Market Overview

The UK Green Bonds Market reached a size of USD 36.9 billion in 2024 and is expected to grow significantly to USD 127.8 billion by 2033. The market is projected to expand at a CAGR of 11.97% during the forecast period of 2025-2033. Growth is driven by increasing involvement from corporate and government issuers funding renewable energy, energy efficiency, and sustainable transport projects, supported by strong investor demand for ESG investments and government green finance initiatives.

Study Assumption Years

• Base Year: 2024
• Historical Years: 2019-2024
• Forecast Period: 2025-2033

UK Green Bonds Market Key Takeaways

• The UK green bonds market size reached USD 36.9 billion in 2024, with a forecast to reach USD 127.8 billion by 2033.
• The market is set to grow at a CAGR of 11.97% during 2025-2033.
• The market growth is propelled by rising issuance driven by both public and private sectors.
• Green bonds fund renewable energy initiatives, energy efficiency projects, and sustainable transportation, such as electric vehicles.
• Corporate participation is increasing, with banks and large corporations leveraging green bonds to finance sustainable infrastructure and carbon reduction.
• Government support includes green finance initiatives and investment in green technologies and clean energy.
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Market Growth Factors

The green bonds market in the UK has been growing significantly with the increasing number of issues in the market. There is growing use of the funds for renewable energy sources, energy efficiency upgrades, as well as sustainable transport alternatives such as electric vehicles. Furthermore, in 2023, the total global green bond issuance stood at USD 576 billion with 23% coming from the issuance by the public sector.

Corporate issuances of green bonds in the UK are on the rise, with financial institutions such as banks and major corporations from the energy, automobile, and manufacturing industries engaging with the system with the aim of funding clean technologies and lowering negative effects on the environment. A good example is the Allied Irish Banks (AIB), which issued its fifth green bond with proceeds amounting to €750 million in October 2023.

Government efforts also help in increasing growth in the market, and one such example is the investment made by the UK government of £4 billion in green innovation and clean energy in November 2023. Some of the major allocations made in this investment are: In the Green Industries Growth Accelerator fund related to supply chain resilience and internationalization, with a budget of £960 million. Over £2 billion in zero Emission Vehicles and battery production. In energy-efficient and zero-carbon aircraft innovation in the aerospace industry with a budget of £975 million.

Market Segmentation

Type Insights:

• Corporate Bond: Used by various issuers for sustainability-linked projects financing in the UK.
• Project Bond: Issued to fund specific green projects mainly focused on renewable energy and infrastructure.
• Asset-backed Security (ABS): Backed by green assets to raise capital ensuring environmental benefits.
• Supranational: Bonds issued by international organizations supporting UK green finance.
• Sub Sovereign and Agency (SSA) Bond: Issued by regional and local authorities to support green initiatives.
• Municipal Bond: Issued by local governments to finance low-carbon infrastructure and community sustainability.
• Financial Sector Bond: Issued by banks and financial institutions to fund sustainability and climate-related projects.

End Use Insights:

• Energy/Utility Sector: Funding renewable energy projects and energy efficiency upgrades.
• Financial Sector and Other Corporates: Financing sustainability projects by corporations and financial entities.
• Government/Agency/Local: Bonds issued by government bodies and local authorities for public sector green projects.

Regional Insights

The report identifies multiple UK regions including London, South East, North West, East of England, South West, Scotland, West Midlands, Yorkshire and The Humber, East Midlands, and Others. While specific statistics per region are not provided, the segmentation underscores a geographically comprehensive market analysis covering all major UK regions.

Recent Developments & News

In July 2024, NatWest Group issued the first Electric Vehicle Green Bond, raising €750 million to fund and refinance electric vehicles, supporting the transition to net zero. Previously, NatWest issued green and social bonds totaling £3.9 billion, contributing to avoiding nearly 0.121 million tons of CO2e emissions.

In November 2023, the UK government announced a £4 billion investment in green technologies and clean energy, including a £960 million Green Industries Growth Accelerator (GIGA) fund to enhance supply chains and capitalize on global growth opportunities. Over £2 billion is allocated to zero emission vehicles and their supply chains, and £975 million is dedicated to energy-efficient and zero-carbon aircraft technology development.

Key Players

• Allied Irish Banks (AIB)
• NatWest Group

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