How to capitalize on Trudeau’s carbon tax

Green bonds have the potential to be a key tool to help finance Canada’s transition to a low-carbon economy and to meet global, national and local sustainability objectives, says Michelle Brownlee, the report’s co-author and Director of Policy at the Smart Prosperity Institute.

The Smart Prosperity Institute and the Climate Bonds Initiative released Bonds and Climate Change Report 2016: State of the Market in Canada.

Read: What’s the greenhouse gas footprint of world’s 500 largest companies?

Canada’s climate-aligned bond market has grown to $32.9 billion — the 5th largest in the world. Both the full climate-aligned universe and the $2.9-billion green segment of the Canadian market have grown over the past year, though less quickly than had been expected.

This week Prime Minister Justin Trudeau announced that the federal government would institute a national price for carbon, starting at $10 per tonne in 2018, and rising to $50 by 2022. Provinces can decide how to implement the price, and the tax will be revenue neutral for the federal government.

Read: Trudeau to work on Canada-China free trade

“The market needs strong leadership now; 2016 will be a tell-tale year for Canada,” Brownlee says. “With leadership, 2016 can be the year Canada’s green bond market really goes mainstream.”

“Canada has a unique opportunity to advance on green finance,” says Sean Kidney, CEO, Climate Bonds Initiative. “Large pension fund investors and a well-developed banking and insurance sector can act as building blocks for a domestic and green bonds market to help meet Canada’s climate objectives and emissions goals.”

Read: Scrap the capital gains tax, says Bernier

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.