The study utilizes new IMF data to explore the effect of energy policy diversity on the issuance of green bonds in seventy countries from 1991 to 2021. It develops a measure of energy production diversity that captures the variations in key alternative energy sources, enhancing our understanding of energy policies. The results reveal that countries with greater energy policy diversity are associated with higher green bond issuance growth, shedding light on the relationship between environmental considerations and sustainable finance. Environmental factors, such as higher energy demand, reduced greenhouse gas emissions, and decreased fossil fuel subsidies, are associated with greater green bond issuance. However, changes in energy policy diversity may not produce an immediate or linear impact on green bond issuance. The study reveals that nuclear power and solar power stand out as the principal catalysts driving growth within the green bond market, out of various energy sources. Nonetheless, countries that emphasize nuclear power generation might confront challenges in supporting green finance projects due to concerns regarding the integrity of water infrastructure. The insights derived from our research offer valuable guidance for both private sector enterprises and public sector endeavors involved in green financing initiatives. Additionally, our findings shed light on the impact of cultural factors on the financial behavior of nations.