GREEN BONDS AS
AN INSTRUMENT
TO FINANCE LOW CARBON TRANSITION
Eftichios S.
Sartzetakis
University of Macedonia
Abstract
The present
paper examines the role that green bonds can play in financing the transition
to low carbon economy. We first establish the need for central banks to respond
to climate change challenges and we present the main ways in which they can get
involved. We explain why green bonds should be used to instrument of choice for
financing the low carbon transition, based, on the one hand, on the theoretical
argument of intergenerational burden sharing and, on the other hand, on the
practical need of large long-term infrastructure investments. After defining
green bonds, we present their main characteristics. We then summarize the
development of the green bond market in the last decade. We conclude by
presenting ways in which to respond to existing challenges and barriers, so
that the green bonds market develops further.
Keywords: Green bonds, climate
change, low carbon transition
JEL-classifications: Q54, G12, G28
Acknowledgements: The author is indebted to the anonymous referee for
insightful comments and suggestions. The views expressed in this paper are
those of the author and do not necessarily reflect those of the Bank of Greece.
This research was conducted as part of the project “Economic policy –including
monetary policy– and climate change”, funded by the Bank of Greece.
Correspondence:
Eftichios S.
Sartzetakis
Economics and
Management of Sustainable Development (EMSD) Research Unit
Department of
Economics
University of
Macedonia
156 Egnatia
Street
Thessaloniki
54006, Greece
E-mail: esartz@uom.edu.gr