Green Project Financing: Analyzing the Role of Green Bonds in Supporting Renewable Energy Development

Green bonds – which are used to finance projects that have environmental benefits – are key instruments in the green finance landscape. Their ascent is testament to increasing investor demand for sustainable investing products and urgent efforts around the world to ramp up climate-finance mobilisation to scale. Of all the sectors frequently funded by green bonds, renewables are a standout for the major role they play in cutting greenhouse gas emissions and advancing the Sustainable Development Goals (SDGs), specifically SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).

Notwithstanding their extraordinary growth, there are questions about the extent to which green bonds actually translate into real renewable energy development, especially in a variety of different economic and institutional settings. This article fills this gap by systematically reviewing the literature (narrative review) by peer-reviewed publications and institutional reports between 2020 and 2025. It aims to answer three questions: (1) What are the effects of green bonds on financing and delivery of renewable energy projects? (2) What are the critical success factors enabling green bonds to deliver results? and (3) How could green bond markets be scaled to finance the transition to green energy in emerging economies?

The study concludes that green bonds help deliver long-term capital, reduce the cost of project financing and promote transparency, but their effectiveness is linked to strong taxonomies, regulations convergence and verification arrangements. Emerging economies have unique constraints but also opportunities from sovereign issuances, blended finance and multilateral assistance. Policy recommendations to improve scalability, quality and alignment of green bonds with national and international climate need are provided.