Global green bond issuance hit a record US$155.5 billion ($197 billion) in 2017 - based on 1500 separate issues, which surpassed previous estimates, and could reach US$250-300 billion ($316.8-$380.1 billion) this year, according to the latest report from the Climate Bonds Initiative (CBI).

Green bonds are a growing category of fixed-income securities, which raise capital for projects with environmental benefits. 

The report shows that the number is up 78% on the adjusted 2016 figure of US$87.2 billion ($110.5 billion), which is well over the CBI's estimate of US$130 billion ($164.8 billion) for the year. 

According to CBI, the United States, China and France accounted for 56% of total issuance in 2017. Germany, Spain, Sweden, Netherlands, India, Mexico and Canada filled out the remaining top 10 positions.

Fanny Mae was the largest overall issuer in the US, with US$24.9 billion ($31.6 billion) from its green Mortgage Backed Securities programme. However, the largest single green bond placement originated from the Republic of France through its January 2017 US$7.6 billion ($9.6 billion) issuance, followed by two subsequent taps, bringing its total up to over US$10.7 billion ($13.6 billion). 

The next largest cumulative bond issuers for the year were the China Development Bank and the European Investment Bank with US$4.6 billion ($5.8 billion), then the New York MTA with US$4.2 billion ($5.3 billion).

According to CBI, 239 individual issuers came to market in 2017, of which 146 (61%) were debut issuers reflecting a widening of the issuer base each year. Issuers came from 37 countries with 10 new entrants - Switzerland, Argentina, Slovenia, the UAE, Chile, Singapore, Lithuania, Malaysia, Fiji and Nigeria. 

Although green bonds make up a small fraction of the overall bond market, they are attracting more attention because meeting emissions-cut targets will require trillions of dollars of capital from public and private sectors.

Last year, several climate leaders called for ten-fold increase in green bond investment from 2016 levels and set a target for 2020 of US$1 trillion. 

"There are now three vital years to reach the milestone of a trillion dollars in green finance by the end of 2020," said Sean Kidney, CBI's chief executive. 

"The final results for 2017 provide some foundation, but must be doubled and doubled again by the end of the decade. 

"The spotlight is now firmly on financial system actors, banks, insurers, corporates and institutional investors to achieve this vital 2020 climate investment target. 

"The results from 2017 also point to the area for acceleration between now and 2020." 

Investment in renewable energy continue to be the most common use of proceeds, however, their share has dropped considerably from 38% of volume in 2016 to 33% in 2017.

Allocations to low carbon buildings and energy efficiency rose 2.4 times year-on-year and accounted for 29% of 2017 use of proceeds, up from 21% in 2016. 

"With a multitude of rail and urban metro deals, allocations to low-carbon transport almost doubled in volume. The trend to finance an increasingly diverse range of projects continues," Kidney adds. 

"Waste, land use and adaption themes continue to be the smallest, in part due to a lack of clear definitions on which project types would qualify." 

Moving forward, Kidney says increasing international alignment and market harmonisation will result in more green investment in China and the greening of the Belt and Road will also gather wider significance.

"The Indian market will continue its growth with the government's ambitious renewable energy policies and regulatory reforms providing impetus," Kidney said. 

"More brown-to-green financing initiatives will emerge from global energy suppliers and the large emitters as institutional investors look for corporate business plans and hence balance sheets to be increasingly geared towards achievement of the Paris targets and the wider clean energy and low carbon transition."