Green Treasury Bonds

David Connolly
Apr 17
3 min read

Updated: Apr 21

The Australian Government green bond program enables investors to back public projects that drive Australia’s transition to net zero by 2050 and support environmental objectives. Green Treasury Bonds attract green capital to Australia by increasing transparency around climate outcomes and the scale of green investments available.

The green bond program is managed by the AOFM in partnership with the Treasury.

Green Bond Framework

The Green Bond Framework sets out the Australian Government's key climate change and environmental priorities and outlines how green bonds finance Eligible Green Expenditures. This includes the basis for identifying, selecting, managing, and reporting on expenditures financed with green bonds.

The Framework has been developed in accordance with the International Capital Market Association (ICMA) Green Bond Principles 2021 and is informed by the Climate Bonds Initiative’s Taxonomy.

The Framework includes:

Australia’s climate and environmental priorities
The types of projects and expenditures eligible for financing through green bonds
Processes for project evaluation and selection of eligible projects and expenditures
How proceeds of green bond issuance will be managed
Ongoing reporting arrangements for the allocation of proceeds and the impact of projects
Details of the external review of the Framework and ongoing reporting.

Sustainalytics, an independent ESG and corporate governance research, ratings and analytics firm, provided a Second-Party Opinion on the Framework’s environmental credentials and confirmed that it is credible and impactful and aligns with the four core components of the Green Bond Principles 2021.

What Green Treasury Bonds will finance

Green Treasury Bond proceeds will be used to finance government programs that drive Australia’s net zero transition and deliver broader environmental benefits. Eligible Green Expenditures must align strongly with one or more of the Australian Government’s three key Green Goals:

Climate change mitigation
Climate change adaptation
Improved environmental outcomes.

Some Eligible Green Expenditures that may be financed by Green Treasury Bonds can be found in the list of projects below.

What Green Treasury Bonds won’t finance

In recognition of the Government’s priorities and market expectations, projects in the following sectors are excluded from consideration as Eligible Green Expenditures:

nuclear energy
arms and ammunition manufacturing and chemical weapons
manufacture, production or sale of alcohol, tobacco, and other recreational drugs
manufacture or retail sale and distribution of any products and services that are prohibited by any commitments under an international convention or treaty instrument to which Australia is a signatory
gambling
development, refining and transportation of fossil fuels, as well as programs that predominately assist Australia’s highest greenhouse gas emitting facilities.

List of Eligible Green Projects

An indicative list of Eligible Green Expenditures to be financed through Green Treasury Bonds is below. Treasury, informed by the Green Bond Committee, is responsible for annually reviewing and updating the list of Eligible Green Expenditures.

Sustainalytics conducted a Pre-Issuance Review that confirms all projects listed below comply with the use of proceeds eligibility criteria outlined in the Green Bond Framework.

Climate Change Mitigation
Rewiring the Nation	Providing low-cost financing to upgrade Australia’s electricity grid to integrate increasing renewable energy generation
Renewable energy investments by the Clean Energy Finance Corporation	Providing financing to drive investments that add value and develop capability in renewables and low-emission technologies
National Reconstruction Fund Corporation	Investing in renewables and low-emission technologies
Advancing Renewables Program	Financing R&D projects for renewable technology
Regional hydrogen hubs	Supporting green hydrogen industrial hubs
Snowy 2.0	Providing dispatchable, on-demand generating capacity and large-scale storage to the National Electricity Market
Hydrogen Headstart	Providing revenue support for large-scale renewable hydrogen projects
Community batteries	Deploying community batteries across Australia
Household Energy Upgrades Fund	Providing low‑interest loans for energy‑saving home upgrades
Electric Passenger Rail Projects	Financing the construction of core electric transport infrastructure
Driving the Nation	Supporting electric vehicle charging infrastructure
Climate Change Adaptation
International climate finance projects	Supporting developing countries’ mitigation and adaptation plans
Improved Environmental Outcomes
Urban Rivers and Catchment Program	Addressing natural resource management problems such as vegetation loss, soil degradation, introduced pest weeds and animals, water quality changes and flows and fire regime changes
Saving Koalas Fund	Supporting the recovery of Australia’s unique plants, animals and ecological communities
Reef 2050	Investing to protect the health and resilience of the Great Barrier Reef
Sustainable Rural Water Use and Infrastructure Program	Investing in rural water use, management and efficiency
Murray-Darling Basin Plan	Recovering environmental water for the Murray-Darling Basin