In a special edition of SEB’s The Green Bond report, we issue outlooks for renewable energy investment and for the sustainable debt market next year. We forecast that 2022 could be the year when the world finally breaks with a decade of stagnation in renewable energy investment and expect a jump of about 25 percent in global investments to close to USD 400 billion. Regarding sustainable financing, we forecast that global transactions will reach a total of between USD 2.3 trillion and USD 2.6 trillion next year, driven mainly by strong growth in green bond issuance.
In the transition outlook, we look at how the energy crisis currently hitting Europe and Asia in particular will affect renewable energy investments going forward. With a surge in the cost of energy and electric power, which has made all kinds of energy production extremely profitable, we expect that the crisis will pave the way for a break with the disappointing flatlining trend of the past decade.
“After a decade in which clean energy investment was capped at USD 300 billion, we expect a jump to close to USD 400 billion in 2022 as governments start to spend more on infrastructure,” says Thomas Thygesen, Head of Research, Climate & Sustainable Finance, at SEB. “We see upside to that estimate as companies faced with sky-high energy bills may see the possibility to offset that cost by engaging in now extremely profitable investments in de-centralized renewable energy supplies.”
The report also features an outlook for sustainable financing for 2022. In our Baseline Scenario, we expect the global volume of sustainable bonds and loans to grow to USD 2.3 trillion next year while in our more optimistic scenario – the Green Growth Scenario – issuance is forecast to increase to USD 2.6 trillion. That compares with an estimated total transaction volume of USD 1.55 trillion in 2021.
”While we don’t expect another doubling of the market like we saw in 2021, we are still very confident that the exponential growth of sustainable finance is set to continue in 2022,” says Gregor Vulturius, Advisor at Climate & Sustainable Finance at SEB. ”In particular, we forecast that sustainable-themed bonds will continue to grow strongly next year, with new issuance of green, social, sustainability and sustainability-linked bonds increasing by between 35 and 53 percent.”
The overall growth in sustainable financing in 2022 will mainly be driven by the issuance of green bonds, which is seen increasing 50 percent year-on-year to more than USD 900 billion in our Baseline Scenario and by 70 percent to just over USD 1 trillion in the Green Growth Scenario.
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.
SEB is a leading northern European financial services group with a strong belief that entrepreneurial minds and innovative companies are key in creating a better world. We take a long-term perspective and support our customers in good times and bad. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, the bank’s operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB’s business is reflected in our presence in more than 20 countries worldwide, with around 15,500 employees. At 30 September 2021, the Group’s total assets amounted to SEK 3,585bn while its assets under management totalled SEK 2,422bn.
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