The European Union (EU) has been pursuing an ambitious green transition path, with the ultimate goal of reaching climate neutrality by 2050 in line with the European Green Deal. One of the most critical factors to achieve the Green Deal targets is the unprecedented levels of capital investment in green infrastructure. Estimates suggest that trillions of euros are needed annually to overhaul energy systems, modernise infrastructure, and finance innovative green technologies. While public funds provide critical initial impetus, the vast majority of this financing must come from private capital markets. In this regard, the rise of the green bond market over the past decade has been a pivotal development in global efforts to channel private capital towards environmentally sustainable projects. Green bonds play an important role in financing assets needed for the low-carbon transition and to raise finance for projects that help achieve environmental and climate objectives.

In the EU, green bond issuance increased significantly between 2014 and 2024, from 0.1 per cent to 6.9 per cent of the total bonds issued. This indicates an increasing demand for financing sustainable investments, driven by the EU’s climate objectives. However, the absence of a harmonised standard made the European green bond market fragmented and complex. There was also a lack of credibility, transparency, and consistency in the rapidly growing, but largely unregulated, green bond market. To this end, the EU formally introduced the European Green Bond Standard (EU GBS) in November 2023 with the adoption of Regulation (EU) 2023/2631 by the European Parliament and Council.

Notably, this regulation became effective from December 2024, establishing a voluntary standard for green bonds available to all issuers (private and sovereign) to help finance sustainable investments. Italian utility group A2A, French public transport company Île-de-France Mobilités, and Dutch banking group ABN AMRO issued the first green bonds under the new EU GBS in the first quarter of 2025. In the electricity transmission segment, transmission system operators (TSOs) issued green bonds worth over EUR6 billion during the first ten months of 2025. This includes the October 2025 EU GBS-aligned issues by Eurogrid GmbH, the parent company of German TSO 50Hertz and Elia Transmission Belgium (ETB).

Key highlights of EU GBS

While the green bond market to date has largely relied on the voluntary International Capital Market Association (ICMA) Green Bond Principles, the EU GBS sets out formal requirements, including for project eligibility (aligned with the EU Taxonomy – a classification system that defines environmentally sustainable economic activities to help direct investments towards a greener economy), enhanced and standardised pre- and post-issuance disclosures, and regulatory oversight via the European Securities and Markets Authority (ESMA). The EU GBS establishes clear, binding criteria for sustainable bond offerings across the EU to ensure transparency, accountability, and consistent environmental integrity in sustainable finance.

The single most defining feature of the EU GBS, is its mandatory and integral link to the EU Taxonomy for sustainable activities. The Taxonomy is a classification system that defines, with detailed technical screening criteria, which economic activities can be considered environmentally sustainable.

The EU GBS lays down uniform requirements for issuers of bonds who wish to use the term “European Green Bond (EuGB)” for their bonds that are made available to investors in the EU; establishes a system to register and supervise external reviewers of EuGBs; and provides optional disclosure templates for bonds marketed as environmentally sustainable and for sustainability-linked bonds in the EU. EuGB relies on the detailed criteria of the EU Taxonomy to define green economic activities, ensures levels of transparency in line with market best practice, and establishes supervision of companies carrying out pre- and post-issuance reviews at the European level.

Issuers using the EuGB label must commit to allocating at least 85 per cent of the proceeds to economic activities that are aligned with the EU Taxonomy. This means the financed projects must substantially contribute to one or more of the EU’s six environmental objectives (climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems); do no significant harm (DNSH) to any of the other objectives (the ones it is not contributing to); and comply with minimum social safeguards.

The remaining 15 per cent of the proceeds constitutes a “flexibility pocket”. This pragmatic allowance is designed to ensure the standard remains operational in sectors where the EU Taxonomy’s Technical Screening Criteria (TSCs) are still being developed, or for specific financing needs related to international support, acknowledging that the regulatory framework is a living document.

