On June 2 the Green Bonds proposal was unveiled publicly for the first time. After nine months of consultation and policy development, the Green Bonds Team gathered stake-holders to initiate what we hoped would be an on-going public debate. Green Bonds, a Victory Bond for the environment, was an exciting proposal. But would it withstand the scrutiny of Bay Street? Or my fellow cleantech entrepreneurs? Or think-tanks and academics? Would anyone even show up?

We packed the place. Over 120 people attended to hear our presentation, listen to a panel of experts kick the tires, and engage in a lively Q & A session. Not only did the policy withstand scrutiny and debate, the room was charged with excitement. It’s time for Green Bonds to enter the national debate on the economy and the environment.

What’s all the excitement about?

Here’s how it works: Canadians buy a government-backed bond (like a Canada Savings Bond), to raise funds to accelerate renewable energy production by providing low-cost debt to renewable energy producers.

Public engagement is one thing – Green Bonds will spark excitement by providing an answer to those Canadians asking “What can I do for the environment?” – but the financial details are another. Our analysis suggests that Green Bonds are more flexible and efficient than other policy options on the table. The Green Bond proposal is one of the cheapest and most effective ways for the government to reduce carbon emissions.

The government backs the bond, and provides a mandate to the private sector to run the fund. The fund manager lends the money at low rates to renewable energy producers. The mandate is technology-neutral, has a clear measure of success (e.g. cost to government per tonne of carbon reduction), and financial incentives to maximize that success. Since renewables are typically high capital cost and low operating cost, the low-cost debt reduces the cost of renewable energy production, making it competitive in the short-term.

Some questions come to mind.

Why private sector management? The government shoulders the risk, so why separate risk from management? We want to leverage the creativity of the private sector by offering the right financial incentives to deliver an efficient policy.