SEB's The Green Bond report: Politics matters, economics decides
The latest issue of SEB's The Green Bond report takes an in-depth look at the outcome of the US elections and The UN Climate Change Conference COP29 in Baku. Despite mounting political headwinds, 2024 will see USD 2 trillion spent on the energy transition - twice as much as on fossil fuels, as well as a new record for new sustainable bond issuance. In the end, the continuously improving economics of renewables and mounting impacts from climate change will trump politics.
"The US election outcome is likely to lead to weakened policy support for the clean energy transition, but it will not stop it," says Thomas Thygesen, Head of Strategy and Sustainability in SEB Equity Research. "The clean energy transition has passed the tipping point where it becomes irreversible. The only thing we can influence is the speed of the transition, and speed does matter. From a climate perspective, we need it to be the fastest technology cycle ever. This will be harder now, but Europe will hopefully step up to fill the policy void."
The report also features an update on the sustainable finance market. A total of USD 1 034 billion in new sustainable bonds have been issued from January to mid-November of this year. Year-to-date, this puts 2024 ahead of last year by more than 12 per cent. Green bonds continue to grow at a steady pace of just under 10 per cent, with year-to-date issuance of USD 610 billion.
"Based on a strong second half of the year, we are forecasting that cumulative sustainable bond volume will exceed USD 1.2 trillion in 2024," says Gregor Vulturius, Lead Scientist and Advisor at Climate & Sustainable Finance at SEB. "The Nordic market is particularly strong, with 45 per cent of corporate issuance being labelled sustainable."
The report also contains a comprehensive discussion about the impact of the US Inflation Reduction Act on clean energy investments and global trade relations, as well as the act's likely future under Donald Trump's second presidency. We also summarize the outcomes of COP29 in Baku.
About The Green Bond report
SEB, which together with the World Bank developed the green bond concept in 2007/2008, publishes the research publication The Green Bond 5-6 times a year. It strives to bring readers the latest insight into the world of sustainable finance through various themes. Even though the report covers all kinds of products and developments in the sustainable finance market, we have decided to keep its historic name - The Green Bond - as a tribute to our role as a pioneer of the green bond market. You can find The Green Bond report at sebgroup.com and here.