Tokenized Indexed-Green Bonds: Funding the Decarbonisation of Ammonia Production

Abstract

This study seeks to investigate how distributed ledger technology can be applied to the green bond market. Second, this study examines how green bonds can finance the suck cost of decarbonizing the ammonia industry. Third, this study seeks to forecast the spot price of ammonia. This forecast is relevant since the bond’s coupon should be indexed and linked to the price of ammonia. The proposed tokenized indexed-green bond is a new idea that leverages the technologies of distributed ledgers, indexation, and green bonds. No study to current date has undertaken such research that integrates these technologies to fund the decarbonization of the ammonia industry. Data was collected on the spot price of ammonia from the Central Bank of Trinidad and Tobago online database at the monthly frequency over the January 1991 to June 2023 period. The applied forecasting methodology was a hybrid framework combining Particle Swarm Optimization and Support Vector Regression. This study found that an out-of-sample forecast for ammonia prices would be US$438.89/ton in the 1st quarter, US$289.99/ton by the 2nd quarter, US$448.30/ton by the 3rd quarter, and US$331.57/ton by the 4th quarter. The decarbonization of the ammonia industry is technically possible. Economically, it would involve leveraging several technologies such as green bond financing, tokenization, and indexation.

Received: 26 May 2023 | Revised: 1 September 2023 | Accepted: 3 December 2023 

Conflicts of Interest

The author declares that he has no conflicts of interest to this work.

Data Availability Statement

Data available on request from the corresponding author upon reasonable request.

Author Contribution Statement

Don Charles: Conceptualization, Methodology, Software, Validation, Formal analysis, Investigation, resources, data curation, Writing - original draft, Writing - review & editing, Visualization, Supervision, Project administration.