The Green bond market is estimated to be valued at US$ 479.60 billion in 2023 and is expected to exhibit a CAGR of 10% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Green bonds are fixed-income securities used to raise funds for projects targeting environmental sustainability and climate change mitigation. The proceeds from green bonds are used to finance renewable energy, energy efficiency, sustainable waste and water management, green buildings, and biodiversity conservation projects. Green bonds allow both governments and corporations to fund new investments in the low-carbon economy and help transition to more climate-friendly practices.
Robust investments in clean energy infrastructure by both private entities and governments around the world are expected to drive the demand for green bonds over the forecast period. According to the International Energy Agency, global clean energy investments are projected to reach $4 trillion by 2030. In addition, various countries have pledged to achieve net-zero emissions by 2050, which will require massive capital investments in renewable energy and other green technologies. This in turn is likely to boost the issuance of green bonds for financing such clean energy projects. Furthermore, growing awareness among consumers and investors regarding climate change is positively impacting the adoption of sustainable business practices by companies. Many large corporations are increasingly relying on green bonds to fund their low-carbon initiatives and transition to greener operations.
The Green Bond Market Growth is segmented into sovereign green bonds, corporate green bonds, and municipal green bonds. Sovereign bonds account for the largest share as they allow governments to fund large-scale environmental projects. Sovereign bonds dominate the market as governments have a strong credit profile and can raise large amounts through bonds to invest in renewable energy, green transport, and zero-carbon buildings.
Political: Growing environmental regulations in several countries are driving issuances of green bonds. Many nations have announced targets to achieve carbon neutrality by 2050, boosting investments in clean technologies.
Economic: A growing transition towards sustainable economic development presents significant market opportunities. Investments needed for clean infrastructure and renewable energy are estimated to top $120 trillion by 2030.
Social: Rising environmental consciousness among citizens and investors is increasing demand for sustainable investment options. More organizations feel social pressure to reduce their carbon footprint and transition to greener operations.
Technological: Advancements in renewable energy, energy storage, green buildings and electric vehicles have made many clean technologies commercially viable. Continued technology progress will help decarbonize different sectors of the economy.
The global green bond market is expected to witness high growth, exhibiting a CAGR of 10% over the forecast period 2023 to 2030, due to increasing investments needed to achieve global climate targets. The market size is estimated to reach US$ 479.60 billion by 2023.
The US and China are the fastest growing markets for green bonds currently. The US green bond issuances stood at $51.1 billion in 2021 while China’s issuances reached $54.6 billion, making them the two largest markets. The European Union follows in third position with issuances of $49.3 billion in 2021.
Key players operating in the green bond market are Bank of China, China Development Bank, European Investment Bank, Natixis, Societe Generale, Iberdrola, Banco Santander, Abu Dhabi Islamic Bank, KfW, BNP Paribas, UniCredit, Credit Agricole, DBS Bank, Standard Chartered, NatWest Group. These top players have been the major issuers and underwriters of green bonds globally over the past few years.