Green Securitisation

This briefing by the Climate Bonds Initiative explains how green securitisation—the process of creating asset-backed securities (ABS) from low-carbon assets—can unlock finance for small-scale projects. It details various structures including synthetic ABS, PACE ABS, solar ABS, and green mortgage-backed securities, highlighting how aggregating small assets allows institutional investors to provide capital to SMEs and urban infrastructure.

• Green securitisation allows issuers to create asset-backed securities (ABS) where the underlying cash flows are linked to low-carbon assets or proceeds are earmarked for such investments. Typical collateral includes mortgages on certified buildings, loans for electric vehicles, and leases on solar or wind assets.
• Synthetic ABS allows banks to transfer credit risk to investors while retaining loan ownership, thereby freeing up regulatory capital to originate new green loans. A notable example is Credit Agricole CIB's USD3bn synthetic ABS from 2017, which was secured by various loans, including renewable energy project finance.
• Property Assessed Clean Energy (PACE) ABS in the US enables the financing of energy efficiency and renewable energy improvements. Loans are repaid by property owners through property tax bills, and the risk is passed to ABS investors. Three providers from California have issued green ABS using this model, totaling USD4.3bn across 23 issues.
• Solar ABS are secured by cash flows from solar assets, primarily lease payments and power purchase agreements. The US market dominates this sector, with 89% of deal volume; SolarCity (now Tesla Energy) issued the first deal in 2013 for USD54m. Other examples include Northland Power in Canada and FlexiGroup in Australia.
• Green mortgage-backed securities (MBS) include Agency MBS, Residential (RMBS), and Commercial (CMBS). In 2017, Fannie Mae was the largest green bond issuer, issuing USD26.4bn of labelled Green MBS. The first green CMBS was recorded in China, secured by a LEED Gold certified office building owned by China Energy Conservation and Environmental Protection Group (CECEP).
• Other receivables ABS provide a diverse way to secure debt using predictable revenue streams. Examples include Toyota Finance's USD4.6bn in green ABS for hybrid and electric vehicles, Brazil's green CRA ABS issued by Suzano Papel for BRL1bn (USD295m), and various Chinese ABS totaling USD2.4bn covering wind turbines, water, and waste management.
• Aggregation structures help local governments and emerging markets access bond markets. Local government funding agencies in the Nordics and the NWB in the Netherlands raised USD9.5bn in green bonds since 2010. Additionally, the Climate Aggregation Platform (CAP) is being developed to expand the investor base in East Africa and South-East Asia.

APA

Climate Bonds Initiative (2018). Green Securitisation. https://www.climatebonds.net/files/documents/publications/Green-Securitisation-Unlocking-finance-for-small-scale-low-carbon-projects_2025-02-17-163147_tlok.pdf

Chicago

Climate Bonds Initiative. Green Securitisation. 2018. https://www.climatebonds.net/files/documents/publications/Green-Securitisation-Unlocking-finance-for-small-scale-low-carbon-projects_2025-02-17-163147_tlok.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Green Securitisation |date=March 2018 |url=https://www.climatebonds.net/files/documents/publications/Green-Securitisation-Unlocking-finance-for-small-scale-low-carbon-projects_2025-02-17-163147_tlok.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2018green, author = {{Climate Bonds Initiative}}, title = {{Green Securitisation}}, institution = {Climate Bonds Initiative}, year = {2018}, month = mar, url = {https://www.climatebonds.net/files/documents/publications/Green-Securitisation-Unlocking-finance-for-small-scale-low-carbon-projects_2025-02-17-163147_tlok.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }