Green bonds refer to debt instruments issued by corporations and government entities to finance projects and activities that have positive environmental and climate benefits. They help mitigate and adapt to climate change by funding renewable energy, pollution prevention, sustainable water management, and green building projects. The rising focus among corporations and governments globally on adopting sustainable practices to reduce carbon footprint and transition to clean energy is accelerating the growth of the green bond market.
The global Green Bond Market is estimated to be valued at Us$ 552.5 Mn in 2024 and is expected to exhibit a Cagr OF 8.5% over the forecast period 2024-2031, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
With growing climate change concerns, many governments and regulatory bodies are coming up with favorable policies and incentives to promote issuance of green bonds and funding for sustainable projects. Carbon pricing mechanisms and taxation on carbon intensive industries is encouraging issuers to transition to greener operations and technologies. This is fueling the issuance of green bonds to fund such initiatives. Between 2024 to 2031, the market is expected to witness rising green bond issuances especially in the renewable energy sector as the world moves towards net-zero carbon economies.
Segment Analysis
The green bond market can be segmented by end-user sector into power and utilities, transport, real estate, and others. Among these, the power and utilities segment dominated the market in 2021 and accounted for over 30% share. This is because power generation through renewable energy resources such as solar, wind and hydropower is gaining prominence worldwide to reduce dependence on fossil fuels. Investments in renewable power generation assets are increasingly being funded through green bonds.
Key Takeaways
The Global Green Bond Market Demand is expected to witness high growth over the forecast period of 2024 to 2031.
Regional analysis:
The green bond market in Asia Pacific is expected to grow at the fastest rate during the forecast period. This can be attributed to rapid infrastructural development and industrialization in major economies such as China and India. Both the countries are making huge investments in renewable energy, green buildings, clean transportation, energy efficiency and other environmental projects to meet their Paris Agreement commitments. This is likely to boost the issuance of green bonds in the region over the coming years.
Key players operating in the green bond market are Zimmer Biomet, Smith & Nephew, Stryker, DePuy Synthes, Orthofix, Bioventus LLC, DJO Global, Braun, Medtronic, Globus Medical. The market is highly competitive with the presence of several global and regional players. Major players are focusing on new product launches, partnerships and expanding their operational footprints across various countries to strengthen their market share.
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