Investments include green infrastructure and transit initiatives across the province
On Feb. 2, 2016, the Government of Ontario issued a second green bond of $750 million, as a part of a plan to reduce greenhouse gas emissions at the provincial level. The proceeds will finance eight projects deemed beneficial to the environment or climate.
Green bonds are a financing tool created in 2008 by the World Bank. They are used to generate funds for environmental projects, and, in turn, stimulate the green economy and the clean-tech sector. Green bonds are subject to flat pricing—they cost the same as ordinary bonds.
The most recent green bond investment is part of the province’s larger goal of improving infrastructure and transit throughout the province in the hopes of creating more jobs.
According to the provincial government’s media release, the investment encompasses $134 billion over the next decade, and will create approximately 110,000 jobs each year.
“Effectively combating climate change requires smart investments in environmentally friendly infrastructure projects, such as improving energy efficiency and building more public transit,” said Minister of the Environment and Climate Change Glen Murray, in a Feb. 2, 2016 news release. “Green bonds give all Ontarians the opportunity to invest in climate actions that will protect the environment, strengthen the economy, and improve everyday life.”
The green bond’s maturity date of Jan. 27, 2023 leaves time for the province to achieve their 2020 target, as per their long-term plan. The 2020 goal is to reduce overall greenhouse gas emissions to 15 per cent below levels recorded in 1990.
The province is currently working on a plan to reduce emissions to 80 per cent below the 1990 levels by 2050. It may seem farfetched, but in 2015, the province was already six per cent below the rate in 1990.
Ontario is the first province to introduce green bonds. The initial green bond of $500 million was issued in 2014, and the proceeds financed the creation of the Eglinton Crosstown Light Rail Transit Line (LRT)—an electric rail line in Toronto that produces fewer emissions compared to its counterparts.
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“These investments will help to manage congestion, connect people to jobs, and improve the economy and residents’ quality of life,” said Minister of Transportation Steven Del Duca, in the same Feb. 2 news release.
The eight projects financed by the second green bond include electric vehicles for the Eglington LRT, and low-carbon improvements to the GO Transit Regional Express Rail in order to switch GO trains from diesel to electric—no small feat. The Eglington LRT project will receive up to $402 million, and the GO Transit project up to $200 million.
Beyond that, the green bonds will also contribute to the creation of Sheridan College’s Hazel McCallion Campus expansion in Mississauga. The project will receive support of up to $68 million to help create a cutting-edge, energy-efficient building on Sheridan’s campus.
Some of the most exciting and topical investments include funds allotted to the Waypoint Centre for Mental Health Care in Penetanguishene, alongside funds allocated to the Centre for Addiction and Mental Health (CAMH) in Toronto. Each institution will receive up to $2 million to boost indoor energy and water efficiency, while simultaneously creating healthy indoor environments through greenspace. CAMH is targeting a 27 per cent decrease in energy costs through these improvements.
Although $2 million in investments seems trivial compared to the Eglington LRT and GO Transit projects, investing in the link between mental health and environmentally friendly practice is an emerging trend.
“Investing in environmentally friendly hospital infrastructure projects through green bonds will grow Ontario’s communities in a meaningful way,” said Minister of Health and Long-term Care Dr. Eric Hoskins, in the Feb. 2 news release.
Paired with the cap-and-trade carbon pricing system to be implemented in Ontario in 2017, the green bonds initiative is part of the province’s efforts to establish Ontario as a centre for energy efficiency and low-carbon technology.