A quantitative framework for analysing potential bond contributions in a low-carbon transition

This chapter proposes a framework for understanding possible directions of bond market evolution and for analysing the potential contribution that the bond markets can make to a low-carbon transition. It lays out scenarios providing the first quantifications of debt financing, and bond financing in particular, that would be required in order to meet a 2oC energy investment scenario. Starting with energy investment requirements at the national level estimated by the International Energy Agency for its 2oC scenarios (2DS), the analysis converts investments into their constituent equity and debt components. Focusing on debt, the analysis considers the role that the bond markets will need to play to finance this investment and connect bond supply with demand from institutional investors.