Green bonds in Canada

2008-07-23

in Canada, Economics, Politics, The environment

Emily Paddon, one of my friends and classmates from Oxford, is involved in a scheme to create green bonds in Canada. The initiative, which is part of the Action Canada Fellowship, aims to create a “government-backed financial instrument designed to engage the public by raising capital to accelerate renewable energy production.” The aim is to eliminate more than 25 million tonnes of carbon dioxide equivalent by 2020, at a cost of between $1 and $13 per tonne.

Innovative financing mechanisms will be a very important part of the transition to a low carbon economy. It will be interesting to see when the full details of this become available, and even more interesting when the bonds are available for purchase. Those aiming to both save for the future and help to save the future should take note.

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{ 10 comments… read them below or add one }

. July 23, 2008 at 8:02 pm

Emily Paddon
Trudeau Scholar 2007

. July 24, 2008 at 12:00 am

I don’t see how this solves the fundamental problem: government unwillingness to act. How is this different from a government subsidy, apart from the psychological feel-good about public participation? If the government wanted to support green technologies, it is more than able to borrow money…

That being said, I don’t have a problem with such a program – it’s harmless. It would do the same thing as Canada Saving Bonds and encourage people save their money. It would also allow the government to borrow some money to subsidize emerging green technologies. But really, this isn’t exactly a very novel idea to solve climate change, other than having a cooler name.

Getting the government to support the concept of green subsidies is the hard part. What to call it, and who the government ends up borrowing the money from… that’s the easy part.

Milan July 24, 2008 at 12:35 am

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Milan July 24, 2008 at 12:38 am

I don’t see how this solves the fundamental problem: government unwillingness to act.

Clearly, this can only be a small part of an overall solution. That being said, it could do some good, and it is the kind of initiative that appeals to the ideologies of some groups presently in charge of major countries.

It would do the same thing as Canada Saving Bonds and encourage people save their money.

Canada Saving Bonds are a pretty terrible way to save your money. They are rigid in terms of when you can cash them and pay very low interest. You can do better with no risk of capital loss using GICs. In the long run, you would probably do dramatically better investing in low-fee index tracking funds.

ToryC July 24, 2008 at 1:00 pm

I also don’t see why the government has any business backing these bonds. If the investments to be made will be profitable, there is no need. If they will not be profitable, it is more honest to just subsidize the companies.

In any event, high energy prices and concern about future supply are already driving investment in renewable energy to a sufficient degree.

ToryC July 24, 2008 at 1:10 pm

“What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. “

Anon July 24, 2008 at 6:16 pm

For investors looking for a safe way to make a few bucks, Green Bonds would be perfectly sensible. As an environmental measure for a government, they’re downright bizarre.

The government (through an “arm’s-length group” of the party-in-power’s cronies) takes risks with private investors’ money, but guarantees them a miserly rate of return no matter how badly they screw up, so it’s supposed to be OK. The whole point would be to support ventures that traditional sources of capital are unwilling to touch, keep in mind.

. September 18, 2008 at 6:58 pm

TORONTO — Green bonds — similar to Canada Savings Bonds — should be offered to Canadians to help boost investment in cleaner municipal infrastructure, Stephane Dion says.

Standing on the GO train platform at Exhibition Place yesterday, the Liberal leader was engulfed in a sea of party heavyweights as he pledged a Grit government would spend $70 billion over 10 years on public transit, high-speed rail, waste-water treatment and recreation facilities.

The proposal, he told a band of cheering supporters and candidates, would strengthen the economy and provide “good jobs, green jobs, high-paying jobs, new jobs.”

. October 6, 2008 at 2:41 pm

Climate right for government green bond

Tyler Hamilton

The International Energy Agency warned last week that 50 per cent of global electricity supply will need to come from renewable energy sources by 2050 if we hope to “minimize significant and irreversible climate change impacts.”

“Governments need to take urgent action,” said Nobuo Tanak, executive director of the agency. “Governments need to do more. Setting a carbon price is not enough.”

. December 12, 2008 at 2:40 pm

[B}elow is a short piece in the Walrus that my close friend Emily Paddon and I wrote about our truly wild last night in Erbil.

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