Climate bonds would be issued by any organization with a sound credit rating, according to the rules that will govern their operation. For example:
- Climate Bonds could be issued directly by national governments in the form of gilts tied to specific assets (such as electricity grid infrastructure). The novelty of sector-specific, asset-backed gilts would attract investment and potentially increase the pool of money available to the government. Marketing opportunities alone could stimulate interest from pension funds.
- Developing countries could issue them as well as developed countries – but because many developing countries lack good credit ratings, these transactions would probably be managed by credit institutions in the developed world. Thus it is highly probable that countries such as Nigeria or Indonesia or Columbia would be able to issue climate bonds, through such entities as SEB (who managed the recent World Bank Green Bonds issue), Kleinwort Dresdner or HSBC, where the security of the issue would be based on the certainty that such countries will be able to effect a switch towards renewable energy sources, or would be able to introduce carbon sequestration initiatives such as forest retention programs that will themselves be facilitated by the funds raised via the bond issue.
- A Green Investment Bank (GIB) could be established at a national or international levels to issue bonds and direct investment. It could be either fully or partly publicly-owned, and be a separate entity, arms-length from government, allowing its transactions to stay off the public balance sheet. The functions of a GIB are explored in more detail in the later section on institutional architecture.
- In some jurisdictions Climate Bonds could be issued by quasi-independent government-owned bodies such as corporatised (government enterprise) power generators.
- Municipalities could raise capital through bond issues for low-carbon projects in their area.
- Public-private partnership. Government could make a ‘cornerstone investment’ in a low-carbon fund, putting in, say, the first 20%, and leveraging investment from the private sector. By providing a guarantee to step in and take the first hit on any losses, the government could create an attractive investment for the private sector, without exposing large amounts of public money to risk.
- Purchase contracts. Governments could provide an even stronger guarantee of good returns to a private developer by tendering a long-term purchase contract, which can then be used by the company as collateral for a bond issue. For example, a government could offer a 40-year contract to a renewable energy developer, guaranteeing a floor price for the energy generated across this timespan.
Because the developer could rely on diminishing costs for constructing renewable technologies over this time period, they would have an incentive to frontload investment and reap greater rewards later, exploiting the difference between the costs of installation and the contract price. The developer in turn could raise funds by basing a long-dated bond issue on this contract. Whilst purchase contracts would appear as a liability for government, they would not feature on the public debt ratio. Long-term purchase contracts are in some ways simply a variation of policies such as the UK Conservative Party’s offer householders of a 20-year price guarantee on renewable energy through a Feed-In Tariff.
 See Conservative Party policy paper, Power to the People, December 2007.