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, Climate Bonds Initiative has said in a report.
Green bonds are financial instruments designed to raise money for climate and environmental projects.
“The impact of COVID-19 in 2020 proved a huge economic and social negative. In that context, the resilience of green finance markets led to a record year of issuance. 2021 may enable a sustained resurgence,” the report said.
The U.S. President Joe Biden’s announcement to rejoin the Paris Climate Accord, governments, policymakers, and investors’ growing focus to support the decarbonization of energy-intensive industries can play key roles in increasing green bond issuance in 2021.
In 2020, the cumulative green bond issuance crossed over $1 trillion and stood at $1.05 trillion, an average annual growth of 60% since 2015.
Last year, the United States led the way by issuing green bonds with a total value of $51.1 billion, followed by Germany at $40.2 billion and France at $32.1 Billion. China and the Netherlands issued green bonds worth $17.2 billion and $17 billion, respectively. The top 20 countries cumulatively issued green bonds worth $243.8 billion, out of total green bond issuance of $269.5 billion.
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.
The proceeds of green bonds were mainly utilized in the energy sector, with investments worth $93.6 billion, representing 35% of total issuance in 2020, followed by low-carbon buildings amounting to 26% of total issuance, with investments worth $70.6 billion. Low-carbon transport, with investments worth $63.7 billion, represented 24% of total issuance.
According to the report, urban transport operators, including New York MTA, SNCF, and LA MTA, dominated the list of top certified issuers green bond issuers. Societe du Grand Paris, a French government entity with green bond issuance worth $12.2 billion, was the biggest certified issuer in 2020.
The climate bonds certification program, a labeling scheme for bonds and loans, continues to grow in line with the market as $150 billion of certifications was passed in 2020, a 20% annual increase as of October 2020.
Green bonds have been an attractive source of funds for renewable energy companies in India and globally. In October 2020, independent power producer ReNew Power raised around $325 million through overseas green bonds, and CLP Wind Farms secured ₹2.96 billion (~$40.51 million) through its green bonds.