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The importance of living in a sustainable world

Héctor Ferreiro Portfolio Manager

Bonds and loans to finance green technologies

Bonds and loans to finance green technologies

Green technologies, such as renewable energies, energy efficiency and electric vehicles, can help to reduce the impact of human action on climate change. In 2007, the European Investment Bank issued the world's first green bonds aimed at financing and developing these technologies. In Spain, BBVA signed its first green loan in 2017, worth 500 million euros.

If there is a fact that shows us the importance of living in a sustainable environment and focusing on the environment is that 29 July was the Earth Overshoot Day​, i.e. the day when humanity consumed all the resources available for that year.  The current pace is increasing and growing exponentially every single year.

We need to live in a sustainable environment. This means that the energy used to meet our needs must not compromise future generations in satisfying their own needs.

Recently, there have been major advances and raising of awareness, but there have also been setbacks, including:

  • The United States left the Paris Agreement when Trump started his term. Trump decided to withdraw his country from the Paris Climate Agreement, which seeks to reduce global warming.
  • China reduced support for renewable energy: a strategy geared towards urban pollution problems.
  • The forces behind trade protectionism are probably the same forces that move away from commitments to fight climate change.

The following figure shows the CO2 emissions from the main countries. Perhaps due to the setbacks, we mentioned above, China and the US add up to 49% of total emissions while their gross domestic product (joint GDP) is around 40% of the world GDP.

The main advances to end this type of emission refer to renewable energy and include:

  • Hydropower is still the main form of renewable energy.
  • Major improvements in the costs of renewable photovoltaic and wind power.
  • Wider presence of electric cars, as evidenced by the new European Union regulation, which comes into force now: it aims to reduce accidents resulting from the low noise level of these types of vehicles. Their electric engine barely generates any sound at low speeds, making them a potential danger for pedestrians or cyclists because they cannot identify their presence.

Pending development

  • Other renewable technologies still far from grid parity (i.e. a source of power generation can generate power at a Levelized cost of electricity that is less than or equal to the price of power from the electricity grid).
  • Current technology does not enable the technical or economic viability of 100% renewable systems.
  • Current technological progress does not enable the technical or economic viability of 100% renewable systems.
  • The efficiency of distributed generation alternatives is still below industrial-scale facilities.

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