What is a green bond?
Green bond is the type of municipal bond exempt from tax, issued by organizations and local governments that the US federal government qualified. The idea of a green union is that it is issued to support the development of so -called brownfield sites that are buildings or land that are abandoned or insufficiently developed, and may have a small amount of industrial pollution. The full name for the green link is a qualified green building and a sustainable design project. Increasing awareness of environmental issues are bases for implementation of green bonds. The purpose is to raise money that will support environmentally sensitive business practices and new businesses. They usually take the form of rebuilding or renewal of land or buildings that have a negative impact on the community or have been contaminated and need to return. The interest obtained from these bonds is not taxable to provide motivation for their purchase, compared to conventional bonds whose interest is taxed.
Only some development or renewal projects will be entitled to use green bonds. Three main criteria are used for this qualification and if one of them is met, there may be a problem with green bonds. The first is that the building must have a trace of at least 20 hectares (8 hectares) or an internal area of 1 million square feet (92,000 square meters). The project can also qualify if they receive financing from a municipality or state of $ 5 million USD (USD) or more.
If you fail of one of the two, the project can still qualify if at least three -quarters of the building are registered for certification through management in the field of energy and environmental design (LEED). Leed is an evaluation system that is based on standards for environmentally sustainable construction projects. Buildings may also be required within this system to use renewableCH sources such as solar energy for part of their energy requirements.
While investments motivated ecologically are not new, green bonds are one of the first of these investments to offer a fixed rate of return. The first main construction project to use green bonds was the retail complex of the US Destiny in New York. The US Destiny project is also unique in that it is expected to meet all its energy needs from renewable sources.