Almost half of so-called "green bonds" issued last year were in euros, the European Central Bank said Tuesday, highlighting an opportunity for the single currency to gain importance on the global stage.

"EU residents are the largest issuers of green bonds. In 2019 more than half of global issuance was concentrated in the EU and almost half of global green bond issuance was denominated in euro," the ECB said in an annual review of the currency's international role.

In the ECB report, "green" bonds are described as "earmarked to finance investment projects with an environmental benefit".

The market segment is growing, rising from just 0.2 percent of global bond issuance in 2014 to 2.85 percent last year, or $205 billion, ECB economists found.

Of that amount, some 45.4 percent was issued in euros, compared with 25.7 percent in dollars and 28.9 in other currencies.

ECB President Christine Lagarde told European Parliament lawmakers Monday that green bonds were one of the areas where "the euro already has a head start and provides possible avenues to strengthen its global appeal."

In its report, the ECB noted that recent years have seen a surge of non-eurozone residents issuing green bonds denominated in euros, reaching around 60 percent in the first quarter of 2020.

"The consolidation of the EU role as a global hub for green finance could strengthen the euro as the currency of choice for sustainable financial products, bolstering its international role," it said.

But the European Union has struggled to set up a so-called "taxonomy," clearly marking out which investments count as environmentally-friendly and preventing so-called "greenwashing" -- in effect covering up harmful spending with a veneer of environmental packaging.

Battles have raged between member countries over whether technologies like nuclear power should be classified as green.

While Lagarde acknowledged progress on the taxonomy Monday, she warned that "we need more", urging more granular distinctions even among bonds from individual issuers such as energy companies.

"More work (must) be done in order to identify not just what is green and what is not green... but what is actually brown, and that's where often it proves to be difficult politically," Lagarde said.

A breakdown of "brown" investments would classify them by the harm they inflict on the environment, rather than immediate or potential future benefits.

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