Tom Rand would like to make a deal

With my arms gesticulating wildly at a B&B in Canmore, Alberta, I told my Action Canada colleagues about the sort of geeky vision that haunts the dreams of a Cleantech engineer and financier like myself. Eyes wide open, they heard how windmills circling Hudson’s Bay might power the North American grid, how the Bay of Fundy holds more power than a fistful of nuclear reactors, and how geothermal could transform the way we heat and cool our buildings. Canada is uniquely positioned – our geography speaks not just to our being an energy superpower but a renewable energy superpower!

How do we get there, I asked, and more importantly, how do we engage Canadians in this vision? “Green Bonds!”, shouted my colleague Andrew Sniderman. A public policy project was born.

Indeed, the Government of Canada has committed itself to deep, long-term greenhouse gas and air pollutant reductions. Outlined in the Turning the Corner regulatory framework, we’re committed to a 60 to 70 per cent reduction below current levels by 2050. We ain’t gonna get there with compact fluorescents and hybrid cars – we need massive renewable energy infrastructure, and we need to start building it now.

The only long-term solution to the carbon crisis is a strong, market-wide pricing signal – preferably a global pricing signal (for more, see the 2007 Cleantech Issue) – but that signal will come only slowly and incrementally. No one wants to shock the economy. The National Roundtable on the Environment and the Economy (NRTEE) has concluded that a price on carbon of around $270 a tonne will get us to that commitment, but that price level won’t be reached for years. In the meantime, energy producers are investing in energy infrastructure that will last a lifetime. How to change their behaviour today, before that pricing signal really hits?

Here’s where Green Bonds comes in – a government-backed financial instrument designed to engage the public by raising capital to accelerate renewable energy production. The idea is to lend this capital at low rates to energy producers who choose renewable methods of production.

The Europeans issued their Climate Awareness Bond in June 2007. The idea has been tested, and it works.