US green bond share drops to 0.6 percent as greenium turns positive

Researchers Alessandro Moro and Andrea Zaghini used a triple-difference empirical framework to isolate the election effect from global trends.

Following the November 2024 vote, the probability of US firms issuing green bonds fell by 4.4 to 6.0 percentage points, while monthly placement volumes dropped by 20 to 28 million dollars per issuer.

Simultaneously, the greenium—the yield discount green bonds usually enjoy over conventional debt—deteriorated by 68 to 83 basis points.

This shift pushed the US greenium from minus 29 basis points into positive territory at plus 53 basis points.

Because both issuance volumes and prices fell together, the evidence indicates a demand shock driven by changing political and regulatory expectations.

The authors identify three institutional mechanisms explaining the contraction in investor appetite.

First, withdrawing from the Paris Agreement undermined long-term climate commitments and increased regulatory uncertainty for long-maturity debt.

Second, expected reductions in public subsidies and tax incentives lowered projected cash flows for sustainable projects, reducing asset attractiveness even for conventional investors.

Third, weakening political priorities surrounding reporting standards raised greenwashing concerns, making investors unwilling to accept lower returns without strict regulatory oversight.