Unlocking Ocean Finance: Blue Bonds Report Launched in MENAT

10x Industry

Mita Srinivasan
10x Industry
Published:

Unlocking Ocean Finance: Blue Bonds Report Launched in MENAT

The report from Systemiq, Rare and HSBC suggests that if the blue bond market grows at the same rate as the green bond market, it could mobilise up to $14 billion in new finance by 2030, significantly contributing to the funding needed for Sustainable Development Goal 14 (Life Below Water).

In a groundbreaking development for sustainable finance, Systemiq, in collaboration with Rare and HSBC, today released a comprehensive report detailing the potential of blue bonds to revolutionise ocean finance in the Middle East, North Africa, and Türkiye (MENAT) and Asia-Pacific (APAC) regions at this year’s MENA Oceans Summit. Co-authored by Jennifer Ring Associate at Systemiq, the report highlights innovative debt instruments designed to support the sustainable ocean economy.

Key Findings and Opportunities

Blue bonds, an emerging subset of green bonds, are positioned as a pivotal financial tool to address the pressing need for investment in sustainable ocean projects. These bonds are issued by governments, multilateral development banks, or large corporations to raise capital for marine conservation, clean energy, sustainable fisheries, and other ocean-related initiatives.

This latest report suggests that if the blue bond market grows at the same rate as the green bond market, it could mobilise up to $14 billion in new finance by 2030, significantly contributing to the funding needed for Sustainable Development Goal 14 (Life Below Water).

The report dives deep into the potential of blue bonds to unlock significant capital for ocean-based projects in MENAT and APAC.

  • Offshore Renewable Energy: MENAT countries like Saudi Arabia, UAE, and Egypt could leverage blue bonds to finance offshore wind farms, wave, tidal, and ocean thermal energy conversion projects, transitioning from fossil fuel dependency to renewable energy sources.

  • Sustainable Ports: With major ports such as Jebel Ali and Tanger-Med, MENAT has the potential to lead in green port infrastructure. Blue bonds can fund the necessary upgrades for decarbonising maritime transport, including green hydrogen and ammonia bunkering facilities.

  • Water Scarcity Solutions: As the most water-scarce region globally, MENAT could use blue bonds to invest in sustainable water management practices, including wastewater treatment and desalination technologies, reducing the environmental impact on ocean health.

  • Sustainable Tourism: Blue bonds can accelerate the development of ecotourism in coastal regions, promoting tourism that protects and restores marine ecosystems, while supporting local communities.

In an exclusive chat with SME10X at MENA Oceans Summit, Systemiq’s Jennifer Ring emphasised the critical role of blue bonds in addressing the funding gap for the sustainable ocean economy. "There is no sustainable ocean economy unless we can find a way to pay for it. Blue bonds are an emerging debt instrument that can help unlock the capital we urgently need," Ring stated. She highlighted the importance of International Financial Institutions (IFIs) and commercial banks in issuing blue bonds and on-lending to SMEs for projects in water treatment, tourism, and fisheries.

Tatiana Antonelli Abella, Founder of Goumbook and Chair of MENA Oceans Summit, agreed with Ring. “Blue bonds offer a solution to the underfunding of SDG14,  helping to direct capital to specific organisations and projects crucial to conserving marine ecosystems and enable investors to contribute to oceans health. Launching this report at MENA Oceans Summit, emphasises the importance of funding projects in this region, where research and conservation efforts are playing a pivotable role in adaption and mitigation efforts at a global level.”

Building Momentum

According to Ring, since the first blue bond was issued in 2018, the market has seen significant growth. The report notes that $6.5 billion in blue bonds have been issued between 2018 and 2023, with the majority of these in the Asia-Pacific region. However, the MENAT region that has yet to see its first blue bond issuance, presents a substantial opportunity for regional leaders.

The report calls on governments, businesses, and financial institutions in the region to seize the opportunity presented by blue bonds. By investing in sustainable ocean projects, they can contribute to a resilient, nature-positive, and net-zero aligned economy. The report also stresses the need for better governance, supportive frameworks, and robust key performance indicators to build investor confidence and ensure the effective deployment of funds.

As the world grapples with the dual crises of climate change and biodiversity loss, innovative financial instruments like blue bonds offer a beacon of hope. By harnessing the power of ocean finance, MENAT and APAC regions can lead the charge towards a sustainable and prosperous future.