TORONTO -- Ontario will be the first in Canada to issue so-called green bonds next year to generate the billions of dollars that's needed to expand public transit, Premier Kathleen Wynne said Wednesday.
The program, an innovative tool to raise money to build infrastructure across the province, will be unveiled in next week's fall economic update, she said.
"Green bonds are a great tool to raise capital for a project with specific environmental benefits," she said.
"The worldwide market for green bonds in the last year has doubled, and it's now estimated to be more than $346 billion -- those are U.S. dollars."
It's the first measure Wynne has promised to help generate the billions of dollars needed to expand public transit in the heavily congested Toronto and Hamilton area.
It will require legislation and certification, but it won't be a confidence vote that could topple the minority Liberal government and trigger an election, Wynne said.
The new bonds would capitalize on the province's ability to raise funds at low interest rates, said Finance Minister Charles Sousa.
It will actually save the province money over the long term because there are many investors who are prepared to pay to invest in specific green initiatives, he said.
Finance officials say the green bonds would be a part of the province's regular borrowing program, but that portion will be dedicated to environmentally friendly transit projects.
"Rates for green bonds are expected to be in line with our current borrowing rates," said Sousa's spokeswoman Susie Health.
They'll be targeted at larger institutional investors like pension plans, but the government will look at ways to accommodate interest from retail investors, Sousa said.
It won't necessarily get the province cheaper financing in the short term, but it will attract new investors to put their money in Ontario, said Toby Heaps, president of Corporate Knights Inc. who joined Wynne in making the announcement.
"Investors are hungry for this kind of stuff, and there's just a drop in the bucket of the supply for that demand," he said.
Green bonds were not among the levies recommended by the provincial transit agency Metrolinx to raise the estimated $2 billion a year that's needed to improve transit in the Toronto-Hamilton area.
Wynne also appointed a panel last month to examine those proposals, which included a jump in the HST, a five-cent-a-litre regional gas tax, a $350-million-a-year business parking levy and $100 million a year in development charges.
The premier said the green bonds don't preempt the panel's work, because they address the broader issue of building infrastructure across Ontario. But there may be some "overlap," she acknowledged.
NDP Leader Andrea Horwath wouldn't say if her party -- which opposes any new levies to fund transit -- will support the legislation.
Most people will probably think it's not a bad idea, she said.
"But it seems to me that the premier has just appointed a panel to give them advice on how to fund transit, and they're not even waiting to hear a peep from that panel before they're throwing this out here as an idea," she said.
