New UK Parliamentary Term Could See Continued Momentum of Green Gilt Issuance - Energy News

by Kevin Leung*

The new government is expected to revitalise climate policy, which can be supported by continued green gilt market growth. Green gilts play a rising role as a fundraising tool and a catalyst for private investments as the UK races with peers to reach net zero. The UK government should update its green financing strategy, formulated to clearly show proceeds’ contributions to sectoral decarbonisation pathways.

Clarity on green gilts’ use of proceeds remains a challenge in the absence of a science-based UK taxonomy.

Following the results of the UK general election held on 4 July 2024, the Labour party has formed the next government. The new government is committed to reaching net zero by 2050, with some form of interim climate policy pledges; this could see continuity of the country’s green gilt programme.

Since the UK government first launched its green gilt programme in September 2021, its accumulative cash issuance has reached nearly £40 billion, with proceeds allocated primarily to transportation and, to a lesser extent, renewable energy, climate adaptation, nature and energy efficiency. The government has planned to issue £10 billion of green gilts in cash in 2024-25 (0.37% of 2023 GDP) and already issued £3.5 billion in cash in the first two months of the financial year.

(read the full article on ieefa.org – published on July 11, 2024)

*Kevin Leung is Sustainable Finance Analyst, Debt Markets, Europe.

Prior to IEEFA, Kevin worked in Credit Ratings and Sustainable Finance at Moody’s. As an experienced fundamental analyst, he has developed his expertise into ESG integration in credit analysis and comprehensive ESG assessments adopting a double materiality approach.

Kevin holds a Master’s Degree in Finance from HEC Paris and a Bachelor of Science Degree from the University of Warwick.