Green Finance or Daltonic Finance?

Abstract

Clean energy is currently a top priority on the global agenda, and green bonds have emerged as a key response from financial markets. However, while these bonds aim to reduce carbon emissions, they may create perverse incentives. Brazil has made significant investments in eolic parks in recent years, with players issuing green bonds to finance these activities. One region that has seen high levels of investment is the interior of Bahia state, which has historically had low levels of economic and social development. Unfortunately, the production of wind energy in this region has been marked by several social conflicts. Despite this, these conflicts have largely gone unnoticed, as the appeal of clean energy has overshadowed them. Social issues such as land disputes are critical but often overlooked in green finance mechanisms. In some cases, these financial incentives may incentivize land grabbing from vulnerable populations in the name of clean energy production.