Green Bonds

There is no doubt that large, very large budgets are needed to effectively combat climate change and adapt to the problems caused by it. Green bonds attract attention as one of the instruments used for financing the green transformation. So let’s take a look at green bonds.

Green bonds are financial instruments created to finance projects that have positive impacts on the environment and/or climate. Energy efficiency, pollution prevention and control, Environmentally sustainable management of living natural resources and land use, conservation of terrestrial and aquatic biodiversity, clean transportation, sustainable water and waste management, circular economy adapted products, production technologies and processes, and green buildings are some of the possible projects that may be financed through green bonds.

The World Bank is one of the largest issuers of green bonds[1]. Since 2008, green bonds with a total value of 14.4 billion USD have been issued by the World Bank, and 111 projects have been financed thanks to these bonds. While 33% of the financed projects are related to energy and energy efficiency, the ratio of clean transportation among the financed projects is at the level of 27%.

Frankly, I have not been able to find any data or estimates of the total decarbonisation achieved by projects financed by green bonds. However, project-based successes stand out: Rampur Hydroelectric Power Plant, with an annual power generation capacity of 2,000 MW, was built in Northern India, thanks to the financing provided by the World Bank’s green bonds, and prevents the release of 1.4 million tons of carbon into nature[2].

On the other hand, there are doubts as to the extent to which green bonds are successful in supporting the green transition. According to a study[3], although the carbon emissions of the 200 firms that issued green bonds between 2015 and 2018 decreased for a few years after the bonds were issued, for the following years, the emissions did not decrease, or even increased. This raises the question of whether firms are using green bonds for marketing and greenwashing purposes.

Finally, let’s note that the green bond market, which was worth 104 billion USD in 2015, has grown exponentially over the years and has reached a value of 1.5 USD at the current stage[4].


[2] Ibid.



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