Analysing potential bond contributions in a low-carbon transition

This analysis considers scenarios for the potential contribution of the bond markets to meet low-carbon investment financing needs in a 2oC energy pathway. The IEA has estimated investment needs in the renewable energy, energy efficiency and LEV sectors to 2035, consistent with an expectation that countries will take policy actions leading to a 2oC emissions pathway or scenario (“a 2DS”). Building on these investment scenarios, this work applies assumptions based on current trends in regional financial markets to synthetically break down the aggregated investment needs by source of finance and type of financial instrument. The analysis converts investments into their constituent equity and debt components. Focusing on debt, the analysis considers the role that the bond markets can play to finance this investment.