Published on June 26th, 2016 | by Saurabh Mahapatra4
Global Green Bonds Likely A Trillion Dollar Market After 2020, Says Citi
June 26th, 2016 by Saurabh Mahapatra
Citigroup expects the global green bonds market to balloon into a trillion-dollar behemoth by the next decade.
Citigroup banker Michael Eckhart recently told media outlets that the global green bonds market could see an exponential growth, taking its value to $1 trillion after 2020. The growth is expected to pick up swiftly once a global framework on investment guidelines and reporting are agreed upon over the next couple of years.
The exponential growth Eckhart stated may come from developing economies like China and India, which probably have the most ambitious renewable energy targets in the world. Both the countries have only recently entered the green bonds market and plan massive expansion through new bond issues.
Both the Chinese and Indian governments have directed public sector companies to issue green bonds worth billions of dollars. Last year, China’s central bank set quotas for several companies to issue a total of $45 billion green bonds. Earlier this year, the Indian government announced that public sector companies would soon raise $1 billion through green bonds.
According to the Climate Bonds Initiative, a record $41.8 billion worth of labelled green bonds were issued across the world in 2015, an increase of 13% over 2014.
The labelled green bonds market already had its best quarter ever in Q1 2016, when $16.9 billion worth of bonds were issued. China had an overwhelming share in this issuance. With $7.9 billion raised, China overtook the United States as the largest player in the green bonds market.
While the Climate Bonds Initiative hopes to push this year’s total issuance to $100 billion, research firm Moody’s estimate looks more realistic at $70 billion, while Bloomberg New Energy Finance has put its estimates at a much more conservative $56 billion.