The first green bond for a North American P3 project was issued this month in B.C. to fund a pair of hospitals.
It is the first time a green bond has been issued to finance public infrastructure in Canada. The 32.3-year bond for the North Island Hospitals Project was issued by Tandem Health Partners. About $231.5 million was raised.
“We are delighted to be selected by the government of British Columbia to work in partnership with Island Health to deliver this important project in the North Vancouver Island communities of Comox Valley and Campbell River,” said Matt Dekkers, vice president of Tandem Health Partners. “Working collaboratively with all interested stakeholders, Tandem Health Partners looks forward to the successful completion of these hospitals which will provide first rate health care services to support the communities of North Vancouver Island.”
B.C. finance minister Michael de Jong explained that green bonds were at their core similar to traditional bonds with the added feature that they are used for projects with environmental benefits.
Green bonds were first introduced by the World Bank in 2008. They enable capital-raising and investment for new and existing sustainability projects, like renewable energy, wastewater treatment, biodiversity conservation or energy-efficient buildings. The market for the bonds is expected to reach $25 billion this year.
“It’s a way to highlight the approach that is being taken to foster energy efficiency,” de Jong said.
The bond was oversubscribed, an encouraging sign, de Jong said, of support for the bonds.
“That fact that this bond was oversubscribed would suggest that there is an appetite out there. The market speaks and in this case the market responded very positively,” de Jong said, though he was careful not to oversell the bonds.
He explained that while the market has shown enthusiasm, it isn’t likely to pay for green bonds at a premium.
He still sees the bonds as an opportunity to encourage sustainable building in the country. Though the use of the green bonds in Canada is still new, he believes the country can become a green bond leader.
The North Island Hospitals Project has been assessed as green by Altus Group Limited (Altus Group), a consultant and technical advisor for public and private sector infrastructure projects.
The B.C. government set the technical criteria for the development of the North Island Hospitals Project.
The technical criteria, which include LEED gold certification, energy and greenhouse gas targets, along with the B.C. Climate Action Plan, provided the foundation to classify the project as green.
“Government has set the bar high for LEED Gold certification with these two hospitals, and we’re ensuring that they meet stringent energy-efficient qualifications including targets for energy reduction and greenhouse gas emissions,” Said Terry Lake, minister of health.
“With these requirements, this project is supporting environmental sustainability, and at the same time, ensuring the best care for families living on the North Island now, and well into the future.”
The $606.2-million North Island Hospitals Project is being cost-shared by the Province (60%) and the Comox Strathcona Regional Hospital District (40 %). It consists of two hospitals, one in Comox Valley and one in Campbell River.
Construction is scheduled to begin this July with a late 2017 move-in date for patients. Stantec Architecture designed both buildings.
The green bond market in Canada is still in its infancy. The first bonds were issued in January and March. Ontario plans to launch a green bond program later this year.
B.C. isn’t the only province with green bonds on its mind. Ontario Premier Kathleen Wynne announced plans last year to use green bonds to finance infrastructure projects across the province.
She said the new bonds would capitalize on the province’s ability to raise funds at low interest rates, and serve as a tool for the government to address critical infrastructure needs.