After successfully issuing a $5 billion green bond in 2022, Canada is planning to issue a second green bond as part of the nation’s emissions reduction goals.
Canada announced its plan under its Green Bond Framework, which was released at the end of 2023 and included nuclear energy expenditures that are in line with current green bond practices from energy utilities in Ontario and the European Union. The country is the first sovereign borrower to include certain nuclear expenditures in a green bond. The green bonds will also enable investors to make green investments backed by Canada’s AAA rating.
Green bonds enable private financing to be unlocked that can be used to speed up projects covering green infrastructure and nature conservation, and mobilizing capital through green bonds is an important strategy within Canada’s 2030 emissions reduction targets and achieving net-zero emissions by 2050.
The plan comes after Canada issued its first green bond, which saw a successful 7-and-a-half-year, $5 billion issuance, and a final order book of over $11 billion. International investors bought 45% of the bond, underscoring the high demand for quality green investments.
The green bond market is expected to continue growing. Sustainable bonds will increase to between $950 billion to $1.05 trillion in 2024, according to a recent S&P Global report. Issuance of green bonds expanded 10% year on year in 2023, reaching a total of $575 billion.
“Energy utilities in Ontario, such as Ontario Power Generation and Bruce Power, and in the European Union, such as Électricité de France (EDF), have already issued green bonds including certain nuclear expenditures, which were well received by investors,” the Canadian government said in its announcement.
Eligible expenditures for allocation to a green bond include clean transportation, living natural resource sand land use, energy efficiency, terrestrial and aquatic biodiversity, clean energy, climate change adaptation, sustainable water and wastewater management, circular economy products, and pollution prevention and control.
