Emerging Markets Drive Green Bond Resilience in 2025

Takeaways

• Global green bond issuance has fallen 32% in 2025 amid policy rollbacks and political headwinds, but demand for climate financing remains strong.
• U.S. dollar-denominated bonds continue to play a leading role, with corporations driving two-thirds of issuance.
• Emerging markets, led by China, are expected to remain key players in the green transition, requiring large-scale financing.

The global green bond market has faced a difficult 2025, with issuance down 32% year-on-year as shifting sentiment around sustainable investing and rollbacks in climate policies in the U.S. and Europe weighed on growth. Despite this slowdown, the market is showing resilience as financing needs for the energy transition remain vast.

Cumulative global issuance is now approaching $4 trillion, still far short of the $7.5 trillion needed annually by 2030 to achieve net-zero goals. Yet, the long-term case for green finance is intact. As former UN climate chief Christina Figueres noted, “It’s not about climate politics anymore, it’s about climate economy.”

In 2024, investments in renewable energy were double those in fossil fuels, with 93% of new power capacity coming from green sources. This trend is expected to continue, reinforcing the importance of green bonds in funding climate solutions.

Read More: Sustainable Bond Market Sees Sharp First-Half Decline in 2025

U.S. Dollar Green Bonds Hold Steady

USD-denominated green bonds remain a cornerstone of the global market, representing 28% of cumulative issuance through July 2025. At $550 billion, U.S. issuers account for more than half of that share, with corporations and government-backed entities contributing almost equally.

However, issuance trends have been uneven. After peaking at $156.3 billion in 2021, annual issuance settled near $130 billion in 2023 and 2024. By July 2025, only $60.6 billion had been issued, compared with $99 billion during the same period last year. Analysts attribute the decline to political backlash and issuers’ preference to hold off on “green” labeling until market sentiment stabilizes.

Notably, corporates have become the dominant issuers, accounting for two-thirds of U.S. dollar green bonds this year, up from 50% in 2020. Asset-backed securities, such as electric vehicle loan bundles and green mortgage-backed securities, have also gained ground.

Global Momentum Shifts

Non-U.S. issuers are playing an increasingly important role. In 2025, 45% of U.S.-dollar green bonds came from countries such as China (10.7%), Ireland (5.9%), the UAE (4.4%), and South Korea (4.1%). China, in particular, has surged ahead as a leader in renewable energy, installing more solar capacity in one year than the U.S. has ever achieved in total. Its dominance in solar panels and electric vehicles highlights its global influence on the green transition.

Data center infrastructure has also emerged as a key driver of issuance. Companies like Vantage Data Centers and Stack Infrastructure collectively raised nearly $8 billion this year, reflecting growing demand for energy-efficient facilities to power artificial intelligence.

Also Read: What Are ESG Bonds? Benefits & Future of Green Investing

Outlook

Looking ahead, U.S. dollar-denominated bonds are expected to remain about 25% of global issuance, supported by corporates, supranationals, and sovereign-linked entities. While 2025 has been marked by political pushback, the financing needs of the green economy remain undeniable. For investors, green bonds continue to provide a pathway to build sustainable fixed-income portfolios while contributing to measurable climate impact.

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Source: Vaneck