Sustainable Debt Market
Summary H1 2022
August 2022

Key figures

Sustainable fixed income market• H1 2022 volumes: cumulative green, social,sustainability, sustainability-linked, andtransition (GSS+) labelled debt reached
USD417.8; peak in January 2022 (USD108.4bn)

Theme
GSS+

• Cumulative total labelled (GSS+) issuancestood at USD3.3tn at the end of H1 2022;
green cumulative at USD1.9tn

Transition• Q1 was the most prolific quarter for GSS+
volumes in 2022, but green and transition
labelled issuance was largest in Q2

The first half
at a glanceGreen

Use of proceeds

SocialUse of proceeds

Sustainability

Use of proceeds

Sustainability-linked

Entity KPI-linked

Transition

Use of proceeds• Transition UoP bond issuance picks up:
volumes up more than two and a half times
from Q1 2022

C

1000
Green
Social800

Sustainability
SLB

600

Transition

USD Billions

400

200

0
2017

2018

2019

2020

2021

H1 2022

Source: Climate Bonds Initiative

H1 GSS+ volumes reached USD417.8bn
400

300

200

USD Billions

In H1, green-themed issuance accounted
for 52% of the H1 GSS+ labelled debt withsustainability and social UoP bonds at 21% and15%, respectively. Transition instruments wereless frequent: sustainability-linked bonds took
11% of the H1 GSS+ volumes, while transition
UoP bonds represented less than 1%. Transition
instruments are gaining traction despite being
less well-established than green, social andsustainability bonds. The development ofcommon ground definitions and guidelines
for transition finance will play a key role instrengthening the integrity and transparency of
the transition bond and SLB markets, paving theway for rapid scaling.

FormatCumulative GSS+ volumes reached USD3.3tn in H1 2022

Half-yearly GSS+ volumes reached USD417.8bn,
which represents a year-on-year (YoY) decreaseof 27% against H1 2021. The Russian invasion of
Ukraine in February and subsequent European
energy crisis exacerbated post COVID-19 inflation
impacting bond market dynamics. Rising interest
rates and high volatility resulted in decreased
bond issuance, including GSS+ volumes.
January 2022 was the most prolific month(USD108.4bn) in H1, representing a 74%
YoY increase. The International Bank for
Reconstruction & Development issued thelargest deal: a sustainability Use of Proceeds(UoP) bond worth just below USD7.2bn. Caissed’Amortissement de la Dette Sociale issued thelargest cumulative volume, with eight social UoP
bonds worth USD27.9bn.

GSS

Label

100

0
Green

SocialSustainability

SLB

Transition

Total

Source: Climate Bonds Initiative

Sustainable Debt Market Summary H1 2022 Climate Bonds Initiative

1

CThe Sovereign GSS+ Bond Club continued to
expand in H1: twelve countries added volumesof USD42.8bn with new bonds or taps. A
successful repeat issuer, France, priced thefirst inflation-linked sovereign green bond.
The EUR4bn bond attracted an order book of
EUR27.5bn thanks to growing investor concerns
over green transition and rising inflation. The
bond is indexed to the European consumer
price index. This means coupon payments offer
investors protection from rising inflation.1 Hong
Kong followed suit in May with a HKD20bn(USD2.55bn), 3-year tenor green retail bond,with a coupon linked to the HKCPI index.

H1: Debut sovereign issuers

The Philippines and Mexico issued debut
sustainability bonds. Denmark was the 15th
member of the EU27 to issue a sovereign GSS
bond with its 2031 green bond priced in January.

Theme

Largest deal issuer

Amountissued(USD)

Top issuer for
cumulative volume

Amountissued(USD)

SocialCaisse d’Amortissement
de la Dette Sociale

6.8bn

Caisse d’Amortissement
de la Dette Sociale

28.0bnSustainability

International Bankfor Reconstruction &Development

7.2bn

International Bankfor Reconstruction &Development

21.0bnGreen

European Union

6.5bn

European Union

11.8bnSLB

Chile Government
International Bond

2.0bn

Enel FinanceInternational NV

7.6bn

Transition

Kyushu Electric PowerCo Inc234m

Kyushu Electric PowerCo Inc429m

SLBTransition

IssuerPhilippine Government International Bond

1.5 bnSustainability(United Mexican States) Bonos de Desarrollo delGobierno Federal

