The European green bond market is preparing to finance nuclear power projects for the first time, according to Bloomberg.
French energy giant Electricite de France has revised its green financing framework to include nuclear power, following the European Parliament’s decision to grant certain nuclear projects the “sustainability” seal.
And other companies are reaching out to investors for the same purpose, according to NatWest Market, one of the 10 largest deal makers for “green” bonds, which finance energy transition activities.
Although nuclear energy received the “green” certificate on paper, due to its particularly low greenhouse gas emissions, it is considered by many to be controversial and many funds operating on the basis of “ethical principles” continue to boycott its financing. EDF said it would separate its green bonds for its nuclear activities from the rest, creating two different classes of “green” debt to make it easier for investors.
“It is very likely that we will see a European green bond financing nuclear projects, as well as green bonds financing nuclear-related activities among others,” said Arthur Krebbers, an executive at NatWest. “This is not a blank check on nuclear power and natural gas – there is a long list of environmental criteria and safeguards in the European regulatory framework.”
Yields on “green” assets have been tested this year and have lagged behind their peers.
The main source of concern surrounding nuclear power concerns the management of nuclear waste, as well as the possibility of radioactive leakage due to accidents, but also the possibility of its use for war purposes.
The accidents of Three Mile Island in the USA, Chernobyl in Ukraine (then part of the Soviet Union) and Fukushima in Japan have played a negative role in the desirability of this form of energy production.
Given France’s EDF spending for nuclear-related purposes in 2021, it is estimated that around €8 billion may be needed this year.
Canadian utility Bruce Power last year sold the first green bonds to finance nuclear activities in history, followed by Ontario Power Generation in July 2022.
About 60% of investors in a Barclays survey said they would buy green bonds to finance nuclear projects, with those in Europe, however, the most reserved. The desirability of nuclear power has increased due to the energy crisis triggered by Russia’s invasion of Ukraine.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