Types of green bond issuers

Green bonds can be differentiated by the entity that issues them. For instance, corporate green bonds are issued by a corporate entity, such as a company or financial corporation. Sovereign green bonds are issued by a national government. Supranational green bonds are issued by an international body such as the European Commission (EC), which started issuing green bonds in 2021 under the NextGenerationEU (NGEU) Green Bonds programme, or by international financial institutions (IFIs) such as the European Investment Bank (EIB), the lending arm of the EU. Data providers also differentiate green bonds issued by sub-national entities such as municipalities or agencies from other types of green bonds. Such bonds are usually securitised by a government-sponsored enterprise or a government department.

Recent trends and developments in green bonds

EU level – NextGenerationEU Green Bonds

At the EU level, NGEU acts as its temporary recovery instrument, created in 2020, to support economic and social recovery from the Covid-19 pandemic. With a budget of up to EUR800 billion, it aims to repair immediate damages and accelerate the EU’s green and digital transitions to build a more resilient and sustainable future.

The EC has committed to funding up to 30 per cent of NGEU by issuing NGEU green bonds. The NGEU green bond framework is aligned with the market standard green bond principles of the ICMA. Under the NGEU instrument, at least 37 per cent of spending in the EU member countries’ recovery and resilience plans (RRPs) must be used for sustainable investments and reforms in areas addressing climate change. RRPs are national plans detailing investments and reforms to receive funding from the Recovery and Resilience Facility (RRF), which is a temporary programme, established in response to the Covid-19 pandemic, that provides funding for reforms and investments to support member countries’ economic and social recovery. Proceeds from NGEU Green Bonds must be used to finance these investments.

After adopting the independently evaluated NGEU green bond framework, the EC proceeded with the issuance of the first NGEU green bond in October 2021. Through this 15-year bond, the EC raised EUR12 billion, making it the world’s largest green bond transaction to date. Since then, the EC has continued to be active in the market.

As of October 27, 2025, the NGEU amount eligible for financing through green bonds stands at EUR261,442 million, and funds raised from capital markets via NGEU green bonds amount to EUR78,496 million. Further, the expected NGEU eligible expenditure amounted to EUR142,646 million. This is based on actual payments to EU countries and the share of green bond eligible expenditure in the respective RRPs. Additionally, the NGEU green bonds expenditure stood at EUR79,902 million. These comprise eligible expenditures by EU countries towards which green bond proceeds have been allocated to date.

EU countries – corporate and government bonds

In recent years, the share of green bonds issued by corporations in Europe have increased rapidly, from 5.6 per cent of the total corporate bonds in 2020 to 12.8 per cent in 2024. However, in 2023, this share declined to 10 per cent. The share of green bonds issued by governments (sovereign bonds) increased from 3.3 per cent in 2020 to 4.2 per cent in 2024, which is lower than the peak 6.1 per cent recorded in 2022. Corporations accounted for 58.8 per cent of the total value of corporate and government green bonds issued in the EU during 2024, reaching EU33.55 billion.

Note: The figure depicts green bonds issued by corporations, governments, and both of them
Source: European Environment Agency

Across EU countries, the share of green bonds in the total bond issuance varies significantly. In 2024, the share of green bonds was highest in Sweden, Denmark and France, where green bonds represented over 16 per cent of the total bonds issued in each of these countries. Sweden leads with a 32 per cent share, suggesting a highly mature and localised green finance market structure or strong national mandates. Denmark (17 per cent) and France (16 per cent) follow, rounding out the top three. Germany (10 per cent) and Spain (6 per cent) represent established major European economies with a noticeable, but considerably smaller, share of local issuance compared to the top three countries.

In contrast, thirteen EU countries did not issue any green bonds in 2024.

The speed at which national green bond markets develop and mature depends on many variables, including policy and regulatory factors, market conditions, and financing trends.