982 mSustainability

Kingdom of Denmark

762 m

Green

Q1&2 2021 vs. Q1&2 2022
Green

H1 2022: Sustainablefinance policy update

SocialSustainability

300
250

On the 6 July 2022, the European Commission’sComplementary Delegated Act to the EU
Taxonomy Regulation (CDA) got throughthe European Parliament. This means somefossil gas and nuclear activities will be included
as transitional in the EU Taxonomy from 1
January 2023.2

200
150
100
USD Billions

The IEA revealed this year that global energy
sector methane emissions are 70% higher thanofficial figures.3 Methane is a greenhouse gas,around 80 times more potent than carbon
dioxide, and this can bring carbon intensity offossil gas-fired power near that of coal.4

Theme

H1 2022: Issuer highlightd

GSS+ volumes were larger in Q1 2022 at
USD225.5bn, while issuance in Q2 accounted
for USD192.4bn. Green volumes picked up in
Q2 reaching USD121.3bn, a 25% increase fromQ1. Transition UoP issuance experienced thelargest growth in the GSS+ universe, with a
2.5-fold increase on Q1. Substantial issuanceof UoP transition bonds came from Japan,
which contributed USD1.3bn in H1 2022. This
follows the publication of the Basic Guidelines on
Climate Transition Finance from the Ministry of the
Economy, Trade, and Industry (METI) in May 2021.
Issuance contracted in social (-59%) andsustainability (-50%) themes compared to Q1 while
SLB issuance was down by 12% on the quarter.

AmountIssued (USD)50
0

The CDA is not expected to result in manytaxonomy-eligible gas and nuclear investments,
due to stringent criteria such as the need for a
fossil gas-fired power plant to replace existingsolid/liquid fossil fuel electricity generation
and result in a 55% GHG emissions reduction.
Construction permits for fossil gas power andheating/cooling generation infrastructure
would also have to be granted before the endof 2030, and the plants would have to switch torenewable gases by the end of 2035.5
Sustainable Debt Market Summary H1 2022 Climate Bonds Initiative

Q1 2021

Q2 2021

Q1 2022

Q2 2022
Source: Climate Bonds Initiative2

China, Germany, and the USA were the largest sources of green bonds in H1.
50

200

Climate Bonds does not support the use of fossil
gas as a transition fuel.
Central banks took further steps to incorporate
climate considerations into policy in H1 2022.
The European Central Bank (ECB) announced
measures to incorporate climate change intomonetary policy, including tilting corporate bondholdings.7 This provides a strong signal to themarket and will encourage green bond issuance.
Hong Kong Monetary Authority (HKMA) will
also integrate climate risk management into its
prudential supervision. With the introductionof principles for the effective management andsupervision of climate-related financial risks by
the Basel Committee, such action is expected toincrease soon.8

Volumes from Europe exhibited a 31% decline
from H1 2021, but nonetheless constituted
almost half of the green segment (USD101.5bn or47%). Asia-Pacific confirmed second place, with

r
Ot
he

a_
HK

UK

Ch
in

nm
ar
k
Fi
nl
an
d

pa
n
Ja

De

So
ut
h

In H1 2022,Developed markets (DM) continued
to generate the largest share of green debt,
with over 60% of total issuance. Emerging
markets (EM) accounted for a larger shareof green-themed issuance in the first half of2022 (29%) vis-à-vis H1 2021 (20%). Issuancefrom supranationals (SNAT) at USD19.6bn
registered the most impressive increase (up 75%
from H1 2021), with extraordinary growth fromsupranational government-backed entities (1867%).

Source: Climate Bonds Initiative

USD74.3bn and a third of the total. North America
and SNAT took third and fourth spots with analmost equal share of the market (10% and 9%).
LAC and Africa each contributed under 1%.
Issuers from 40 countries (excluding SNAT) priced
green bonds in H1 2022. China was the mostprolific country by volume (USD48.2bn, or 22% of
the total),deal count (190 deals) and number ofissuers (116). All three indicators soared YoY, withtotal amount issued up by 63%, number of green
bond issuers up by 59% and deal count by 64%.
This growth rate was largely driven by financial
corporates, responsible for USD26.4bn or a 55%
share of the Chinese market.

