A large debt offer this week will surely spark a debate about what is considered “green” in the world of high finance.

Bruce Power, which operates Ontario’s largest nuclear power plant, has issued $ 500 million in green bonds to fund unit lifespans and increase production. Its supporters say this is the first use of environmentally focused securities to finance nuclear power.

Bruce Power, its bankers and the Ontario government hail the debt issue as an important step in helping the province meet the net zero carbon goal. The bond issue was approved by Cicero Shades of Green, an organization that provides independent assessments of the environmental claims behind green debt.

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

Nuclear power is not the first thing that comes to mind when it comes to the use of green bond proceeds. Securities are typically issued by companies and governments to fund things like renewable energy, energy efficiency projects, sustainable infrastructure, or climate change adaptation.

It is also remarkable from a national point of view. At the COP26 summit in Glasgow, Scotland, Prime Minister Justin Trudeau reiterated his government’s commitment to sharply cut carbon emissions, so that nuclear power, with its high base load capacity, can help. Bruce Power already supplies one-third of Ontario’s electricity.

But there is a problem: radioactive waste. The industry-funded Nuclear Waste Management Organization was looking for a site for a deep geological repository for used nuclear fuel and is now deciding between Teeswater, in the South Bruce area, and Ignace , in northwestern Ontario. Some people in the communities considered for the project are far from being won over by the idea.

Therein lies the problem. Yes, from an emissions standpoint, nuclear power plants are good for the environment. From a waste perspective, there is a risk.

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

The NWMO plans to place used fuel bundles in copper-clad steel containers, which will be encased in clay in chambers half a kilometer underground.

This raises the question of whether green finance is aptly named. Shades of green can be used, especially since all sources of energy have an environmental impact, whether on air, land or water.

The bond issuance comes as the finance and natural resource sectors discuss Canada’s guidelines for sustainable finance to help companies attract the financing they need to reduce their emissions. The Canadian Standards Association has brought together representatives of these sectors, as well as governments and industry associations to develop a draft document that presents proposals on what is included in transition funding.

Environmental activists, including Keith Stewart, senior energy strategist at Greenpeace Canada, fear it will be drafted to allow the fossil fuel industry to avoid the restrictions it faces in the 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 Canadian draft document, for example, transition funding can support new oil and gas developments if the projects include net low or zero emission technology, such as carbon capture, use, and storage.

Hackett said investors often ask “what’s in the box” of sustainable finance as they try to figure out how to assess environmental impact and financial performance. “The impact of being able to find something that is gradual and that will lead to decarbonization in the short term is actually very high, and therefore giving these options to investors is very important to support the transition to net zero,” he said. he declares.

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 to reach net zero by 2050 expected to hit $ 150 trillion and growing fears of greenwashing, this is a debate that will only intensify.

Jeffrey Jones writes on sustainable finance and the ESG sector for The Globe and Mail. Email him at [email protected].

Can green investment save the planet? A new newsletter course from The Globe explores climate-friendly investing. Register today.

Your time is precious. Receive the Top Business Headlines newsletter delivered to your inbox in the morning or evening. Register today.