Crypto News: China to wake up green bond market

Today's newsletter focuses on China's plan to sell its first sovereign green bond in London, amid a dearth of similar issuances from other emerging market borrowers this year. For unlimited access to climate and energy news, please subscribe.

China's green bond debut

By Greg Ritchie

China is preparing to launch its debut sovereign green bond at a time when the market is stuttering elsewhere, especially in the US where corporate deals have almost ground to a halt.

Green bonds, which raise funds for environmentally-friendly projects, are perhaps finance's most well-known product designed to accelerate the world's climate transition. Global issuance mushroomed to around $700 billion last year, from just $41 billion a decade ago.

Yet at the start of 2025, pockets of the market are showing signs of a slowdown. Issuances of green bonds from emerging economies, excluding China, have fallen by about a third to $8 billion in 2025, the slowest start to a year since 2022.

Asia Pacific was the only region to see green bond issuance grow, up by around 23% compared to 2024, with a large portion of that coming from Chinese issuance, according to BloombergNEF.

"The pullback is likely a result of the increased macroeconomic and geopolitical uncertainty issuers are facing, with persistently high interest rates, rising protectionism and the threat of potential trade wars," said Jameson McLennan, a research analyst at BNEF.

The development is also being tied to a broader US retreat – from the White House to Wall Street – when it comes to climate finance under President Donald Trump. Case in point: Only one US dollar green bond from an American firm has hit the market in 2025, a $350 million note from Oglethorpe Power in January.

In that context, it's no coincidence that China has chosen to list its debut green bond in London, given European investors' continued strong demand for environmental products. A foreign listing also supports China's ambition of taking a greater role in global climate diplomacy, where the US's retreat creates space for new alliances.

China's deal is particularly significant given "European investors' strong appetite for responsible and green investments and amid global uncertainty in emissions reduction, such as the US withdrawal from the Paris Agreement," said Sonali Siriwardena, global head of ESG at law firm Simmons & Simmons. It could "provide fresh impetus to the global green transition."

In the first month of his second term, President Trump pulled the US out of the Paris Agreement, froze funding for green projects, fired staff from agencies that do climate work and targeted agencies' climate-related programs. That's fanned Republican leaders' attacks on investments that try to achieve environmental goals such as cutting emissions.

To be sure, it's still early in the year and US green bond sales may pick up. What's more, many firms are still funding projects in the US to improve their efficiency and meet other environmental goals. They're just doing so outside the green bond market as they look to keep quiet about their climate goals and achievements.

"Some US issuers simply don't want to flag their green investments," said Johann Plé, a senior portfolio manager at AXA IM.

A lot of green

$830 million

This is how much China's government seeks to raise (6 billion yuan) from its inaugural sale of green bonds.

Stepping up

"This is a positive move by China. A clear signal to the market that China intends to stay committed to the green transition agenda despite the US backtracking."

Rose Choy

Research director for Asia Pacific at the nonprofit Anthropocene Fixed Income Institute

Data deep dive

By Siobhan Wagner

Clean energy investments are lagging defense spending worldwide, according to new research from BloombergNEF. But there's a major outlier: China.

The world's second biggest economy spent 4.5% of its gross domestic product on the energy transition last year, more than double the global average. Its defense budget accounted for just 1.3% of overall GDP, based on BNEF's aggregation of the latest data from the International Institute for Strategic Studies.

Globally defense spending in 2024 reached $2.46 trillion, surpassing a record $2.1 trillion in clean energy investments, BNEF said.

To a lesser degree, large economic powerhouses like Germany and Canada also directed more cash toward low-carbon energy systems, according to the BNEF research. The US, UK, France, Japan and India budgeted more for military capabilities last year.

Broad economic and geopolitical factors will continue to change how budgets are allocated. The EU is boosting defense spending in support of Ukraine. At the same time, global energy needs are soaring as artificial intelligence turbocharges demand for data centers. This means electricity from any and all kinds of sources will be needed. Wind and solar are the fastest growing sources of electricity worldwide — helped by cheaper prices for equipment.