H1 green bond volumes came largely from the private sector.
Sovereign

Loan

Development Bank

Government-Backed Entity

ABS

Non-Financial Corporate

Local Government

Financial Corporate

120
100
80
60

USD Billions

While Q1 saw the lowest volumes since Q42020, green issuance picked up in Q2, with
USD121.3bn, a 25% increase on the quarter.
June was the busiest month of the year, closing
the first half at almost USD47bn, or 22% of the H1green-themed volume. This brings cumulative
green labelled issuance closer to the USD2tn
milestone, at just under USD1.9tn.

No
rw
ay

ce

Europe continues tolead issuance, China tops
country rankings

Green bondissuance highlights
In H1 2022 new green debt instruments
recorded in the Climate Bonds Green Bond
Database (GBDB) totalled USD218.1bn, a 21%
drop compared to the record H1 volumes of
USD277.5bn in 2021. This was not unexpected,
given post COVID-19 inflation concerns andbroader market volatility following the Russian
invasion of Ukraine.

Sw
ed

Fr
an

nd
rla

Ne
th
e

pr
an
Su

Ge

Ch
in

The Commission has made it clear that it does
not see fossil gas as green but decided to include
it in the CDA because it believes it is needed forthe energy transition.6

Sp
ai
n

0

Ko
re
a

0

en

40

s

10

US
A

80

y

20

at
io
na
l

120

a

30

Deal count

Deal count
160

rm
an

USD Billions

Amount issued
40

40
20
0

Sustainable Debt Market Summary H1 2022 Climate Bonds Initiative

Q1 2022

Q2 2022
Source: Climate Bonds Initiative

3

Sovereigns maintainmomentumIn the first half of this year, volumes of USD27.4bn
in new sovereign bonds or taps were added to
the Climate Bonds GBDB. Germany made thelargest contribution with USD7.8bn, reopening
its 2030 (EUR1.5bn/USD1.7bn), 2031 (EUR1.5bn/
USD1.6bn), and 2050 (EUR4.0bn/USD4.5bn)
deals. By the end of H1 2022, Germany had raisedover EUR30bn (USD36.3bn) since initiating its
green bond programme in 2020. The German
government is planning to issue a new green
federal bond in Q3 as part of its strategy to giveinvestors worldwide access to green benchmark
bonds and establish a green yield curve.9 France
followed closely, with its new 2040 inflation
linked deal (EUR4.0bn/USD4.2bn) and reopeningof its 2039 bullet bond (EUR2.8bn/USD3.2bn).
Denmark priced its debut green bond in January(DKK5bn/USD20m), a 2031 maturity. Hong
Kong, the Netherlands, Indonesia, and Hungary
returned to the market, the latter increasing its
presence in JPY with four new tranches worth
a combined total of JPY59.3bn (USD581m).
Hungary is the only sovereign to have issued
green bonds in JPY.

Top 10 Green issuers in H1 2022

In the second half of this year, Climate Bonds
will publish its social and sustainability
methodology, which will enable more robust
screening and assessment of social andsustainability debt instruments.

SocialEurope continues to lead thesocial theme, generating almost
two-thirds of the volumes in
H1 2022 (USD41.3bn). Caissed’Amortissement de la Dette Sociale
was the source of 68% of the issuance from theregion spread over eight bonds. A decline insocial bond issuance was registered in almost all
regions, the only exception being Africa, with 3
deals from NMB Bank and Bayport Management,
worth 310.8m (<1% of the segment’s volumes).
France was the country that made the largest
contribution, with three issuers responsible for
USD29.1bn. With less than a third of France’s

Country

Amount issued (USD)

European Union

Supranational

11.80bn

Bank of China

China

8.13bnFederal Republic of Germany

Germany

7.83bnRepublic of France

France7.47bnEIBSupranational

5.57bnDutch State Treasury Agency

Netherlands

5.23bnChina Development Bank

China

4.26bn

ICBC

China

4.17bnTenneT Holdings

Netherlands

4.06bnChina Three Gorges Corporation

China

3.68bnCombined S&S issuance was down 39% YoY
400SocialSustainability

300

Social andsustainability
bond highlights

200

USD Billions

Social and sustainability bonds comprised 15%
and 21% of total GSS+ debt captured by Climate
Bonds in H1 2022, with USD63.8bn and USD87.2bn
respectively. Issuance was down 57% and 13% YoY.
Unlike green volumes, social and sustainability
issuance registered a decline in Q2, down 59%
and 50% from the previous quarter. Newly issued
bonds bring cumulative social and sustainability
volumes to USD583.9bn and USD622.4bn.

