Green Bonds

Green bonds became an increasingly important innovative debt financing instrument to complement traditional public funding sources. Green bonds basically work like conventional bonds with the difference that their proceeds are allocated to projects that are expected to deliver environmental benefits, according to pre-defined criteria (Oteh et al. 2021).

There is high potential in the transport sector, as infrastructure assets become increasingly attractive due to predictable cash flows and reasonable returns (Oteh et al. 2021). According to the Climate Bonds Initiative, urban transport operators and states were under the Top 10 Certified Issuers, not only in high-income countries. The New York MTA was closely followed by the Republic of Chile, who issued several bond targeted to low carbon transport in recent years (CBI 2021). However, the key challenge for most developing countries’ cities is their insufficient creditworthiness that is limiting their ability to issue bonds themselves (CPI, 2016). Only very few cities in emerging economies like Mexico, Indonesia and South Africa have been able to issue green bonds themselves. The majority of green bonds were issued by development finance institutions (DFIs), including the World Bank and Asian Development Bank.

The following products provide information and guidelines for cities on green bond issuance and how they can be used to finance low-carbon infrastructure and transport. Several case studies are listed.

Green City Bonds: financing low carbon infrastructure

This factsheet/ briefing shortly summarises the potential of green city bonds to finance low-carbon urban infrastructure. It provides an overview over current trends and the use of proceeds of green bonds issuance and points out to case studies, for example Mexico’s first green bond. Moreover, it shortly addresses the problem of lacking creditworthiness and briefly outlines recommendations for alternative options for urban infrastructure to be financed by green bonds.

Topics:  green bonds, financing, urban infrastructure, private finance
Document Type: Factsheet/ briefing
Name of the Document:  Green City Bonds: financing low carbon urban infrastructure
Organisation: Climate Bonds Initiative (CBI)
Year: 2017
Number of Pages: 2
Language: English

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Green Bonds for Cities – A Strategic Guide for City-level Policymakers in Developing Countries

This report provides a strategic guide for policymakers of cities in developing countries on how to access green bonds as a potential financing source in order to secure investment in low-carbon, climate-resilient infrastructure, including transportation. It helps to decide on most appropriate short and long-term strategies based on cities’ current creditworthiness, regulatory context and financing goals. Addressing the insufficient creditworthiness of most developing country cities, it points to several options for cities to improve their creditworthiness in order to gain direct access to green bond markets. Moreover, alternative opportunities for indirect access to green bond markets exist regardless of their creditworthiness.

 green bonds, financing, urban infrastructure, private finance
Document Type: Report
Name of the Document: Green Bonds for Cities – A Strategic Guide for City-level Policymakers in Developing Countries
Authors: Padraig Oliver
Organisation: CPI
Year: 2016
Number of Pages: 24
Language: English

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Financing Options for Sustainable Transport Infrastructure in Cities

In this webinar, financing options for sustainable transport infrastructure in cities were discussed as well as the Low Carbon Transport Criteria and the Climate Bond Standard. One case study dealing with the BTS Group in Thailand was used as example for green bond finance.

Financing, Urban mobility, green bonds, climate bonds
Product Type: Webinar; ASEAN Webinar series
Name: Financing Urban Transportation Policies and Programs
Organisation: CBI (Climate Bonds Initiative), Asia Sustainable Finance Initiative
Year: 2020
Length: 58:35 minutes
Language: English

Watch here

Low carbon transport – sector criteria

Check out the CBI website on the sector criteria for low carbon transport according to the Climate Bonds Standard and find out more about what projects are eligible to be certified and financed by a low carbon transport green bond. Watch the webinar from 2015 to listen to Justine Leigh-Bell, Climate Bonds Initiative, and Cornie Huizenga, SLoCAT(link is external), further explaining the Low Carbon Land Transport criteria.

Topics: climate bonds, green bonds
Document Type:  Website article
Name of the Document: Low carbon transport – sector criteria
Organisation: CBI, SLOCAT
Year: 2020 (updated version)
Language: English
Access here
Watch here (01:00h)


Financing low-carbon transport in Mexico

This briefing report was developed for the project “Building a foundation for a sustainable and scalable low-carbon future in Mexico – from Green Bonds to a Greener Ecosystem” under UK PACT Mexico.
It aims to offer a guide to the options in Mexico to leverage green and sustainable bonds to finance low-carbon transport. The briefing shortly outlines already issued bonds to sustainable public transport projects, for example one by the local government in 2016, and points out to further opportunities for green bonds financing for sustainable transport.

Topics: climate bonds, green bonds, Mexico
Document Type:  Report, briefing
Name of the Document:  Financing low-carbon transport in Mexico
Organisation: CBI, UK Pact Mexico
Year: 2021
Pages: 6
Language: English

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Analysis of Green Bond Financing in the Public Transportation Industry

This research report introduces green bonds to public transport operators and shows how they can be used to achieve their sustainability goals. It also explains costs and risks of green bonds versus traditional bonds, the advantages of green bonds as well as alternatives. Case studies from Massachusetts, New York and Los Angeles are highlighted to convey the knowledge needed to understand the complex process of green bond issuance. The report is targeted at public transit agencies of all sizes and their stakeholders looking for new and additional opportunities to finance public transport.

Topics: climate bonds, green bonds, public transport
Document Type:  TCRP Research report 222
Name of the Document:  Analysis of Green Bond Financing in the Public Transportation Industry
Authors: Damon Fordham, James Schroll, Griffin Flannery, Laura James, Phil Ludvigsen, Sean Flannery
Organisation: Transportation Research Board; National Academies of Sciences, Engineering, and Medicine
Year: 2021
Pages: 50
Language: English

Access here  (Download after free registration)

Photo by Annie Spratt on Unsplash

Ronja Kwasniok

10 Principles for Sustainable Urban Transport