The Indian government’s multiple initiative to promote and invest in the national Blue Economy has got the much needed boost. In a significant development, the Securities and Exchange Board of India (SEBI) has put out a Consultation Paper on “Green and Blue Bonds as a mode of Sustainable Finance” and sought comments from the general public on the Paper.

Green Bonds are not new to the SEBI, and Indian companies raised nearly USD 7 billion through ESG (environmental, social and governance) in 2021, compared to USD 1.4 billion and USD 4 billion in 2020 and 2019, respectively.

The SEBI Paper makes reference to the draft “Blue Economy policy” rolled out by the Ministry of Earth Sciences (MoES) which emphasizes on several key sectors across the maritime domain to achieve holistic growth of India’s economy. It identifies the scope of Blue Bonds in India and focusses on some of the key sectors concerning Blue Economy. These include (a) Oceanic resource mining; (b) Sustainable fishing: National Offshore Wind Energy Policy; (c) Coral degradation; (d) Geoengineering techniques; and (e) Blue flag beach.

Perhaps for the first time, the government has recognized the need for National Accounting Framework for the Blue Economy and ocean governance. In this context, the Prime Minister has clearly laid out the national “vision and work in this sector include improving infrastructure on current ports, more ports, offshore energy, sustainable coastal development and coastal connectivity."

It is well known that development of Blue Economy is a highly finance intensive activity. Most developing nations, particularly Small Island states (SIDS), are short of fiscal resources and must seek international support through grants, loans and other instruments and develop ocean economy.

Seychelles offers a good example of how a SIDS was able to use this financial instrument for the development of Blue Economy; “Five years ago, TNC (The Nature Conservancy) did a really pioneering deal in the Seychelles which involved working with the Paris Club of official creditors to undertake an impactful project for 30% of the Seychelles exclusive economic zone (EEZ), swapping US$20m of official bilateral debt and channeling it to a conservation trust fund,”  

Seychelles was followed by Belize (over US$550 million) showcasing a government that “chose to invest political capital into a deal with ambition and scale never seen before”. The Fiji government too has plan to issue a sovereign Blue Bond in August 2022 and raise up to US$50 million for investments to deliver a sustainable blue economy, create jobs and protect Fiji’s ocean and biodiversity.

Now the Indonesian Government has announced Blue Bonds, under the “Blue Principle” and during its G20 Presidency, the country plans to “promote the importance of blue economy, blue carbon, ocean waste management, and blended finance”,

It is worth mentioning that according to the International Finance Corporation (IFC), part of the World Bank Group, a “Blue Bond" is a “fixed income instrument that is aligned to the Green Bond Principles (GBP) and where the proceeds are exclusively dedicated to finance or refinance activities that contribute to ocean protection and/or improved water management”.

During the 9th annual World Ocean Summit, the delegates were unanimous in their views that public-private partnerships (PPP) offers an innovative way to scale up projects through efficient finance instruments and conservation tools for sustainable development of Blue Economy.

Finally, Blue Bonds are perhaps the most viable financial instrument that offer States, both crediting countries and borrowing nations, an opportunity to adapt/mitigate climate change in favour of conservation. Blue Bonds are therefore a “practical and tangible” source of funding with no prohibitive costs to the Treasury.

There is every reason to believe that Blue Economy has a high potential for growth and the demand for fiscal support is quickly outstripping the supply. By some estimates, it could double in annual value growing from US$1.5 trillion (2010) to US$3 trillion by the end of the decade. And the key to these figures rests in Blue Bonds. These can be issued by governments, financial institutions such as the SEBI as also private companies that wish to invest in Green-Blue projects to restore ocean health, protect the environment and support the livelihoods of coastal communities.

Dr Vijay Sakhuja is Consultant Kalinga International Foundation, New Delhi.