More 'Green Bonds' Needed to Fund the Clean Energy Revolution

A critical piece of the funding needed to transition to a low-carbon world—bond financing for climate-saving projects—grew by 20 percent to nearly $600 billion compared to last year, but it's still short of what's needed, according to a new report.

"It has grown 20 percent, which is good.  It's not good enough, but it's a start," said Sean Kidney, chief executive of the nonprofit Climate Bonds Initiative (CBI), which wrote the report and is helping create the market in bond financing for green and climate-related projects.

The push to rev up the climate bond market is part of the worldwide effort to keep climate change to 2 degrees Celsius warmer than pre-industrial levels.  To do that, countries need to eventually zero out fossil fuel burning, and that requires a broad and immediate shift to clean and renewable energy sources.

Researchers at the International Energy Agency estimated last year that it would take about $53 trillion in infrastructure, energy efficiency and other projects to get the world on track to meet the 2-degree promise.  An earlier IEA estimate put that figure at $36 trillion over 36 years—a projection that was shortened to a "Clean Trillion" of investment per year.

And yet the world is less than a third of the way there.  Climate-related bonds are an answer to filling the gap because the overall bond market is worth an estimated $100 trillion—which means it has more money flowing through it than the world’s stock exchanges, according to the CBI.  The United States is the largest bond market, accounting for about one-third of the total.

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