The Australian Government will introduce a sovereign green bonds program in 2024 to enable investors to support public projects driving Australia’s net-zero transition and boosting the country’s green finance market scale.

The recent second investor roundtable announced the decision that allowed collaboration between governments, investors, banks, global asset managers, and superannuation funds.

The green bonds initiative is expected to increase transparency around climate outcomes and the volume of accessible green investments.

The Australian Office of Financial Management will manage the program.

T The roundtable was attended by energy and climate leaders and some of Australia’s largest investors, who collectively manage over $2 trillion in assets.

Australia has made several other commitments to ensure that it takes advantage of the opportunities presented by the energy transition.

Integrity of Green Investments

The Australian government will co‑fund the initial development phase of an Australian Sustainable Finance Taxonomy in partnership with industry through the Australian Sustainable Finance Institute.

The taxonomy will help attract more green investment to Australia by helping investors target sustainability objectives and ensuring investments are delivering on their sustainability claims.

In addition, the government will provide an extra $4.3 million to crack down on businesses making misleading claims about the sustainability or efficiency of their products.

A strong and proactive regulatory approach will reduce the risk of greenwashing, supporting investor sentiment toward Australia as a destination for green capital.

According to Climate Bonds Initiative report, global green bond issuance reached a record high of $269.5 billion in 2020, a 1.12% increase compared to $266.5 billion in 2019, due to a late surge in the second half of 2020.

Fannie Mae, a U.S. government-sponsored enterprise, issued the most green bonds with a total value of $13 billion, followed by Germany, with its debut sovereign green bond issuance worth $12.8 billion.

India completed the sale of ₹160 billion (~$1.9 billion) worth of sovereign green bonds, with the second tranche raising ₹80 billion (~$970 million) in February.

Energy Performance Rating Program

The Australian government is expanding the National House Energy Rating Program to include existing residential properties.

The move will enable homeowners to receive a star rating for their property’s energy performance, allowing them to make informed decisions regarding energy upgrades and home rentals or purchases.

The expansion will also provide banks with a reliable framework to assess a home’s energy efficiency, which they can use to develop green lending products.

The ClimateWorks’ Renovation Pathways research, which was launched at the investor roundtable, will assist households and banks in identifying upgrades that offer the most significant value for money.

The updated rating system will speed up home upgrades by assisting households in locating energy-saving opportunities and incentivizing banks to lend more capital to Australians for energy-efficient home improvements.