Final Project_Olga Zubareva

Author

Olga Zubareva

Overview of the green bond market in 2022

Executive Summary

  • Total amount of global green bonds issuance increased from USD 139 bln in 2017 to almost USD 550 bln in 2022.

  • In 2022 global green bonds issuance decreased by 17 percent mainly due to developed countries.

  • Top-5 countries in global green bonds issuance in 2022 were China (USD 99.4 bln), Germany (USD 83.8 bln), The Netherlands (USD 32.5 bln), the USA (USD 28.5 bln), and France (USD 28 bln).

  • China has the most fast-growing green bonds market. It grew by almost 30 percent y-o-y to USD 99.4 bln in 2022.

  • Despite the decrease in 2022, Europe remains the most prolific issuance region.

  • Most of green bonds are dominated in Euro, US dollar and Chinese yuan.

  • Clean Transport, Energy Efficiency and Adaptation projects are key priorities in green bonds financing.

Over the recent years total amount of global green bonds issuance increased from USD 139 bln in 2017 to almost USD 550 bln in 2022. However, in 2022 there was a 17 percent decrease in global green bonds issuance. Top-5 countries in global green bonds issuance in 2022 were China (USD 99.4 bln), Germany (USD 83.8 bln), The Netherlands (USD 32.5 bln), the USA (USD 28.5 bln), and France (USD 28 bln). Nevertheless, the tendencies in developing and developed countries were different.

As for developing countries, total amount of green bonds issued in selected countries increased almost 3 times since 2017. In 2022 this indicator equaled to USD 120 bln, while in 2017 only to USD 40 bln. The absolute leader among developing countries in green bonds issuance is China. China showed the most impressive increase, growing by almost 30 percent y-o-y to USD 99.4 bln. In addition, 82 percent of total green bonds issuance in 2022 in developing countries accounted for China.

Comparing to developing countries the green bond market in selected developed countries is larger and more homogeneous. Since 2017 it increased from USD 50 bln to USD 200 bln in 2022. However, total amount of green bonds issuance decreased almost 35 percent in 2022. Such significant reduction can be explained by energy market turmoil and tightening of the global financial conditions. The European countries lead the global green bonds market. Almost 39 percent of total green bond issuance in 2022 accounted for Germany, 15 percent - for the Netherlands, 13 percent - for France.

Most of green bonds were dominated in Euro, US dollar and Chinese yuan. Almost 43 percent of cumulative green bond issuance were dominated in euros, 25 percent in US dollars and 14 percent in Chinese yuan. Green bonds dominated in other currencies equal to 18 percent of total amount. Large share of euros can be explained by the predominant position of the European countries at the global green bond market. In 2022 the share of euro and US dollar declined by 3 percent, while the share of Chinese yuan increased by 1 percent.

Clean Transport, Energy Efficiency and Adaptation projects are key priorities in green bonds financing. Almost 70 percent of financing (or USD 1.6 trl) was used to finance these types of projects. Unexpectedly, Renewable and Alternative Energy projects were only 5.8 percent of total financing. That means that financial resources are highly concentrated in several types of projects, while other types can be significantly under-financed. Additional resourses, including multilateral support, are needed to diversify the financing of different types of projects and promote the achievement of all the SDGs on equal basis.

Conclusions

Since 2017 global green bond market significantly increased, while total amount of green bond issuance decreased in 2022. However, developing countries, especially, China demonstrated strong growth, while green bond issuance in developed countries declined. Such reduction can be explained by energy market turmoil and tightening of the global financial conditions.

Euro, US dollar and Chinese yuan were the source of 82 percent of green bond issuance during 2022. Share of Euro and US dollar declined in 2022 amid reduction in total green bond issuance.

Clean Transport, Energy Efficiency and Adaptation projects remained the three largest Use of Proceeds categories, collectively contributing 70 percent to the total volume. Additional resources, including multilateral support, are needed to diversify the financing of different types of projects and promote the achievement of all the SDGs on equal basis.

