The sun is shining in NYC as Ban Ki Moon talks at UN Investor Summit on Climate Change. Did you know China that has announced $15bn of green bonds in one go

Jay Owen Green Prosperity, Reforming Global Finance, SRI/ESG News


The sun is shining in NYC as Ban Ki Moon talks at UN Investor Summit on Climate Change. Did you know China that has announced $15bn of green bonds in one go.

“Ethical Markets agrees that 2016 will see this huge shift away from the obsolete dirty energy sectors towards the growing markets in efficiency, electrified transport, green infrastructure, financed by green bonds, with solar and wind now competing on costs, as we have found in our research measuring trends over the past few years in our Green Transition Scoreboard®, now showing $6.22 trillion of private capital already in the pipeline in green sectors worldwide.  All we need now is for fossilized asset allocation buckets and other financial models to be modernized and the $2.5 trillion subsidies on fossil fuels annually to be discontinued.  Not surprising that mainstream media largely ignored this ground-breaking event!  Hazel Henderson, Editor”

I’m writing this inside the United Nations complex in New York, part of a large crowd of investors, finance people, and related NGOs like ours. All here for the UN Investor Summit on Climate Risk, well-organised by Ceres (a Climate Bonds Partner).

It’s a glorious sunny day outside, piles of melting snow everywhere; inside there’s a post-COP buzz about the acceleration of climate finance, including lots of talk of the US $42bn of green bonds last year.

Al Gore has just given a tub-thumping, inspiring speech about what needs to be done and how to do it. Earlier, UN Secretary-General Ban Ki Moon got a standing ovation (and he’s not a charismatic speaker!) from the sold out crowd; and Christiana Figueres (who really is a charismatic speaker) got the same.

Bloomberg’s Michael Liebreich got a gasp when he said that in India rooftop solar is now at price parity with fossil fuel power (wow!) and that more investment went into clean energy globally last year into fossil fuel power investments. Will 2016 be remembered as the ‘game over’ moment for fossil fuels?

But of course we need a lot more than just energy investments. In the insurance investors session, Shaun Tarbuck, CEO of the International Cooperative Mutual Insurers Federation (and a Climate Bond Standards Board member), has just been extolling the importance of building metro and high-speed rail in the USA, and how they would be ideal for green bond issuance. And then there’s water investments, low-carbon buildings, even broadband to enable smart cities.

Back in the main Hall, Guo Peiyuan of China’s Syntao reminded the conference that China’s central bank announced last week they’ve approved two banks to issue RMB 100 billion of green bonds in the domestic market in 2016 – that’s US $15 billion on one approval! And we know there are two further approvals waiting in the queue.

Guess where green bond volume is going to come from this year.

Unlike much of the USA, China doesn’t need to be convinced about green infrastructure – it’s already built the world’s largest high-speed rail network, and is building more renewable power every year than anyone else on the planet. That will make for a lot of green bonds.

By the way, the two banks with approval to issue green bonds are the China Industrial Bank (CIB) and the Shanghai Pudong Development Bank (SPDB). Each bank received permission to issue up to RMB 50 billion ($7.5bn) of green bonds in the inter-bank bond market this year. Bond proceeds will be used to provide loans for green industry projects, as defined in the central bank’s Green Bond Issuance Guidelines.  

In fact, SPDB has already issued the first tranche – today – of RMB 20 billion (US$3bn), coupon rate 2.95%, maturity 3 years. The bond was twice oversubscribed. That’s right folks, hard evidence of domestic Chinese demand for green bonds, albeit from other banks.  CIB is going to issue their first tranche of RMB 10 billion in the next couple of days. 

As some of you may know we’ve been working in China for the past two years, with the People’s Bank of China – the central bank – and with the Development Research Centre of the State Council, to promote the idea of green bonds as a policy tool. Thanks to champions such as PBOC’s Ma Jun, there’s now government support.

It’s deeply satisfying to see the China market actually start.

But as Christiana Figueres reminded us this morning, we have a long way to go before it’s anywhere near enough to see our vast environmental challenges addressed. We need an enormous green infrastructure investment program in not only China, but in the EU and the US, and in other countries around the world. And then green bonds to suit. 

This is the UN Security Council chamber, where Russia and the USA slugged it out during the Cold War – and still do I guess. Glorious room. When will we get them negotiating about how best to rapidly shift the global economy to green? Or will we just see them arguing about how to deal with millions and millions of climate change refugees in the Middle East and South Asia and how to avoid war as a result – which means we will have missed our window to avoid catastrophic climate change.