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A big debt offering this week will surely prompt debate over what is considered “green” in the world of high finance.

Bruce Power, which runs Ontario’s biggest nuclear power plant, issued $500-million in green bonds to finance the extension of the life of its units and to increase output. Its backers say it is the first use of the environmentally focused securities to fund nuclear power.

Bruce Power, its bankers and the Ontario government hail the debt issue as an important step in helping the province get to net-zero carbon emissions. The bond issue passed muster with Cicero Shades of Green, an organization that provides independent assessments of the environmental claims behind green debt.

The financing does little to lower the company’s cost of capital, as interest rates for green bonds are only slightly lower than traditional debt. The real benefit is that the bonds get the necessary certification to include institutional investors with specific environmental requirements in their portfolios.

Nuclear power is not the first thing that comes to mind regarding the use of green-bond proceeds. The securities are usually issued by companies and governments to fund things such as renewables, energy-efficiency projects, sustainable infrastructure or climate-change adaptation.

It’s also notable from a national perspective. At the COP26 summit in Glasgow, Scotland, Prime Minister Justin Trudeau reiterated his government’s commitment to sharply reduce carbon emissions, so nuclear energy, with its large baseload capacity, can help. Bruce Power already provides a third of Ontario’s electricity.

But there’s a problem: radioactive waste. The industry-funded Nuclear Waste Management Organization has been searching for a site for a deep geological repository for spent nuclear fuel and is now in the process of deciding between Teeswater, in the South Bruce region, and Ignace, in Northwestern Ontario. Some people in the communities being considered for the project are less than enamoured with the idea.

Therein lies the problem. Yes, from an emissions standpoint, nuclear power plants are good for the environment. From the standpoint of waste, there’s risk.

Given the enormity of the climate fight, and the need to replace high-carbon energy, nuclear power is a good recipient of green finance, says Jonathan Hackett, head of sustainable finance for BMO Capital Markets, a co-lead green structuring agent for Bruce Power. Spent fuel volumes are smaller than they used to be, and the waste could eventually be recycled and used in future generations of power plants, he says.

NWMO plans to place bundles of spent fuel in copper-coated steel containers, which will be encased in clay in chambers half a kilometre underground.

It raises questions about whether green finance is properly named. Shades of green may be in order, especially since all energy sources have some environmental impact – be it on air, land or water.

The bond issue comes as the financial and natural resource industries discuss made-in-Canada guidelines for sustainable finance aimed at helping companies attract the funding they need to lower emissions. The Canadian Standards Association brought representatives from those sectors, as well as governments and industry associations together to develop a draft paper that lays out proposals for what transition finance includes.

Environmental activists, including Keith Stewart, the senior energy strategist at Greenpeace Canada, worry it is being written to allow the fossil fuel industry to avoid restrictions it faces in transition guidelines developed by the European Union. The EU says transition activities are those “for which there are no technologically and economically feasible low-carbon alternatives.”

In the draft Canadian paper, for instance, transition finance can support new oil and gas developments if the projects include low- or net-zero emission technology, such as carbon capture, utilization and storage.

Mr. Hackett said investors often ask “what’s in the box” of sustainable finance, as they try to determine how to gauge environmental impact and financial return. “The impact of being able to find something that’s incremental and will drive decarbonization near term is actually very high, and so giving those options to investors is very important in terms of supporting the transition to net zero,” he said.

All of this suggests that sustainable finance will encompass investments in a range of activities that purists believe should not be included. With the global bill for getting to net zero by 2050 projected to be as high as US$150-trillion, and greenwashing fears growing, it’s a debate that will only get more intense.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at

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