Green bond sales in mainland China may sustain their momentum in 2025, helped by long-term policy support from the government that aims to achieve net-zero emissions by 2060.

Mainland Chinese issuers sold $19.14 billion of internationally aligned green bonds in the October-to-December quarter of 2024, the highest among major geographies in the world, according to data from the Climate Bonds Initiative. That was a tad lower than the $19.20 billion of green bonds sold in the September quarter. Still, the total sale of internationally aligned green bonds in the second half of 2024 was 61.8% more than the $23.70 billion in the first six months of last year, the data show.

Aggregate green bond sales, including both internationally aligned and nonaligned portions, increased by 1.7% year over year to $29.28 billion in the December quarter of 2024, the data show. Mainland China also sells substantial amounts of so-called nonaligned bonds that conform with local rules on green finance. Issuers in mainland China sold $10.14 billion of such bonds in the fourth quarter of 2024, compared with $15.15 billion in the prior three months.

"It's likely that green development will continue to benefit from policy support over the longer term, given China's ambitions to peak carbon and carbon neutralization target, as well as its global importance," Lynn Song, chief economist for Greater China at ING, told S&P Global Market Intelligence in an email interview on Jan. 21.

"For 2025 in particular, it's possible that other more pressing priorities such as shoring up the property market and domestic demand could be the main focus" of the government," Song noted. "Despite the challenges facing the overall economy, areas benefiting from policy support continue to see solid growth, with green development as one of these policy beneficiaries."

Internationally aligned green bonds are issued in accordance with the EU-China Common Ground Taxonomy released in late 2021, which outlines economic activities recognized both by China and the EU that substantially contribute to climate change mitigation.

The world's second-largest economy, which currently accounts for the world's highest emissions by volume, is aiming for its emissions to peak by 2030 and achieve net zero by 2060. Mainland Chinese authorities are encouraging alignment with international standards and trying to curb greenwashing, a practice by which issuers overstate environmental claims to take advantage of lower borrowing costs.