Canada Issuing Nuclear Energy-Related Innovative Green Bonds

According to market circumstances, the Canadian government is announcing that it would issue its second green bond denominated in Canadian dollars.

This comes after the first $5 billion, 7.5-year green bond issued in Canada was successfully issued in March 2022.

The first Green Bond issue under Canada’s revised framework was announced on November 21, 2023. In keeping with existing green bond practices from energy utilities in Ontario and the European Union, specific nuclear energy expenditures have been incorporated in the framework, as indicated in the 2023 Fall Economic Statement. Canada’s determination to lead the world in nuclear energy is evidenced by the fact that it is the first sovereign borrower to include specific nuclear expenses in a green bond.

To accomplish its 2030 emissions reduction objectives and reach net-zero emissions by 2050, Canada must mobilize finance through the issuance of green bonds. Green bonds facilitate the utilisation of private money to expedite initiatives such as conservation and green infrastructure. Projects involving green bonds will expand Canada’s economy and add more well-paying employment to the nation.

The Government of Canada’s green bonds will help build a more robust sustainable finance market in Canada while satisfying investor demand for green investment options supported by the country’s AAA credit rating.

Quick facts:

• The federal government planned to publish a green bond framework in Budget 2021, with a $5 billion first issuance objective, before releasing its first green bond in 2021–2022. The government released the first framework for green bonds in March 2022.
• Canada successfully ended the 7.5-year, $5 billion issue of its first green bond on March 23, 2022, with a final order book of over $11 billion, a record high for a Canadian currency green bond offering. 45 percent of the bond was purchased by foreign investors, indicating a high demand for Canadian bonds among global investors.
• The government released its first allocation report on the proceeds of green bonds in March 2023.
• In November 2023, the Canadian government revised the Green Bond Framework to allow for the inclusion of some nuclear expenses. This was done to align with the 2030 Emissions Reduction Plan, updated taxonomy, global best practices, and changing investor preferences.
• The revised Green Bond Framework in Canada lists the expenses that can be allocated to a green bond. 

These includes:

• Investments in new reactors, 
• The refurbishment of existing facilities,
• Research and development, 
• Clean transportation, 
• The use of land and living natural resources, 
• Energy efficiency,
• Biodiversity on land and in the ocean, 
• Clean energy, including nuclear power, and some investments in Canada’s nuclear supply chain.
• Adaptation to climate change;
• Sustainable management of water and wastewater;
• and prevention and control of pollution.

The Green Bond Framework of Canada is consistent with the frameworks of other sovereign issuers that have gained widespread acceptance from market indices and green bond investors. France, Germany, Sweden, Spain, Italy, and the United Kingdom are among the other sovereign green bond issuers.

The terms of the original Framework are still applicable to green bonds issued under it, and the Government of Canada will not use the proceeds of the first green bond, which will be issued in March 2022, for nuclear-related expenses.