"With rising geopolitical uncertainties, deteriorating confidence in the US security umbrella and the re-militarizing of Europe, defense spending may rise in the years ahead," Claudio Lubis, an analyst at BNEF in London, wrote in his analysis. "Nonetheless, as China and European nations have not wavered in the low-carbon transition, energy-related spend from these regions is also unlikely to slip."

More from Green

A 10 billion-yuan ($1.4 billion) fund created by the Shanghai government will invest in one of the nation's moonshot projects, a state-backed firm attempting to harness nuclear fusion technology.

The Shanghai Future Industry Fund plans to make a strategic investment in China Fusion Corp., according to a statement on Tuesday, which didn't specify the amount. It's the first investment since the fund was created last year.

Dozens of companies in the US, Europe, Japan and elsewhere are seeking to commercialize fusion technology, which will replicate the conditions of a star. The process offers the promise of abundant, clean energy but comes with numerous significant technical challenges.

A model of the new generation artificial solar "China Circulation III" at the 2023 China International Nuclear Power Industry and Equipment Expo in Shandong province. Photographer: CFOTO/Future Publishing/Getty Images

Climate startup Aspiration Partners Inc. has gone bankrupt. The company, which boasted a roster of celebrity backers and arranged carbon credits for Meta Platforms Inc., Microsoft Corp. and other large firms, filed bankruptcy weeks after its co-founder was arrested on fraud charges.

Trump wants to reinstate 2020 auto emissions standards. President Donald Trump said the the vehicle pollution curbs imposed by former President Joe Biden are too onerous. Trump has frequently criticized the requirements as an EV mandate.

France's emissions fell at a slower pace. Emissions fell by 1.8% last year to 366 million tons of carbon dioxide equivalent, compared with a 5.8% drop in 2023. A nonproft group that provides the data to the government cited stalled efforts to reduce emissions in the building and transport sectors.

Weather watch

By Brian K Sullivan

California is emerging from its wettest time of the year with new fire and drought risks.

The state is scheduled to measure the snowpack amassed over winter on Tuesday — April 1 is the typical peak point before springtime melting. This data will help determine how much water will be available for residents and agriculture.

The above-average and near-normal snow conditions in mountains in northern and central California should give the state enough water to meet its needs for summer and fall, according to Daniel Swain, a climatologist at the University of California Los Angeles.

For California, however, this isn't all good news. More water helps grasses and shrubs grow more abundantly across the state's hills and mountains. These smaller plants dry out quicker when the rain stops and temperatures rise becoming what scientists call "fine fuels" that can burn quickly and easily spread embers on the winds, causing trees to also catch fire. In addition, the extra moisture also helps invasive plant species to thrive as well, meaning there is more fuel to burn.

The snow-covered San Gabriel mountain range past the downtown Los Angeles skyline after a winter storm in Los Angeles in March 2023. Photographer: Eric Thayer/Bloomberg

At the same time, nearly 40% of California is in drought, with the driest conditions occurring across the southern and eastern portions along the border with Arizona, according to the US Drought Monitor. Long-range forecasts for the state suggest spring and early summer may bring hotter and drier conditions than normal, which would also raise the fire risks, Swain said.

This is the third year in a row where California has found itself in such a potentially combustible situation — where wet winters led to more vegetation growing across its landscape. Already this year, devastating fires around Los Angeles killed at least 29. The Pacific Palisades and Eaton blazes were among the most destructive in state history, according to the California Department of Forestry and Fire Protection, commonly called Cal Fire.

California is grappling with the harsh realities of climate change, driven by runaway greenhouse gas emissions that have made the state hotter, drier and more fire prone. Climate change made Southern California's dangerous wildfire conditions in early January 35% more likely than they would have been before the industrial era, according to a analysis by the scientific group World Weather Attribution.

In a recent webinar Dan McEvoy, a researcher at the Western Regional Climate Center, said many areas in the state experienced their top 10% warmest winters in records going back to 1895.

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