EU green bonds may still finance future gas projects

On Tuesday the 7^th of September, the European Commission adopted a proposal to raise €250bn in green bonds by the close of 2026.

Around €80bn of the proposed total is planned for this year, and is specifically targeted at aiding the continent’s economic recovery from the devastating blows dealt by the COVID-19 pandemic.

The sale of the bonds will be done through monthly auctions, providing investors who finance green projects with what the commission has called “a predictable investment calendar,”. 

This could be considered to be a huge first step towards becoming the world’s largest issuer of green bonds.

“Europe will lead by example,” Budget commissioner Johannes Hahn informed press men at a briefing. “The new green bond framework will provide investors with the confidence that their investments are actually green,” he added.

Yet, this round of green borrowing does not strictly follow its own best practice for green borrowing set out by the commission itself back in July.

In a statement on the matter, Hahn indicated that the so-called European Green Bond Standard (EUGBS) won’t be finalized for another “one or two years.”

In the meantime, the ongoing round will abide by the terms of the International Capital Market Association (ICMA), a market standard for green bonds. Making it possible and likely for some of the funding to go towards future gas projects.