China emerges as key player in green bonds market

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Chinese entities last year issued more than $30 billion worth of bonds that met international “green” definitions. The country maintained its second place position on the green bond market, just behind the US and ahead of France.

China’s Industrial Bank was the second-largest green bond issuer in 2018. China Construction Bank has become the first Chinese institution to list a green bond on the newly formed Luxembourg Green Exchange, a €500 million (US$561 million) fixed-income security.

A scientific report cited by China Daily suggested that the country had already hit its peak emissions target under the Paris accord 12 years ahead of the 2030 deadline.

Beijing allowed green bond use to finance clean coal projects, which are excluded in other markets. A third of the funds raised in 2018 went to transport projects, as well as solar and wind projects.

According to Sean Kidney, CEO of the non-governmental Climate Bonds Initiative, China has been the global leader in regulatory measures to support green finance.

“The rest of the world has a lot to learn,” he said, adding: “The nations that are leading on green finance now have an opportunity to work together to drive capital on a global basis to achieve Paris climate goals and other urgent environmental objectives.”

Kidney noted: “China, with its green finance leadership, has created an enormous opportunity for investment both domestically and along the Belt and Road.”

Green bonds remain a small part of the global bond market but their issuance is growing rapidly, according to the operators of the Hong Kong Stock Exchange.

The Climate Bonds Initiative predicted green bond issuance to rise to $200 billion this year.

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