In the latest issue of SEB’s The Green Bond report, our experts present new estimates for transition investment and sustainable debt issuance in 2024. Clean energy investment is likely to face a setback in 2024 in a delayed reaction to rising production and funding costs. Sustainable debt issuance has been falling in 2022 and 2023, but we expect a gradual return to growth next year, opening for investment to recover in 2025.
“Renewable energy investment levelled off in 2023 and 2024 is likely to see the first decline since 2018,” says Thomas Thygesen, Head of Strategy and transition specialist at SEB Equity Research. “Rising production and funding costs for renewable energy have led to a profit squeeze and a lower number of new projects in 2023.”
Growth is likely to return in 2025, according to Thygesen. “Falling interest rates will help reduce costs and governments have pledged at the COP28 climate change conference to triple investment,” he says. “However, the lack of popular support for transition spending in western democracies is a longer-term concern. We have to move away from seeing the transition as an economic sacrifice and focus on the fantastic gains it will bring to ordinary people all over the world”.
The report also features a forecast of issuance in the sustainable finance market.
“2023 was the second consecutive year of decline in sustainable finance. We believe that 2024 will break this downward trend, although only with a marginal growth of around 10 per cent” says Gregor Vulturius, Lead Scientist and Advisor at Climate & Sustainable Finance at SEB. “Green bond issuance will increase by up to 20 per cent and North America and corporations will be main drivers of growth in 2024. However, more efforts are needed to provide access to funding where it’s needed the most, which is in the developing world.”
The report also provides insight on the 28th UN Climate Change Conference, also known as COP28. It ended with The UAE Consensus – an agreement that some observers have cautiously labelled “historic”, while others called it a “compromise”.
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.