Canada’s Green Bonds for Nuclear Projects Attract Investors

Canada has successfully issued its first green bonds that include financing for nuclear projects, as part of its efforts to support the low-carbon transition and the development of the nuclear industry. The federal government and the province of Ontario raised a total of C$5.5 billion ($4.1 billion) from the bond sales this week, which received strong demand from investors who are interested in the environmental and social benefits of nuclear power.

Canada’s New Green Bond Frameworks

The green bond sales were made possible by the new green bond frameworks that were introduced by the federal government and the province of Ontario earlier this year. The new frameworks allow the issuers to use the proceeds from the green bonds to fund or refinance projects that contribute to the mitigation or adaptation to climate change, as well as other environmental and social objectives.

The new frameworks also include nuclear projects as eligible categories, such as the construction, operation, maintenance, or decommissioning of nuclear power plants, or the research and development of nuclear technologies. This is a significant change from the previous frameworks, which excluded nuclear projects along with fossil fuel projects, due to the controversy and the debate over the role and the impact of nuclear power on the environment and society.

Nuclear Projects
Nuclear Projects

Canada’s Green Bond Sales

The federal government and the province of Ontario took advantage of the new frameworks and issued their green bonds this week, which were the first ones to include nuclear projects in Canada. The federal government sold C$4 billion ($3 billion) of 10-year green bonds on Wednesday, which was its second green bond issue since 2017. The bond had a coupon rate of 1.25% and a yield of 1.27%, and attracted more than C$7.4 billion ($5.5 billion) of orders from investors, indicating a high level of interest and confidence.

The province of Ontario followed suit and sold C$1.5 billion ($1.1 billion) of 12-year green bonds on Thursday, which was its ninth green bond issue since 2014. The bond had a coupon rate of 1.75% and a yield of 1.79%, and received more than C$3.8 billion ($2.8 billion) of orders from investors, showing a strong demand and support. The province said that the proceeds from the bond will be used to fund or refinance projects in the areas of clean transportation, energy efficiency, renewable energy, and nuclear power.

Canada’s Nuclear Industry and Ambitions

The inclusion of nuclear projects in the green bond frameworks reflects Canada’s commitment and ambition to develop and promote its nuclear industry, which is one of the largest and most advanced in the world. Canada has 19 operating nuclear reactors, which provide about 15% of the country’s electricity and 60% of Ontario’s electricity. Nuclear power is also the largest source of low-carbon electricity in Canada, as it avoids about 80 million tonnes of greenhouse gas emissions per year, equivalent to taking 16 million cars off the road.

Canada is also a leader in the research and innovation of nuclear technologies, such as the small modular reactors (SMRs), which are smaller, cheaper, and safer than the traditional reactors, and can be used for various applications, such as remote communities, mining, and hydrogen production. Canada has launched a national SMR action plan, which aims to deploy SMRs in the country by the mid-2020s, and to become a global hub for SMR development and export.

The green bond sales are expected to boost the financing and the visibility of Canada’s nuclear industry, and to demonstrate its potential and its contribution to the low-carbon transition and the sustainable development. The green bond sales are also expected to set a precedent and an example for other countries and issuers who are interested in or considering including nuclear projects in their green bond frameworks.

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