New Green Bonds Could Trigger $1 Trillion in Tar Sands/Oil Sands Activity
A new set of guidelines for clean transition bonds could unlock up to C$1 trillion to help tar sands/oil sands companies pursue their continuing quest to reduce the carbon intensity of their operations.
The draft guidelines, released late last month by Corporate Knights and the Council for Clean Capitalism, could be “a crucial first step in establishing an important new category of green bonds,” Corporate Knights CEO Toby A.A. Heaps wrote at the time. “CTBs will be instrumental in enabling Canada’s energy and other carbon-intensive industries to further reduce their emissions, while at the same time leveraging massive opportunities for process improvement and new product development.”
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“There’s strong and growing investor interest in financing projects that help address the carbon challenge and that reduce stranded asset risk,” the Council for Clean Capitalism said in a release. “These guidelines will help ensure that some of Canada’s most important industries can tap into green capital flows as they transition to a clean growth future. And since these industries account for most of our carbon emissions, targeted investment will be hugely helpful in meeting our climate-related goals.”
The guidelines “define sector-specific categories of activities, which reduce carbon or otherwise improve environmental outcomes, while often also establishing market advantages or new products and revenue streams,” Corporate Knights explains. “For downstream oil and gas companies, for example, qualifying project categories include emissions intensity reductions in refining, development of bio-based polymer products, renewable jet fuels, and development of electric and hydrogen vehicle fueling infrastructure. The guidelines define the maximum percentage of proceeds from a CTB issue that can be directed to each activity, ranging from 25 to 100%, depending on the activity’s impact.”
Corporate Knights’ analysis suggested $1.5 trillion in potential market value by 2030 for a range of sustainable products derived from bitumen and other abundant feedstocks.
“Sustainable finance is about speeding up the transition to a low-carbon economy consistent with the Intergovernmental Panel on Climate Change recommendations to keep global temperature increases below 1.5°C,” said Climate Bonds Initiative CEO Sean Kidney. “These draft guidelines are an important contribution to enabling full participation in that opportunity across carbon-intensive industries.”