CNG (Compressed Natural Gas) is the only fossil fuel marked as eligible for subsidies, incentives and other benefits under the Sovereign Green Bonds approved by Union Finance Minister Nirmala Sitharaman on Wednesday. However, the maiden green bonds framework has only allowed expenditures pertaining to public transportation. “Subsidy/incentive for private transportation using CNG is neither envisaged nor included,” the government said. The public transportation chain in India includes, both the mass option such as buses, as well as individual point-to-point options comprising autos, taxis, and app-based services such as Uber and Ola.
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The inclusion of CNG comes as a boost to the adoption of CNG as an alternative fuel and its distribution network in the country. The Ministry of Finance this week released the framework for the issuance of Sovereign Green Bonds, aligned with the global standard. Using the framework, the government aims to channelise Rs 16,000 crore, through the issuance of bonds, to various public sector projects aimed at reducing the carbon intensity of the economy. Various categories such as clean transportation, pollution prevention and control, climate change adaptation, sustainable water and waste management, among others, are devised to segregate the projects undertaken by the framework.
With regards to CNG, projects such as pipeline for seamless distribution, import terminals across the country, city gas distribution networks, and gas exploration may be under the umbrella of the green expenditure supervised by the Ministry of Finance. With the fuel being included in the Sovereign Green Bond framework, projects related to it will be eligible for green expenditures, including investment, subsidies, grant-in aids, among others. The public expenditure undertaken by the government will also include R&D (research and development) expenditures.
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According to the framework, all the proceeds will be allocated to various projects within 24 months of issuance. The devolution of funds will be in tranches. CNG is included in the Green Bonds under the ‘Clean Transportation’ category. Equity is also allowed in the framework but solely to the metro projects under the clean transportation category. The government has also mentioned that the investors in bonds issued under the framework will not bear any project related risks.