The recent decline in oil prices is unlikely to harm the green bond market due to the longevity of climate change as an investment topic, Standard & Poor’s has predicted.

According to the rating agency, 2015 would be a test for the viability and durability of the green bond concept due to changes to energy markets.

The report, ‘Corporate bond market shows its green shoots’, questioned whether recent market growth had in fact been the result of “exceptionally benign” capital markets conditions.

But it concluded that the market would continue to grow despite falling oil prices.

“Oil price movements will have less of an impact on renewables than many fear due to the longevity of climate change as an investment driver relative to the short-term fluctuations in commodity prices,” S&P said.

It noted that many green bond proceeds were used not only for renewable energy projects but to tackle pollution, and fund housing and water projects unaffected by commodity-price volatility.

The rating agency’s report argued that market growth would come from corporate and municipal green bond issuance but said the Chinese market’s embrace of the concept would be a “game changer”.

It said there were several reasons China would have an interest in growing the diversity of the local bond market – including the government’s stated aim of reducing carbon emissions.

But it added that green bonds could be a means of encouraging Chinese companies to issue debt, thus relieving the credit risk concentrated within the country’s banking system.

Its prediction came the same day as the Climate Bonds Initiative and the International Institute for Sustainable Development launched a report in Beijing to promote the growth of green bonds in China by setting up a green bond market development committee to review market standards, among other things.

The promotion of such standards, either through the private or public sector, is allowing green bonds to “take root”, according to S&P, although it added that the onus of ensuring individual bonds are compliant is still on investors.

The European Commission recently indicated it would support market solutions over new regulation for green bonds as it seeks to establish the Capital Markets Union.

Jonathan Hill, commissioner for financial stability, told IPE new legislation would not always be the most effective or proportionate approach.

“In many cases, the onus will be on the market to deliver solutions,” he said.