References

  1. GreenDebt | Green Debt | Climate Change Indicators Dashboard (imf.org)
  2. Market Data | Climate Bonds Initiative

Codes

Picture 1. “Total amount of green bonds issued in 2016-2022”

> ggplot(total, aes(x = Year, y = Value)) +
+ geom_bar(stat = "identity", fill = "#1f77b4")+
+ labs(x = "Year", y = "bln USD") +
+ ggtitle("Total amount of green bonds issued in 2016-2022") +
+ labs(caption = "Source: Green Bonds, Climate Change Indicators Dashboard, IMF | Latest Data: 2022 | Calculations by Olga") +
+ theme_classic()

Picture 2. “Total amount of green bonds issued in developing countries”

> my_colors <- c("#1f77b4", "#ff7f0e", "#2ca02c", "#d62728", "#9467bd", "ivory", "#e377c2")
> ggplot(gb2, aes(x = Year, y = Value, fill = Country)) +
+ geom_bar(stat = "identity", position = "stack") +
+ scale_fill_manual(values = my_colors) +
+ labs(x = "Year", y = "bln USD", fill = "Country") +
+ ggtitle("Total amount of green bonds issued in developing countries") +
+ labs(subtitle = "2017-2022", caption = "Source: Green Bonds, Climate Change Indicators Dashboard, IMF | Latest Data: 2022 | Calculations by Olga") +
+ theme_classic()

Picture 3. “Total amount of green bonds issued in developed countries”

> gb3 <- read_excel("C:\\Users\\Olga Z\\Documents\\00_data_raw\\Green_Bond3.xlsx")
> ggplot(gb3, aes(x = Year, y = Value, fill = Country)) +
+ geom_bar(stat = "identity", position = "stack") +
+ scale_fill_manual(values = my_colors) +
+ labs(x = "Year", y = "bln USD", fill = "Country") +
+ ggtitle("Total amount of green bonds issued in developed countries") +
+ labs(subtitle = "2017-2022", caption = "Source: Green Bonds, Climate Change Indicators Dashboard, IMF | Latest Data: 2022 | Calculations by Olga") +
+ theme_classic()

Picture 4. “Cumulative Green Bond Issuances by Type of Currency”

> my_colors <- c("#1f78b4", "#33a02c", "#e31a1c", "#ff7f00", "#6a3d9a", "#a6cee3", "#b2df8a", "#fb9a99", "#fdbf6f", "#cab2d6")
> gb4 <- read_excel("C:\\Users\\Olga Z\\Documents\\00_data_raw\\Green_Debt3.xlsx")
> ggplot(gb4, aes(x="", y=share, fill=currency)) +
+ geom_bar(stat="identity", width=1) +
+ coord_polar(theta="y") +
+ ggtitle("Cumulative Green Bond Issuances by Type of Currency") +
+ labs(subtitle = "Cumulative - All Years") +
+ labs(caption = "Source: Green Bonds, Climate Change Indicators Dashboard, IMF | Latest Data: 2022 | Calculations by Olga") +
+ scale_fill_manual(values=my_colors) +
+ theme_void()

Picture 5. “The key priorities in financing sustainable projects”

> gb1 <- read_excel("C:\Users\Olga Z\Documents\00_data_raw\Green_Debt2.xlsx")
Error: '\U' used without hex digits in character string starting ""C:\U"
> ggplot(gb1, aes(x="", y=share, fill=type)) + + geom_bar(stat="identity", width=1) +
+ coord_polar(theta="y") +
+ ggtitle("The key priorities in financing sustainable projects") +
+ abs(subtitle = "Cumulative - All Years") +
+ labs(caption = "Source: Green Bonds, Climate Change Indicators Dashboard, IMF | Latest Data: 2022 | Calculations by Olga") +
+ scale_fill_manual(values=my_colors) +
+ theme_void()