On Tuesday, France issued a record €7 billion ($7.5 billion) in green bonds, a significant step in expanding the renewable energy market.
The 22-year bonds were sold to banks, insurers and other institutional investors at a 1.75 per cent interest rate, similar to traditional government bonds.
French Finance Minister Michel Sapin commented that this shows France is able to finance expenditure on green projects at the same price as traditional borrowing.
The proceeds will be invested in renewable energy projects and other sustainable initiatives.
Since hosting the 2015 Paris Agreement – which aims to combat climate change by reducing carbon emissions and investing in renewable energy – Hollande’s government has been a strong advocate for green bonds.
France is not the first to issue green treasury bonds; however, France’s issue was unique both in terms of its size and duration.
The first country to enter the green bond market was Poland back in December, issuing €750 million ($790 million); previously they had only been issued by companies or finance institution such as the World Bank.
According to Pimco and HSBC, since the first green bond was issued by the European Investment Bank, the size of the green bond market has swelled to around €232.6 billion ($250 billion).
The demand for the French bond issue exceeded expectations, being oversubscribed with total demand exceeding €23 billion.
French Environment Minister, Segolene Royal, said that the move demonstrates France has “a credible and robust framework to implement the Paris Agreement.”
The number of green bonds is expected to grow further as nations and organisations align their practices with commitments made under the 2015 Paris Climate Agreement.
Anthony Requin, CEO of Agence France Tresor, said in a statement: “By becoming the first country to issue a sovereign green benchmark bond, France has confirmed its role as a driving force for the implementation of the Paris Climate Agreement.”