Australia will need to “substantially” boost financing for sustainable projects if the nation is to decarbonize its economy and meet its net zero goal, a senior Reserve Bank official said Tuesday.

While the Australian green bond market has grown quickly since its inception in 2014, it remains a modest share of the overall market, Carl Schwartz, the RBA’s acting head of domestic markets, said in the text of a speech on financial markets and climate change.

“Australian financial markets have taken some steps to help facilitate flows of capital to sustainable investment, although the financing task ahead looms large,” Schwartz said. “Improving data and transparency around climate risks and sustainability will support efforts in financial markets to align investment with climate goals for the net zero path ahead.”

Australia’s addiction to coal and fossil fuels, both at home and for exports, has made it the largest carbon emitter per capita in the developed world. Yet by one estimate, the vast sunbaked continent could generate 5,000 exajoules of green energy — more than eight times current global demand.

Green bond issuances in the first half of 2023 has already exceeded last year’s record A$10 billion ($6.6 billion), reflecting solid interest from both issuers as well as investors, he added.

Green loans are another “attractive prospect” for assisting the transition to net zero, Schwartz said. Volumes have jumped in the green securitization markets, hitting a record A$1.4 billion last year.

Schwartz pointed to a range of activities being undertaken by the government and regulators to help improve data transparency, develop a taxonomy, promote awareness of regulatory expectations and undertake surveillance to prevent “green washing” among others.

“We continue to increase our understanding of the implications of climate change for the Australian economy and financial system, via internal analysis and external engagement,” Schwartz said of the RBA’s role. “We are also committed to improving the environmental performance of our own operations.”

The RBA is also considering what sustainability and climate-related financial disclosures it can make, starting with operational emissions reporting, he said.