Issuer Name

100

0
2019

2020

2021 Q1

2021 Q2

2021 Q3

2021 Q4

2022 Q1

2022 Q2

Source: Climate Bonds Initiative

volumes (USD8.9bn) but the largest number ofissuers (37), the USA placed second, largely driven
by local government issuance. SNAT took the third
spot, with USD7.1bn generated by eight issuers.
Non-financial corporates demonstrated
exceptional growth, their volumes almost
doubling from the first half of 2021 to USD4.3bn(7% of social volumes and nine issuers).
Development banks’ volumes exhibited a slightincrease, up 10% to USD4.7bn, while issuancefrom local governments remained broadly flat
YoY, with USD6.2bn. Government-backed entities
and financial corporates held the largest shareof issuance, with USD37.3bn and USD11.3bn(respectively 58% and 18% of the total). Volumes
from both issuer types were down YoY.
The number of currencies rose to 18, versus
17 during the same period a year earlier. Hard
currencies represent 98% of the market, EUR
and USD being the currencies of choice for

Sustainable Debt Market Summary H1 2022 Climate Bonds Initiativesocial issuers (46% and 38% of volumes). There
was only one change from H1 2021 to thecomposition of the top three currencies: KRW
was replaced by AUD, with 12 bonds worth
USD2.4bn.

Sustainability
In the first half of this year, Climate
Bonds identified a total of 110
issuers of sustainability bonds
spread over 30 countries. SNAT,
USA and South Korea continue tohold on to the top three positions. Their shareof volumes was slightly more concentrated, at
55% against 52% in H1 2021. Saudi Arabia was a
newcomer to the sustainability market, with the
kingdom’s largest lender Saudi National Bank’s
debut sustainability sukuk worth USD750m, thefirst sustainability bond from the Middle East.

4

SNAT tops regional rankings as well, with onethird of social-themed issuance (USD29bn).
The largest single deal was AUD-denominatedsustainability bond issued by the World Bank(IBRD), amounting to USD7.2bn.
Despite only experiencing a marginal increasein volume YoY to USD33.bn, development banks
continued to be the leading issuer type. While
government-backed entities saw the largest
decline (42%), with USD2.5bn worth of volumes
sourced from eight issuers, the largest growth
was registered by sovereign issuers (32%). Fourcountries contributed to the segment’s growing
volumes: Chile and Andorra, which returnedto the market with USD4bn and USD567m
respectively, and Philippines and Mexico, which
debut sustainability bonds worth USD1.56bn
and USD981m.

Transition andsustainability-linked
bond highlights
Policy measures in China
and Japan support growth oftransition bond market
The SLB market continued to grow in H1 2022,with new issuers and repeat issuers using theformat to define and signal to investors theirtransition pathways.
The SLB segment saw rapid YoY growth in Q1 anda more muted Q2 bringing H1 2022 cumulativeissuance to USD46.6bn, still an increase of 5.2% YoY.
H1 2022 also saw 23 transition bonds from 17
issuers, worth USD2.1bn. All but one of which
are first-time issuers under the transition label.
Except for long-time issuer EBRD’s SEK1.9bn(USD209m) issuance in January, all 2022 deals
originated from Japan and China’s transition
finance programmes, targeting hard-to-abate
sectors like steel, chemicals, aviation, as well assome issuance from utilities.
Climate Bonds has completed the public
consultation on its Cement and Basic Chemicals
criteria, and its Steel criteria is open for public
consultation until 22 August 2022.10

Top 10 Social issuers in H1 2022
Issuer NameCountry

Amount issued (USD)

