Abstract

This article investigates how carbon pricing influences green bond yields in China between 2018 and 2024, with a focus on corporate issuers. It introduces the concept of the Private Greenium, the
yield spread between non-green and green bonds issued by corporate issuers, and trace its evolution over time. A composition adjusted series shows a gradual compression of the Private Greenium, becoming negligible by 2024. Rising carbon prices are associated with surges in corporate green bond issuance, which coincide with the disappearance of the Private Greenium.
Mediation analysis indicates that carbon pricing affects yields primarily through issuance dynamics, while direct effects remain weak. In contrast, governmentissued green bonds display little systematic greenium and often offer higher yields despite strong credit quality, suggesting potential policy-driven crowding out of corporate issuers. Nonlinear models further reveal regime dependence by carbonprice level, maturity, and credit quality. These findings highlight an issuance mediated transmission channel through which carbon pricing shapes the corporate green bond markets in China.