In October 2013, Ontario Premier Kathleen Wynne announced her government’s plan to issue green bonds. The Government of Ontario will be the first province in Canada to issue green bonds, but not the first government agency in Canada to do so. Export Development Canada issued a green bond in January 2014, and TransLink, Metro Vancouver’s regional transportation authority, has issued very similar bonds without adding the ‘green’ label. The Ontario government plans to use the bond proceeds for investment in "transit and other environmentally friendly infrastructure projects across the province." At press time, the Government of Ontario had not released further details regarding the specific allocation of the bonds’ proceeds.
The political promise behind green bonds is that they could raise money for infrastructure projects that help to ‘green’ the economy. A green economy is one that improves "human well-being and social equity, while significantly reducing environmental risks and ecological scarcities." In more tangible terms, "a green economy can be thought of as one which [sic] is low carbon, resource efficient and socially inclusive." Similarly, then, a green infrastructure is one that is low carbon, resource efficient and socially inclusive. Ontario’s green bonds could help to green its infrastructure and push the economy toward an environmentally sustainable pathway. Yet these outcomes are not a given.
The purpose of this policy brief is fourfold. First, it explains how green bonds hold potential as policy tools for assisting the transition to a green economy. Second, it contributes to the body of knowledge on green bonds and provides a brief overview of green bonds issued elsewhere. Third, it identifies potential problems with Ontario’s green bonds, which could undermine their potential. Fourth, it observes some steps that the Government of Ontario could take to make its green bond program a success for Ontarians and the environment.