Caisse d'Amortissement de laDette Sociale

France27.98bn

Asian Development Bank

Supranational

2.75bnNederlandse Waterschapsbank

Netherlands

2.63bnCitigroupUSA

2.54bnEuropean Union

Supranational

2.41bnVonovia

Germany

1.92bnKorea Housing Finance Corp

South Korea

1.32bnCaixaBank

Spain

1.13bnBNG Bank

Netherlands

1.10bnAIB Group

Ireland1.10bnTop 10 Sustainability issuers in H1 2022
Issuer NameCountry

World Bank (IBRD)

Supranational

21.03bn

International Development
Association

Supranational

4.77bnChile Government

Chile

North Rhine-Westphalia Germany

Germany

3.66bnBNG Bank

Netherlands

2.82bnOMERS Finance Trust

Canada2.20bnComision Federal de Electricidad

Mexico1.75bnAsian Infrastructure Investment
BankSupranational

1.74bnPhilippine Government

Philippines

1.56bnHanwha Life Insurance

South Korea

1.50bnSLB issuers favour GHG
emission targets
While issuers have the freedom to decide which
Key Performance Indicators (KPIs) to tie their
SLBs to, most issuers choose GHG emission
targets to demonstrate their commitment totransitioning towards net zero.
H1 2022 saw 58% of SLB volumes tied to GHG
emission targets up from 52.5% during the same
period in 2021. Q1 2022 marked the highest shareof such SLBs, with 61% tied to GHG targets. An
increasing number of GHG targets cover all three
scopes of emissions with 26.7% of H1 2022 SLB
GHG targets including Scope 1, 2, and 3, justbelow the historical average of 28.2%.

Sustainable Debt Market Summary H1 2022 Climate Bonds Initiative

Amount issued (USD)

4bnThis commitment varies among industries with
61% of communications SLBs covering all three
scopes, as well as 44.4% of real estate ones,
47.6% of financials, but worryingly, only 27.9%
of oil and gas and 15.2% of gas utility SLBs.
Climate Bonds urges SLB issuers of all sectors,
including fossil fuel-reliant sectors such as oil
and gas utilities to include Scope 3 emissions
in their SLB targets, to clearly demonstrate toinvestors the ambition and credibility of theirtransition plans.

5

USD27.2bn of SLB debt was tied to GHG emissions in H1 2022
GHG Emissions
ESG Score

Renewable Energy
Corporate Social

Undisclosed
Other

Sustainability-linked bonds

Sustainable Finance

Waste

100%
80%
60%
40%

SLBs are forward-looking,performance-based debt
instruments issued with linkages
to Sustainability Performance
Targets (SPT) and associated
Key Performance Indicators (KPI) at the entity
level. When the targets of these deals arecalibrated with appropriate, industry-specificambition and financial materiality, SLBs canbe a useful tool for issuers on a low-carbon
transition trajectory as they finance whole
entities in transition and can help to build
experience and credibility in target setting.

20%

Transition bonds

0%2021 Q1

2021 Q2

2021 Q3

2021 Q4

2022 Q1

2022 Q2

Note: This chart shows the eight largest KPI types used in SLBs, ranked by volume. For the sake of clarity, KPI types grouped into the ‘Other’segment include Social, Circular Economy, Energy Efficiency, Biodiversity, Water, and Project-based KPIs
Source: Climate Bonds Initiative

SLB GHG emission scope coverage varies significantly across industries
3 scopes

2 scopes

1 scope of emission

Transition bonds are UoP
instruments designed toallow high emitters to shift
towards cleaner, moresustainable operations andstrategies on the way to net zero. Whenthoughtfully constructed, these debt
instruments can be pivotal in supportinga global, economy-wide transition to theParis Agreement targets.

