Canada could soon become the third country on Earth to sell bonds specifically designed to raise funds for the fight against climate change, according to a new RBC report.

“Green is the new black” declares the first line in the 42-page document published late Monday, making the case for the Canadian federal government to get involved in the “green bond” business. While the provincial governments of Ontario and Quebec already issue green bonds to raise money for new public transit projects, renewable energy research and enforcement of environmental protections, France and Poland are currently the only sources of sovereign green bonds – meaning those issued from a national government – anywhere in the world.

“With the Canadian federal government pledging to invest heavily in the environment, we think Canada is ready to join the sovereign green bond club,” wrote the RBC analysts who authored the report. “The Canadian green bond market has already seen $4.5 [billion] issued so far across eight provincial, supranational, agency, and corporate transactions, [which] puts Canada within the top ten ranking for green bond issuance globally.”

The market for green bonds has matured immensely since the concept was pioneered a decade ago with the first issuance in 2007. For one, the concept has gone from the fancy of niche environmentally-minded investors to a mainstream money-making vehicle, with the RBC report noting more than 900 institutional investors have put growing sums of capital into green bonds in recent years.

Part of what has led to increasing investor comfort with green bonds is the major ratings agencies – S&P and Moody’s in particular – have recently started ranking the relative “greenness” of certain green bonds. The practice helps ensure issues remain transparent about exactly how the money is being spent, allowing larger players to more closely track and promote their own environmental initiatives.

Green bonds are also coming from a wider variety of sources than ever before. As recently as 2013, more than two thirds of green bond issuances came from non-governmental international organizations, but every year since then, no single source has dominated issuances as governments, banks and non-financial corporations have entered the fray.

Last year, Apple Inc. became the first major technology company to issue a green bond, with a US$1.5-billion seven-year offering the iPhone-maker is using to finance clean energy projects across its operations.

Volumes have skyrocketed along with the diversity of interest. Total green bond issuance has surpassed $190 billion since the first issue in 2007, the RBC report notes, but green bond offerings this year alone are already on pace to surpass that figure. Moody’s estimates global issuances of green bonds will surpass $200 billion this year and the Climate Bonds Initiative expects that figure to grow five-fold by the end of the decade – hitting $1 trillion per year by 2020.

Nearly $500 billion of investment will be required every year in order to meet the emissions-reduction goals laid out in the 2015 Paris Agreement, the report argues, referring to a recent United Nations Environment Program. Ottawa has an “aggressive green agenda”, RBC writes, referring to federal plans for a nationwide price on carbon, emissions regulations on all transportation sectors and a goal of getting 90 per cent of Canadian electricity from emission-free sources by 2030.

“Under the current Liberal mandate, the stage has been set for innovative green financing to support the many green initiatives that have been set by the federal government,” the report said.

Asked if Ottawa would consider issuing green bonds, a spokesperson for Finance Minister Bill Morneau told BNN via email his office was “following the green bond market,” but added the government is already “able to issue debt in a cost-effective manner in conventional markets.”