The National Academies

TCRP J-11/Task 38 [Final]

An Analysis of Green Bond Financing in the Public Transportation Industry

  Project Data
Funds: $91,000
Research Agency: Cadmus Group, LLC
Principal Investigator: Damon Fordham
Effective Date: 9/4/2019
Comments: Completed. Published as TCRP Research Report 222.

Green bonds are a form of financing instruments whereby bonds proceeds are earmarked for positive environmental purposes, such as conservation, renewable energy, energy efficiency, and clean transportation. There are comparable instruments (sustainability bonds, resiliency bonds, etc.) other than green bonds that are similarly used by other institutions to finance or fund climate impact reducing strategies.
According to the Climate Bonds Initiative, more than 157 billion USD in green bonds were issued in 2017, over four times the amount issued in 2014 (https://www.climatebonds.net/market/explaining-green-bonds). As climate change issues continue to gain attention, green bonds have been receiving additional attention in the financial market.
Green bonds can be used by an organization to either:
  • Elicit the preparation and execution of sustainability programs and plans within an organization;
  • Enhance the capacity of organizations to fund sustainability programs and related capital expenditures to reduce extreme weather event impacts as well as to promote resiliency; or
  • Allow for the funding of current sustainability-related projects through an alternative form of financing to maintain a state of good repair.
In 2015, Sound Transit became the first U.S. transit agency to issue green bonds. Since then, numerous agencies have followed with green bond and similar issuances and other sectors have come to see public transportation as an important actor in reducing greenhouse gas emissions and addressing climate change.

Green bonds carry additional transaction costs (including the need for issuers to certify, track and report on the use of proceeds). Issuers must consider whether the marketing of their sustainability commitment along with the attraction of environmentally conscious investors outweigh such costs, or whether alternative forms of financing should be considered. Similar instruments may not carry the same administrative burdens, but could also be attractive for both organizations and investors.


The objectives of this research are to: 
  1. Identify potential roles and benefits of greens bonds in advancing the sustainability goals of transit agencies.
  2. Describe the value and costs of green bond vs. traditional bond financing to both a transit agency issuer and a bond investor.
  3. Describe lessons learned from the experiences of transit agencies, investors, and stakeholders with green bonds and similar financing. 
  4. Identify and contrast alternatives to green bonds to advance sustainability goals.

STATUS:  Complete. Published as TCRP Research Report 222.

To create a link to this page, use this URL: http://apps.trb.org/cmsfeed/TRBNetProjectDisplay.asp?ProjectID=4692