Debt: Example of Emission Reduction-Linked Bond from Vietnam
Example of Emission Reduction-Linked Bond from Vietnam.
Abbreviations: Mobilizing ERC Finance
Find a list of helpful terms used in the Mobilizing ERC Finance Section.
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AMC |
Advance Market Commitment |
Aggregate ERC Activities
To help ensure success of ERC activities and attract investment, an aggregation facility could provide standardized processes for ERC activities, due diligence the activities, and provide technical assistance to help ensure their effective design and ultimate success.
Expand ERC-Backed Debt Issuance
The ERC market exposure that investors face could be optimized through the ERC linkage and attracting a diversified investor base with different preferences.
Key Findings to Scale Up Private Sector Capital for ERC Activities
An overview of three non-mutually exclusive options to scale up private sector capital for ERC activities
Political Risk Insurance
Political risk insurance is helpful for stimulating many types of investment in Emerging markets and developing economies.
Establish an ERC Club
Establish an ERC club. Pooling demand through an ERC buyer’s club is attractive because it helps stimulate ERC supply and allows delivery risk to be distributed across buyers.
Political Risk for ERC Activities
Political risks are acute for ERC activities and arguably the most important and challenging to address to attract capital. ERC markets are fundamentally policy driven and still relatively novel, trading a credit that may not yet be considered by, let alone be clearly defined, in existing regulatory frameworks. Uncertain policy and regulatory frameworks, as well as unexpected government action, policy change including expropriation, or foreign investment restrictions, fundamentally put at risk the ability of an ERC activity to generate and transfer ERCs from a given jurisdiction.
Market Risk for ERCs
ERC market risk remains high and still needs to be mitigated directly to facilitate scaling up ERC financing while the market matures
Scaling Finance for ERC Generation
These sections provides an overview of key findings to attract commercial investment for ERC activities and help scale ERC finance, including examples of how the bond or debt raise could be used to finance ERC activities. For smaller economies and many subnational entities, an aggregation facility that pools multiple ERC activities can help overcome some of the challenges to accessing finance and attract large-scale private sector capital, including through issuing ERC-backed debt.