100%

Policy lends clarity ontransition bonds

80%

Transition bond issuers in H1 2022 included eight
new issuers from China and eight from Japan allfrom heavy-industry sectors such as chemicals,
steel, aviation, and utilities. In Japan, this follows
Japan’s Ministry of Economy, Trade, and Industry(METI) publication of their Basic Guidelines on
Climate Transition Finance in May 2021, and more
recently China’s National Association of Financial
Market Institutional Investors’ (NAFMII) Notice on
Launching Transition Bond Pilot Programmes.11,12

60%

40%

20%

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ns m em t
um mu ic
er nic alsDa
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Ga ncis U als
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Oi als
l&
Re G
al as
Es
ta
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Te Ste
ch
e
no l
lo
Ut gy
ili
tie
s

0

Source: Climate Bonds Initiative

Sustainable Debt Market Summary H1 2022 Climate Bonds Initiative

The use of the transition label to identify
financing to help decarbonise hard-to-abate
sectors is appropriate and useful – however
some of the definitions of hard to abate has notbeen standardised internationally. Climate Bonds
has identified and developed criteria for the
Steel, Chemicals, and Cement sectors. Financing
required to transition utility companies is well
suited to green UoP bonds, and thus its role in
the transition finance market is debatable. Coaldecommissioning or retrofitting transmission anddistribution networks for hydrogen for example,
could be powerful applications of the transition
label, while financing to develop clean coal or to
reduce emissions from the production of oil andgas, are not suitable, as they lock-in assets thatare not compatible with the IEA’s NZE2050 vision.

6

Taxonomies around the world
The success of the taxonomy is reflectedin the increasing number of countries andregions following the Climate Bonds Initiative,
China and EU footsteps and developing aframework for the classification of sustainable
investments. Currently, over 20 jurisdictions
have or are in the process of establishing asustainable finance taxonomy. Although there
are differences in the taxonomy development
processes, the common aim is to provide
transparency and clarity for the financial
market with regards to investments that
support the achievement of the goals set by
the Paris Agreement as well as broader, global
sustainability agenda.

Notable developments in H1 2022
Colombia – Colombia
became the first LATAM
country to publish a green
taxonomy in April 2022.
The taxonomy excludes
all fossil fuels, including
natural gas in the energy sector. The sectors ofland use (Agriculture, Forestry and Livestock)
incorporate multiple environmental objectives
simultaneously to ensure a holistic approach.
EU – following the adoptionof the Delegated Act thatoutlined technical screening
criteria for activities that
contribute to climate change
mitigation and adaptation,at the beginning of 2022 the EU has adopted
Complementary Delegated Act that determined
the place of nuclear energy and fossil gas in theEuropean Taxonomy (see policy section).

Singapore – In May 2022,
the Green Finance Industry
Taskforce, convened by
the Monetary Authority ofSingapore, published detailed
thresholds and criteria for
economic activities in the energy, transport,
and real estate sectors for public consultation.
The taxonomy applies a traffic-lights systemapproach aiming to put forward a methodology
to classify green, transition, and harmful
activities. Criteria for remaining sectors including
industry and agriculture will be presented soon.
South Africa – in April 2022
South Africa concluded its
two-year long taxonomy
development process by
publishing the first editionof Green Finance Taxonomy.
Further work will be carried out to address
outstanding issues such as these related totransition or specific sectors (e.g. electricity
generation from gas).

Interoperability – the challenge for global
climate finance flows
Taxonomies around the world are tailored tomatch national priorities while sharing common
features such as goals, science-based targets, ordynamic nature. Local taxonomies reconcile thenet-zero pathways and economic objectives ofeach of the countries. While such differentiationis necessary for the taxonomies to offer theactionable guidance for the decarbonisation
process, the emergence of national and regionaltaxonomies may lead to market fragmentationthat can hinder cross-border flows of green

and sustainable capital. Such risk requires
solutions aimed at increasing interoperabilityof taxonomies and thus at enhancing theirusability for international investors. Thisissue has been identified as one of thepriority focus areas for the EU’s International
Platform on Sustainable Finance, resulting
in the presentation of the Common
Ground Taxonomy and further work on
harmonisation approaches.

Transition taxonomy – the next
milestone for sustainable finance
Given the scale of the decarbonisation
challenge, there is an ongoing debate on
how to use and design taxonomies for themto support not only activities that are at theoutset green, but also to guide the transition ofcarbon-intensive activities. Although, following
the EU’s approach, several taxonomies (e.g.
South Kora, Vietnam) include transitional
activities in sustainable finance taxonomies(e.g., manufacturing of cement), to date, noneof the approaches have allowed for taxonomy
development to fully encompass all theopportunities offered by the mainstreamingof transition finance. Currently, a traffic-lights
approach is the most broadly applied solution(e.g. Singapore, Indonesia, ASEAN), however
there is no global consensus as to how todefine different performance tiers. Green,amber, and red definitions in the Indonesiantaxonomy are defined through compliancewith the do no significant harm principle,
while in Singaporean taxonomy throughthe level of contribution to climate change
mitigation objective.

