Blockchain based Green Bonds Platform

About Solution

Green Bonds to Finance Renewable Energy Projects:

Funding for Renewable energy projects is challenging for any country. For instance, the Government of India is planning 100GW of energy from solar energy sources and 60GW from wind energy sources by 2022. The current renewable energy output stands at 6.76GW for solar and 26.7GW for wind. Financing the gap requires $160 billion of capital, $120 billion as debt, and $40 billion as equity.

Today, most of the renewable energy is funded by commercial bank loans at interest rate 11-12 per cent per annum. With the banking sector stretched and undergoing a balance sheet adjustment due to Basle requirements, it seems highly unlikely that the banks would have the bandwidth to finance the additional requirements of the renewable sector.

Blockchain based Green Bonds

This is where the Green Bond come into the picture. A Green Bond is a fixed income instrument for the purpose of raising debt capital through markets. The International Capital Market Association states the procedure for certifying a green bond. These directives include the use of proceeds, the evaluation procedure, the management of proceeds, and financial reporting.

Green Bonds to Finance Renewable Energy Projects:

We have created a Green Bonds platform using Blockchain Technology. This platform initially allows the stakeholders to do 2 functions:

a) Financial institutions or Banks are allowed to list their Green Bonds

Financial firms are able to register themselves to the platform. They are able to list their Bond product. The details of the Bond issuer, Bond details and related information is stored on the Blockchain. Investors who have access to the platform are able to view these products.

b) Investors are able to buy the Green bonds

The Investor KYC details, Wallet information and related information is stored on the Blockchain.

If the Investor is interested in a particular Bond, they are able to buy this bond through the platform. Complete transactions including payments can be made using the Blockchain in a quick, easy and cost effective manner.

By using the Blockchain to enable Bond management, we are able to leverage the advantages of the Blockchain as below:

a) Bring Transparency to the system

Ensure that the use of proceeds go into the designated green projects. Further milstones based fund distribution of proceeds using smart contracts automates the process.

b) Enable the Verification process

We would be able to provide access to certification institutions, government bodies etc. To verify the instrument and information on funds on the Blockchain.

c) Enable the auditing of the process or system

The platform may be audited by third parties and access can be provided for auditing firms or regulatory authorities.

d) Provide secure, encrypted, decentralised while access controlled platform

By using the technology, we will be able to bring out Labelled green Bonds.

Next Phase of project:

We have also experimented to add IoT interfacing at the Energy installation (like a solar power plant) to directly be able to write the energy produced to the Blockchain. So we can directly reimburse the returns from the energy generated to the investors of the project.

Eventually we want this project to run as a DAO (Digital Autonomous Organization) without human intervention except for listing the Bonds.

We believe that we can use these technologies to enable new financial instruments, business models and attract customers to this new business idea.

Green Bonds on the Blockchain

Blockchain is an ideal platform for hosting the Green Bonds. We believe that the Blockchain platfrom could provide solutions to the current deficiencies in the market. The Blockchain can provide the evidence that the projects funded have in fact delivered the intended environmental benefits. This would give investors and governments the confidence and thus credibility to the Green Bond Market.

Further we see that there could be a secondary market for these Green Bonds. The transperancy of the platform would highlight not only the quality of the Issuer but also the quality of the project. So viable and successful projects will have more value.

Our Solution

Our Green Bonds are issued on the Ethereum Blockchain Platform with smart contracts that define payments depending on various conditions that have been programmed into the Blockchain. This means that this payment can be completely autonomous and subject to conditions. Each bond is tokenised and can be uniquely identified.

 We initially plan this product for the use of by financial institutions. But in future, we can see this product used by corporates and retail clients.



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