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Handbook of Energy and Environment Policy

Edited By Celil Aydin and Burak Darici

The book deals with the broad perspectives on the energy and environment topics and questions the traditional view on energy and environment policy and issues. Nowadays, energy and environmental issues can be accepted as the related subjects by the whole world. The link between energy and environment is backed to the time when only nature's primary resources were used. Primitive societies’ energy demand was small compared to the forces of the environment. With the emergence of industrial nations, the importance of energy and environment relation appeared again.

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15 The Rise of Environmental Consciousness in Islamic Finance: Green Sukuk

Extract

Fatih Güçlü

15   The Rise of Environmental Consciousness in Islamic Finance: Green Sukuk

Introduction

Following the industrial revolution, the mode of manufacturing evolved from hand labour to mechanization. Prior to the industrial revolution, the production aimed to meet the basic needs. In the factories established after the industrial revolution, mass production was started. After all, globalization eliminated trade barriers, hence, market supply has expanded, and production has increased. The increase in production and needs raised the need for energy and thus the world’s dependence on fossil fuels reached advanced levels. In addition, the unfavourable factors such as unconscious destruction of forests, the misuse of water resources has led the pollution of the natural resources and the deterioration of the nature, particularly the air pollution.

In recent years, awareness of environmental problems called as climate change or global warming has been raised all over the world. Governments came into action on request from the society. Interest in renewable energy sources such as wind energy, solar energy which are considered as “clean energy” has grown. Green bonds, which are created to provide financing for high-cost renewable energy projects, are also a result of this growing interest in environmental problems.

Green sukuk is an Islamic finance product which is used to finance environmentally friendly investment projects. From this aspect, it is alike green bonds. Islamic finance is a financial system in which financial activities are carried out compliance with Shariah (Islamic rules)...

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