Note: The figures include green bonds issued by both corporations and governments
Source: European Environment Agency

Electricity TSOs

TenneT, the Dutch-German electricity TSO, has been an early adopter of green bonds complying with EU standards and taxonomy. It issued its first green bond in June 2015 (EUR500 million), followed by green bonds issuance in 2016 (EUR1,500 million), 2017 (EUR1,000 million), 2018 (EUR1,250 million), 2019 (EUR1,250 million), 2020 (EUR1,350 million), and 2021 (EUR2,800 million). In May 2022,  TenneT issued a EUR3.85 billion green bond, which was the largest corporate green bond in the Eurozone market that year (split in four tranches of EUR 1,250 million (term: 4.5 years, coupon 1.625 per cent), EUR 1,000 million (term: 7.5 years, coupon 2.125 per cent), EUR 750 million (term: 11 years, coupon 2.375 per cent), and EUR 850 million (term: 20 years, coupon 2.750 per cent). In October 2022, it issued another EUR3 billion quadruple tranche bond. This transaction was also split in four tranches of EUR650 million (term: 6 years, coupon 3.875 per cent), EUR500 million (term: 9.5 years, coupon 4.250 per cent), EUR1,000 million (term: 12 years, coupon 4.500 per cent) and EUR850 million (term: 20 years, coupon 4.750 per cent). No green bonds were issued by TenneT in 2023. However, in 2024, the TSO redeemed a EUR1.1 billion green bond and successfully priced a new dual tranche green hybrid bond of EUR550 million with a coupon of 4.625 per cent and a non-call period of 5.25 years, and EUR550 million with a coupon of 4.875 per cent and a non-call period of eight years, respectively. By January 2025, TenneT had around EUR19.4 billion of outstanding green bonds/debt.

The examples of five key TSOs across Germany, Belgium, the UK, and Italy that issued green bonds after the EU GBS became effective are given below:

  • In October 2025, Eurogrid GmbH, the parent company of German TSO 50Hertz, successfully issued Germany’s first EuGB compliant with the new EU GBS, securing a total of EUR1.1 billion in financing to support both onshore and offshore transmission projects that facilitate the integration and transmission of renewable electricity. The dual-tranche bond issuance comprises EUR500 million with a four-year term at an interest rate of 2.886 per cent, and EUR600 million with a 15-year term at an interest rate of 4.165 per cent. The issuance was met with strong investor demand, achieving fourfold oversubscription and at one point reaching an order book exceeding EUR7 billion. This complies with Eurogrid’s green bond framework (first framed in 2017 and updated in May 2022). Under this framework, Eurogrid has issued green bonds worth EUR4.5 billion since 2020 across four issuances – May 2020 (EUR750 million), September 2022 (EUR750 million), February 2024 (EUR1.5 billion), and October 2024 (EUR1.5 billion).
  • In October 2025, Belgian TSO Elia Transmission Belgium (ETB) issued a EUR500 million EuGB, marking its third green bond issuance and the first aligned with the EU GBS. The bonds were issued under ETB’s EUR6 billion Euro Medium Term Notes (EMTN) programme and will be listed on the regulated market of the Luxembourg Stock Exchange (LuSE). The 10-year notes, maturing on October 8, 2035, carry a fixed annual coupon of 3.50 per cent and received a strong response from institutional investors, achieving a six-fold oversubscription. The proceeds will be allocated to projects that enhance and modernise the electricity grid, ensuring all investments comply with the environmental criteria outlined in the EU Taxonomy Regulation.
  • Prior to the latest issuance, ETB issued its inaugural EUR500 million green bond in January 2023 with a coupon of 3.625 per cent and a 10-year bullet maturity, as well as its second green bond in January 2024 for an amount of EUR800 million, with a coupon of 3.750 per cent and a 12-year tenor.
  • In September 2025, another German TSO, Amprion GmbH, issued a EUR1.5 billion green dual-tranche bond and increased its syndicated loan agreement by EUR600 million to EUR3.2 billion. The green bond, issued under Amprion’s EUR25 billion debt issuance programme, comprises a EUR600 million tranche with a four-year maturity and a 2.75 per cent annual coupon, and a EUR900 million tranche with a 15-year maturity and a 4 per cent annual coupon. The bond is listed on the Euro Multilateral Trading Facility (MTF) market of LuSE. Proceeds will be used exclusively to finance projects within Amprion’s green transmission portfolio supporting Germany’s energy transition. Earlier, in May 2025, Amprion issued a EUR1 billion green dual-tranche bond and listed it on the Euro MTF of LuSE. The first EUR500 million tranche has a term of 4.5 years and a 3 per cent annual coupon while the second tranche has a term of 11 years and an annual coupon of 3.875 per cent. With the latest 2025 issuances, the total green bonds issued by Amprion amount to EUR6.6 billion. The TSO’s first green bond was issued in September 2022 in two tranches, with volumes of EUR800 million and EUR1 billion, and a term of 5 years and 10 years, respectively. In 2023 and 2024, it issued dual tranche green bonds worth EUR1.2 billion and EUR1.1 billion respectively.
  • In August 2025, the UK’s transmission company, SSE Networks Transmission (SSEN Transmission) – the trading name for Scottish Hydro Electric Transmission (SHET) and the transmission business of SSE Plc (which holds a 75 per cent stake in SSEN Transmission), launched its second issuance in the Euro bond market. This issuance consisted of a EUR750 million eight-year green bond, maturing on November 2, 2033, at a fixed coupon of 3.375 per cent. The bond has been swapped to Sterling, giving an all-in funding cost of 5.23 per cent. This brings the total outstanding green bonds issued by the SSE Group to GBP5.5 billion, which includes GBP2.7 billion issued directly by SSEN Transmission. The proceeds from this green bond will specifically help finance or refinance critical infrastructure as part of a GBP22 billion investment programme to upgrade the transmission network across the north of Scotland. So far, the SSE Group has issued ten green bonds, five with SSE plc as the issuer: EUR600 million in March 2025, EUR750 million in September 2023, EUR650 million in July 2022, EUR650 million in September 2018, and its inaugural EUR600 million green bond issued in September 2017.Additionally, five bonds have been issued with SHET as the issuer: EUR750 million in August 2025, EUR850 million in September 2024, GBP500 million in January 2024, GBP500 million in March 2021, and GBP350 million in September 2019.
  • In July 2025, Italy’s TSO Terna SpA launched the first fixed-rate, single-tranche EuGB issue, with a total nominal amount of EUR750 million. This issuance is part of its new EUR4 billion EMTN approved in June 2025 and supplemented in July 2025 by the Commissione Nazionale per le Società e la Borsa (CONSOB) (the Italian Companies and Exchange Commission). The EuGB, with a duration of six years, matures on July 22, 2031. It will pay an annual coupon of 3 per cent and will be issued at a price of 99.589 per cent, with a spread of 70 basis points over the mid-swap. In accordance with EU GBS, the net proceeds will be used to finance or refinance the company’s eligible green projects, identified or to be identified based on Terna’s green bond framework drawn up in July 2025, and aligned to the Green Bond Principles 2025 of the ICMA, and to the EU taxonomy. Earlier, in February 2025, the TSO issued a fixed rate, single tranche, green bond issue worth EUR750 million for institutional investors. Overall, the TSO has issued multiple green bonds since its first green bond issue worth EUR750 million in July 2018 (which matured in July 2023). In 2019, the TSO launched a green bond issue in the form of a private placement, amounting to EUR250 million in addition to issuing euro-denominated green bonds worth EUR500 million and a 7-year term. In 2020 and 2021, Terna placed a green bond amounting to EUR500 million (12-year term) and EUR600 million (8-year term) respectively. In 2022, Terna launched its first non-convertible, perpetual subordinated hybrid green bond amounting to EUR1 billion. In 2023, the TSO issued a new green bond amounting to EUR650 million with a 10-year term and in 2024, Terna launched an additional issue of a perpetual, subordinated, hybrid, non-convertible, green bond worth EUR850 million.

Challenges and the way forward

Future growth in the issuance of green bonds across the EU faces several challenges, including fragmented capital markets, an insufficient pipeline of standardised green projects ready for funding, and a lack of domestic investors. The issuance of the EU GBS represents a significant step in addressing these challenges while taking the green bond market towards a more consistent and robust sustainable finance ecosystem. Although the EU GBS aims to improve the share of green bonds in domestic markets, its voluntary nature limits its ability to fully overcome systemic barriers to green bond market growth, such as fragmentation. Furthermore, the high compliance costs and strict requirements for EU Taxonomy alignment, and mandatory external reviews mean many issuers may continue to rely on less stringent standards. This suggests there is still a significant gap to bridge before the market is fully transformed.