Taxonomy development around the world

RussiaUK

CanadaEuropean Union

Kazakhstan

Mongolia
China

MexicoDominican Republic
Colombia

Taxonomy in place

BrazilIndia
Sri Lanka
Malaysia
Indonesia
ASEAN

Singapore

Australia

Taxonomy in draft
Taxonomy in development

Japan
South Korea
VietnamThailandPhilippines

Chile

Taxonomy in discussion

Sustainable Debt Market Summary H1 2022 Climate Bonds Initiative

South Africa
New Zealand© Climate Bonds Initiative 2022

7

JERA’s JPY2bn (USD15.7m) transition bond
JERA is a joint venture
between Japan’s first
and third largest energy
companies, and collectively
counts as the country’s
leading corporate
CO2 emitter, responsible forabout 15% (169 MtCO2e)of Japan’s total annual
emissions. The UoP of thisbond was earmarked for two
purposes:
1. Decomission of inefficient thermal power
plants, with the aim of replacement with highefficiency power plants
2. Demonstration of fossil fuel and ammonia/
hydrogen co-firing projects.
Climate Bonds encourages JERA and otherpotential utility-sector transition bondissuers to raise their level of ambition: while thedecommissioning of coal plants by 2030 is worth
support and excitement, we strongly oppose
the use of combustion plants, as well as thecontinuation of ultra-supercritical (USC) coalplants, neither of which aligns with a net zero
future. To meet its decarbonisation pledges andcommitments, JERA needs to urgently re-frameits transition plans around net-zero targets, aswell as to increase its share of power generationfrom renewables.
JERA’s thermal plants make up some 15% ofJapan’s total GHG emissions, and their transition
plans currently rely on the use of ammonia
and hydrogen co-firing thermal plants. This is
not in line with a net-zero transition, as while
a 100% ammonia or hydrogen thermal plant
could produce no carbon emissions, it does
release large amounts of nitrous oxide (NO2),
a greenhouse gas 298 times more potent.

Furthermore, the production of ammonia
and hydrogen both require high levels ofenergy and release CO2, all while there is nocommitment from JERA to only use green
ammonia or hydrogen.
Climate Bonds recognises that Japanesegeographical challenges make ammonia andhydrogen attractive alternatives, but JERA
should not rely on ammonia and hydrogenco-firing for the core of its power generation
to meet its net zero targets. We encourage
JERA to instead invest its and the Japanese
government’s capital in renewable energy
sources, such as offshore wind. Currently,
renewable energy counts for about 1% of
JERA’s total installed capacity.

Endnotes
1. https://www.environmental-finance.com/content/analysis/francesperfectly-timed-inflation-linked-green-bond-debut.html
2. https://www.europarl.europa.eu/news/en/pressroom/20220701IPR34365/taxonomy-meps-do-not-object-toinclusion-of-gas-and-nuclear-activities.
3. https://www.iea.org/reports/global-methane-tracker-2022
4. https://www.spglobal.com/marketintelligence/en/news-insights/
latest-news-headlines/natural-gas-use-may-affect-climate-as-muchas-coal-does-if-methane-leaks-persist-68096816
5. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=PI_
COM%3AC%282022%29631&qid=1647359214328
6. https://ec.europa.eu/commission/presscorner/detail/en/
SPEECH_22_4330

7. https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.
pr220704~4f48a72462.en.html
8. https://www.bis.org/bcbs/publ/d532.htm
9. German Finance Agency. n.d. The Bund’s green twins: Green
Federal securities. https://www.deutsche-finanzagentur.de/en/
institutional-investors/federal-securities/green-federal-securities/
10. https://www.climatebonds.net/standard/steel
11. https://www.meti.go.jp/pre
ss/2021/05/20210507001/20210507001-3.pdf
12. http://www.nafmii.org.cn/ggtz/tz/202206/
P020220606608323917589.pdf

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