Despite US and European Policy Headwinds, Green Stock and Bonds Grew Worldwide

Martin Wahl

Bloomberg Intelligence recently reported that green bond and loan issuance reached $947 billion in 2025, a record. At the same time, stock market indexes for renewables have recorded their first annual gains in five years. All this is despite U.S. and European government back-pedaling on clean energy initiatives, most markedly the Trump administration’s gutting of clean energy subsidies and active promotion of fossil fuel production. European governments also backed off the green energy accelerator this year.

What are Green Bonds?

Since 2021, the International Capital Markets Association has published its annually updated “Green Bond Principles.” It provides guidelines for issuers of “any type of bond instrument where the proceeds or an equivalent amount will be exclusively applied to finance … Green Projects [sic].” Eligible projects include renewable energy, energy efficiency, pollution prevention and control, among others. The total outstanding debt market has grown exponentially, from $37 billion in 2014 and, pushed by the record $947 billion this year, to over $1.5 trillion.

What about the Stock Markets?

Equities account for two-thirds of the investment in clean energy, according to the International Energy Agency, about $2.2 trillion worldwide. Stocks are more volatile than debt instruments, as the performance of Standard & Poor’s Global Clean Energy Transition Index shows. The stock market for renewables peaked in 2021, driven by government programs and early enthusiasm for clean energy implementation, and were on a downward rollercoaster ride until early 2025. The fact that investments in clean energy are on an upward path worldwide despite flagging government support demonstrates that clean energy initiatives can stand on their own, based on their intrinsic merits.

The index reflects the performance of stocks of around 100 companies worldwide. The top 10 are from the U.S., Spain, Denmark, China, Canada, and Portugal, representing the utilities, information technology, and manufacturing sectors. The index hit its peak in early 2021 and was on a downhill trend from then until early this year.

Blackrock’s iShares Global Clean Energy exchange traded fund shows a similar upward trend, as do many other clean energy-focused funds, after five or so years of lackluster performance.

Google chart from data provided by Intercontinental Exchange Data Services

Why the turn-around?

Well, not because of support from the governments of the U.S. or Europe, nor due to tree-hugging bond and stock traders. Investors understand that energy demand is projected to grow significantly: by 35-50% by 2040 in the U.S. and by 50% globally, and that, according to Lazard, among others, unsubsidized solar and wind are the “lowest cost generation sources for the last 10 years.” Other highlights from their 2025 report note that gas-fired electricity generation’s levelized cost of energy (the average cost to build and operate a power plant over its lifetime) has reached a 10-year high. At the same time battery storage system costs have declined due to technological advancements and oversupply of battery cells.

Gas-fired power plant projects, currently the go-to solution for new power plants, are hampered by long lead times for gas turbine deliveries; orders today are seeing delivery dates four to seven years in the future. Costs of other components have risen and are complicated by tariffs on imports for U.S. project components. Median construction time for nuclear power plants is eight years, and despite the hoopla surrounding small “modular” reactors, few are in the pipeline. No one seems to want them in their neighborhood.

Melissa Cheok, Assistant Director for ESG Investment Research at Sustainable Fitch puts the investor view succinctly, “Green investments are increasingly becoming viewed as core infrastructure and industrial plays, not just niche [Environmental, Social, and Governance] ESG trades. Capital is likely flowing toward areas with clear revenue visibility, policy backing and structural demand such as grid upgrades and renewables tied to electrification.”

What happened in 2025?

As reported in Canary Media, in 2025 “[t]hrough November, a whopping 92% of all new electricity capacity built in the U.S. came in the form of solar, batteries, and wind power.”

This is despite the administration’s promoting coal and gas versions. Thankfully, geothermal energy has been spared the ax.

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