China leads green bonds charge with $30 billion raised in 2017

China issued $30 billion in green bonds in 2017, remaining the world leader in the market.

Analysis from Bloomberg New Energy Finance (BNEF) showed that China retained the top spot, despite issuances declining by 12 percent over the past year.

However, the United States ranks as the top destination for green financing if non-bond instruments are counted, such as asset-backed securities.

Globally, the market for green bonds hit $133 billion, according to BNEF’s tracking data, an increase of 45 percent since 2016. This is an important development in the mainstreaming of green financing with some campaigners hoping the green bonds market can grow to $1 trillion by 2020.

The number of new green bonds issued in China almost doubled in 2017, to 85, despite the lower overall figure, and could indicate more participants seeing the market as an attractive proposition. While state-backed institutions dominated 94 percent of all transactions, the average deal size of $300 million is now closer to the global average.

$5.2 billion from the proceeds of green bonds went into renewable energy projects, notably wind power as the most mature market in China. Water, public rail, energy efficient buildings, and electric vehicles were the most popular non-energy destinations for green financing.

“Chinese green bonds issuances had a slow start in the first quarter of 2017, with only $1 billion issued. However, there was a surge of last minute announcements in Q4 2017 as state-backed companies bumped up issuances to help ensure 2017 totals are at least as much as in 2016,” the report concludes.

Debate on what constitutes green bonds has led to some organisations coming to different figures for the market. For example, Chinese state institutions include the upgrade of coal plants and the ‘clean’ use of coal within the category of green, although this definition is not held globally.