(Montreal) The federal government has announced the results of its very first issue of green bonds which will be used to finance the energy transition and the fight against climate change.
Posted at 2:39 p.m.
Updated at 3:46 p.m.
Ottawa says it has “successfully issued its first 7.5-year green bond, worth $5 billion,” a commitment that was announced when the budget was presented in 2021.
During a press conference on Wednesday afternoon, the Minister of Environment and Climate Change, Steven Guilbeault, stressed that “Canada’s green bonds are an important step in our plan to grow the sustainable finance in the country” and that “to achieve a cleaner and carbon neutral economy, it is essential to increase private sector investment through a sustainable finance market in Canada”.
Associate Finance Minister Randy Boissonnault said the inaugural Canada Green Bond issue has generated strong demand from environmentally and socially responsible investors, who represent the majority of buyers (72 per cent). ), and international investors, who account for more than 45% of the investor base.
Funds could be used for new projects or for those receiving federal assistance in the two fiscal years prior to issuance.
Financing ecological projects
Among the projects or programs that can benefit from green bond funds, guidelines published by the Department of Finance list new charging stations for electric vehicles, the federal commitment to plant two billion trees, infrastructure renewable energy, or even tax credits for residential renovation.
Greenpeace Canada’s Climate-Energy campaign manager, Patrick Bonin, called the government’s announcement “good news,” but he said his organization will keep an eye on which projects will be funded by green bonds.
“We will have to be vigilant and we expect the government to apply unfailing rigor so that these bonds are truly green, and are not a vehicle for financing bad projects,” he said.
To illustrate what would be bad projects, the spokesperson for Greenpeace gives the example of a company which would see its greenhouse gas emissions be compensated by planting monoculture trees, or else the financing of a hydrogen project made from natural gas.
But Patrick Bonin acknowledges that the government has “a solid framework” and that it “has nevertheless done some work to have filters and ensure that the projects will really be green projects”.
A credible framework, according to an independent firm
A review of the Ottawa Guidelines, conducted by the firm Sustainalytics, found the Government of Canada’s Green Bond Framework to be credible, but the company also noted that some eligible projects could have negative environmental and social impacts” that the government should manage and mitigate, including any violation of Indigenous rights or local ecosystems by hydropower projects.
In a statement, Finance Minister Chrystia Freeland said the “strong demand for this first green bond issue — the first of many to come — is a sign of Canada’s future as a leader in the area of sustainable finance.
Globally, the green bond market has grown in the context of talks on financing the ecological transition. According to a recent Royal Bank report, approximately $2 trillion could be needed nationally to bring the economy back to net zero within 30 years.