Global green bond issuance hit a record $155.5 billion in 2017, surpassing previous estimates, and could reach $250 bln-$300 bln this year, research from the Climate Bonds Initiative (CBI) shows.
Issuance last year was 78 percent higher than 2016’s $87.2 billion and well above the CBI’s estimate in December of $130 billion.
The United States, China and France accounted for 56 percent of total issuance in 2017, according to the CBI, a London-based non-profit organisation which certifies the green credentials of bonds.
Fannie Mae was the largest overall issuer in the United States, with $24.9 billion from its green Mortgage Backed Securities programme.
Green bonds are a growing category of fixed-income securities, which raise capital for projects with environmental benefits.
There were 10 new entrants to the market last year: Argentina, Chile, Fiji, Lithuania, Malaysia, Nigeria, Singapore, Slovenia, Switzerland and the United Arab Emirates.
Although green bonds make up a small fraction of the overall bond market, they are attracting more attention because meeting emissions-cut targets will require trillions of dollars of capital from public and private sectors.
Last year, several climate leaders called for a ten-fold increase in green bond investment from 2016 levels and set a target for 2020 of $1 trillion.
“There are now three vital years to reach the milestone of a trillion dollars in green finance by end 2020. The final results for 2017 provide some foundation, but must be doubled and doubled again by the end of the decade,” CBI’s Chief Executive Sean Kidney said in a statement.
“The spotlight is now firmly on financial system actors, banks, insurers, corporates and institutional investors to achieve this vital 2020 climate investment target,” he said.
The most common use of proceeds from green bonds last year was on renewable energy but investment in low-carbon buildings and energy efficiency rose in 2017, the CBI said.
“With a multitude of rail and urban metro deals, allocations to low-carbon transport almost doubled in volume. The trend to finance an increasingly diverse range of projects continues,” it said.