for their extraordinary work in handling, reducing and engaging other stakeholders on the airport site, in reducing CO2 emissions as a part of the airport industry’s encounter with Climate Change. The level accreditation is associated with the rolling out of solar power stations by the government. This is also a crucial step towards the expansion of Qatar’s electricity production sources and increasing reliance on renewable energy sources.
As a part of efforts to reduce air pollutants emitted from transport, the introduction of the electric bus project also promoted sustainable transport in the country and helped achieve integration with the Doha Metro project. Coming to the oil and gas sector, Qatar has been working with Clean Development Mechanism (CDM) project Al-Shaheen Oil Field Gas Recovery and Utilisation Project since 2007. The project aims to reduce greenhouse gas emissions at the international level. That said, there is another project which is considered as one of the largest environmental projects of its kind in Qatar. The project known as the Jetty Boil-Off Gas Recovery Facility was launched in the last quarter of 2014 — and the facility is responsible for collecting boil-off gas and transporting to a central compressor prior to returning it to the LNG plants where it is used as fuel gas, or converted back into LNG. Every year, the facility cuts down 2.5 million tons of carbon dioxide emissions and assists Qatar’s government to curb the dangerous emissions. The facility is considered one of the premium one’s among the Middle Eastern countries.
Furthermore, the bank has launched Qatar’s first ‘Green Mortgage’ home loan programme. The facility allows customers to choose environment friendly options while purchasing a house. The offer has discounts and waiver for interest rates on homes that are certified as energy-efficient. Customers have the option to make the loan repayment within 20 years with an interest rate up to 3.99 percent which will save the utility cost.
In addition, the bank doesn’t take mortgage and zero management charge and provides free fire insurance for a year. Furthermore, customers can avail a lifetime platinum or Visa infinite credit card with a choice to acquire two other complementary cards.
The customers which take the home loan will be provided an optional free mortgage interest saver account with many other benefits. The savers account will give a 1.25 percent interest to the customers who maintain a minimum balance in the account every month. The maximum deposit amount is QAR 2 million.
The pandemic’s impact on green finance
The pandemic is reshaping the world’s budgetary framework and organisations are considering making changes in their financial systems. Against this background, organisations in Qatar are urged to put maintainability at the core of their speculation and business procedures to escape the current situation. It is a remarketable strategy in the best interest of the environment and highly beneficial to individuals. Investors are still focusing on climate issues amid the time of unprecedented capital outflows from emerging markets. In a move to close the Real Economy Green Investment Opportunity (REGIO) fund, The International Finance Corporation (IFC) and HSBC Principal Investments attracted approached investors from different countries to raise $475 million.
The REGIO fund, which is the first global green bond fund targeting companies in emerging markets indicates that despite the current global market situation, green bonds in emerging markets are still an attractive investment opportunity. The pandemic has also opened up enormous opportunities and taught economies of the world that they cannot self-isolate from climatic changes but prevent and control harsh weather conditions. It is reported that $1 trillion worth global market related to green buildings, carbon efficient transportation, renewable energy, climate-smart agriculture are floating worldwide. Global leaders and investors who embrace climate as a business opportunity and offer these low-carbon technologies, goods and services will be the front runners of our future as time has come to boost efforts towards a low-carbon future.
Stoking investor interest in Qatar’s green finance
In light of the Climate Action Summit held at the UN Headquarter in the US, Qatar’s permanent delegation to the United Nations, in cooperation with the Green Climate Fund, had organised an event to address the topic of mobilising institutional investment for climate. The event has attracted participants from around the world where everyone said that for a sustainable development and creating values for the environment, institutional investment is the right element to work upon as it will provide unique opportunities for everyone to achieve their goals. In the event, keynote speakers and participants also focused on best practices in the management of investment as well as diversified long-term assets for investment in climate.
The delegations emphasised on establishing the base that would contribute to the unification and integration of the objectives of investment institutions to invest in developing countries. The event was a golden opportunity for institutions that want to invest in climate as a sustainable development goal and to announce investment institutions to the analysis and solutions provided by the Green Climate Fund. With reference to this development, the Qatar Investment Authority members said that the country has worked hard to achieve its sustainable development goals, along with indicating the country’s efforts towards the construction of the Stadiums of the FIFA World Cup Qatar 2022, which have followed the highest environmental standards.
Qatar has taken further measures to achieve the goals of sustainable development and the climate agreement, where it implemented huge infrastructure projects following building standards that consider climate and sustainable development goals, referring to the international awards received by the country. The country’s investment authority has fostered many initiatives including clean energy to public companies and a new electricity system that will be operated by QIA branches during the FIFA tournament. The members also spoke about the Qatar Investment Authority’s involvement in the One Planet Sovereign Wealth Fund. Qatar Investment Authority’s director Al Mahmoud said that it’s good to see many of the leading fund managers in 2020 have joined the Wealth Fund initiative, which has increased funding for projects to combat climate change. The event was concluded by pushing attention towards the value of the Sovereign Wealth Fund and its long-term investment prospects to ensure the future of the coming generations and achieve sustainable development goals.
Rising challenges that need to be addressed
It can be harder for global investors to seal impact deals because those deals require a lot of time, partnerships and creativity to structure. The goals of impact investors have been fulfilled by catering the needs of cities which have also paved the way for residents of many economies to utilise the environmental impact bond — a new financial model in the field of investments. The finance model can be utilised to support projects related to resilience-oriented and green infrastructure, which not only safeguards against pollution and natural disaster such as flooding but also generate jobs and beautify underserved regions.
The profits for the investors from these projects are purely based on the extent to which the projects produce results; such as the amount of storm water diverted from flowing into nearby rivers. It is reported that many campaigners emphasise on investing money to create a sustainable economy, but $90 trillion is definitely required to fulfill the world’s economic needs by 2030. However, shifting the focus toward changing the flow of finance can impact the market in the long-term. Both investors and savers possess some degree of risk to generate returns because different economies have their own changes in the economy accordingly. The highest return which is generated from the ideas during risky times has the capability to shape up a real and robust economy. The green finance sector will thrive as long as the risk-adjusted return from green assets is sufficiently positive.
Qatar’s green finance structures need to be improved
Drastic improvement has been distinguished as one of the first concerns in Qatar’s National Development Strategy. A definitive target of green structures has been established to reduce the bad effect of the environment on human wellbeing and the indigenous habitat. This can be advanced by utilising water, vitality and different assets all the more effectively just as guaranteeing wellbeing of the environment and improving representative efficiency. Green structures can bring an assortment of social, financial and natural advantages for Qatari inhabitants. Through water gathering, grey water reusing and sustainable power source frameworks, green structures can advance water protection, vitality the board just as environmental change alleviation. In addition, this can bring a sizable decrease in activity expenses and offer long haul reserve funds.
With the emergence of many world class sustainable constructions, there has been rapid progress in the green building sector in Qatar. The country has valuable experience and inputs to offer on the system’s local relevance and application as the region ranks fifth in accommodating environment friendly houses outside the US. According to the LEED system which measures houses in the Middle East, UAE accommodates 65 percent of the environmental friendly houses followed by Qatar, Lebanon, Saudi Arabia and Egypt. Amid- Covid-19 pandemic, Qatar has been successfully tackling the challenges faced by its citizens. The green finance sector is pretty strong than any other Asian nations because the government has planned and organised the goals and initiatives accordingly from time to time. Once the pandemic slows down and Qatar will definitely re-shape its economy. The government of Qatar has focused on taking tax measures and developing infrastructure to enable people to better work and study remotely without facing any issues.