Reflections on Legal Issues Associated with Green Bonds: a reflection by Climate Bonds Senior Fellow Motoko Aizawa from our NYC legal workshop
By Motoko Aizawa, Senior Fellow, Climate Bonds Initiative
A 45 MW power plant running on soybean and recycled cooking oils, enough solar panels to cover six football fields, and 7 MW worth of fuel cells – when Syracuse Industrial Development Agency issued, on behalf of developer Destiny USA, $228 million tax-exempt green bonds in 2007 to finance a massive addition to a shopping mall, these were the green promises. And they remained exactly that: just promises.
The US Internal Revenue Service (IRS) audited the developer to see whether the bond’s tax-exempt status should be revoked, but ruled that the bonds were in compliance. The lawyer representing the developer apparently said: “the bonds should be allowed to remain tax-exempt because the federal law creating the program only required it to describe the energy efficiency, renewable energy and sustainable design features planned for the project and did not require that the project actually include all of them.” Read more