Federal government issues first green bond

Stephen Bryce, Canadian Press

Montreal — The federal government has announced the results of the first green bond issuance used to fund energy shifts and the fight against climate change.

Ottawa states that the commitment announced when the budget was presented in 2021 was “successful in issuing the first 7.5-year green bond worth $ 5 billion.”

At a press conference Wednesday afternoon, Minister of Environment and Climate Change Stephen Gilbo said, “Canada’s green bonds are an important step in our plan to grow the bond market. The country’s sustainable finance.” “For a cleaner, carbon-neutral economy, it is imperative to increase private sector investment through Canada’s sustainable financial markets.”

Treasury Minister Randy Boissonault is in strong demand from environmentally and socially responsible investors, who make up the majority (72%) of buyers, and international investors, who make up more than 45%, with the first issuance of Canadian green bonds. He said he was born. Investor base.

The funds can be used for new projects and projects with federal support in the two fiscal years prior to issuance.

Financing ecological projects

Among the projects and programs that can benefit from the Green Bond Fund, the guidelines released by the Ministry of Finance include new charging stations for electric vehicles, the federal government’s efforts to plant 2 billion trees, and renewable infrastructure. It lists energy and even tax credits for home renovations.

Patrick Bonin, Climate Energy Campaign Manager at Greenpeace Canada, called the government’s announcement “good news,” but said his organization is watching over which projects are funded by Green Bonds.

“We need to be vigilant and expect the government to apply certain rigor so that these bonds are truly green and not a means of funding bad projects.” He said.

To explain what would be a bad project, Greenpeace spokespersons compensated for greenhouse gas emissions by planting single-grown trees or by financing a hydrogen project made from natural gas. Here is an example of a company that is expected to be.

However, Patrick Bonin recognizes that the government has a “strong framework” and “still has worked to put in place filters and make the project truly a green project.” ..

A reliable framework, according to an independent company

A review of the Ottawa Guidelines conducted by Sustainalytics found that the Government of Canada’s Green Bond Framework was credible, but some eligible projects could have a negative impact on the environment and society. It has also been pointed out. Includes indigenous rights or local ecosystem infringement by hydropower projects.

In a statement, Finance Minister Chrystia Freeland said: “”This strong demand for the first green bond issuance is the first of many and is a sign of Canada’s future as a sustainable financial leader. “

Globally, the green bond market has grown in the context of talks on funding ecosystem transitions. According to a recent Royal Bank report, it could cost about $ 2 trillion nationwide to bring the economy to zero emissions within 30 years.