The Government of Canada announced that it will issue its second green bond this week, with the aim of unlocking funding to accelerate green infrastructure and nature conservation projects, and support the achievement of the country's climate goals. According to media reports, the new offering will aim to raise $4 billion through the issuance of 10-year notes.
The new offering follows Canada's inaugural $5 billion green bond issuance in March 2022. According to the most recent green bond allocation report, issued in April 2023, more than a third of the proceeds were directed to investments in “Clean Transport”, including initiatives and projects that support the adoption of zero-emission vehicles (ZEV) and the deployment of ZEV infrastructure, such as charging stations. Other key allocation categories included “Living Natural Resources and Land Use”, with funding to support sustainable agricultural practices and encourage the development of innovative technologies that will reduce GHG emissions in the agricultural sector, and “Renewable Energy”.
Before launching the new offering, Canada updated its Green Bond Framework, outlining the areas of expenditure eligible for the offering proceeds, as well as the process used for project evaluation and selection, and allocation and impact reporting obligations.
One of the most significant updates to the framework was the addition of some nuclear energy spending to the list of eligible investment areas, making Canada the first to do so. The inclusion of nuclear activities has been included in sustainable finance taxonomies in jurisdictions including the EU and the UK's proposed taxonomy, although it has proven controversial in the former, with some member states, and the UK's own sustainable finance advisory group. European Commission opposed its inclusion, noting problems that could negatively affect other sustainability objectives and potential long-term problems arising from nuclear waste management.
The framework lists the deployment of nuclear energy to generate electricity and/or heat in the Clean Energy eligibility category. Other categories eligible for allocation of green bond proceeds under the framework include Clean Transport, Living Natural Resources and Land Use, Energy Efficiency, Terrestrial and Aquatic Biodiversity, Adaptation to Climate Change, Sustainable Water and Wastewater Management, Products Adapted to Circular Economy, Production, Technologies and Processes and Pollution Prevention and Control.
