France today (3 January) launched its first green bonds, becoming only the second country to do so, after Poland. But the absence of international standards has raised questions at the European Commission. EURACTIV France reports.
Contrary to the government’s announcement at last April’s energy transition conference, France was not the first country to issue green bonds.
Despite the great fanfare surrounding the French project, Paris was beaten to the starting line by Warsaw in mid-December. The Polish government issued €750 million of state bonds to finance its ecological transition.
This call for funds by the Warsaw was welcomed by investors, but not without a certain amount of scepticism. HSBC, the bank organising the bond issue, has not given details of the projects it will be used to finance.
At European level, Poland is still dragging its feet on climate action. Warsaw is very deliberately standing in the way of carbon market reform and resisting binding emissions limits for the agriculture and transport sectors, which continue to emit CO2 unchecked.
Nigeria and Luxembourg have also announced the imminent launch of state bonds to finance their own energy transitions.
“Unlike other bonds issued by the treasury, these French ‘green bonds’ oblige the state to identify spending opportunities that support the energy and ecological transition, and to report spending on the investments they will be used to finance,” the ministry of ecology said.
A budding market
According to a study published by the European Commission last November, the green bond market was worth a total of $41 billion in 2015. But this value could double for 2016. The lion’s share of the market is currently driven by development banks such as the World Bank and the European Development Bank, and businesses, as well as local authorities.
The arrival of big-borrowing sovereign states on the green bond market could give it an important boost.
Green bonds currently account for just 0.13% of the whole bond market. To further its development, the EU is considering developing a common standard to ensure that funds are not raised for projects that have either not been confirmed or do not meet certain green criteria.
Green bonds are a debts issued to fund projects that have a positive effect on the environment. They differ from classic bonds in that they are used to fund specific green investments, while they represent no additional risk to the investor.