It remains to be seen whether the federal government’s long-awaited green taxonomy will be a win for the Trudeau government or a train wreck, Investors for Paris Compliance (IFPC) warns in an analysis published earlier this month.
The outcome will turn on whether Finance Minister Chrystia Freeland includes a nod to carbon capture and storage (CCS) and allows for new investments in natural gas in a finished taxonomy, or opts for a more open, public process that includes expert advice on climate science, writes IFPC Executive Director Matt Price.
“From the outset, the Canadian government has seemed strangely allergic to running an open process to develop a taxonomy, unlike other countries,” Price says, in a post that traces the long and tortured history of the taxonomy. “Instead, as far back as the Expert Panel on Sustainable Finance, it sought to contract this out to the private sector.”
After that, multiple rounds of discussion have led to a document now sitting in Freeland’s office. Price says it incorporates recommendations from the Sustainable Finance Action Council that would “shoehorn fossil fuel mitigation (like CCS) into the ‘transition’ label, a form of carbon lock-in as resources are misallocated away from actual transition.” That leaves the government with a choice between advancing the process or allowing it to fail.
“The most appropriate response would be for the government to consider SFAC’s work as one input to an open and transparent consultation process that it runs with the advice of a credible panel of experts, some well versed in climate science,” he writes. “This would be a win for the government, demonstrating it understands the necessary ingredients for a credible taxonomy.”
But word on the street is that Freeland’s office “plans to announce not a process, but an actual taxonomy that not only makes SFAC’s mistake of including fossil fuel mitigation, but goes even further by giving a stamp of approval to investing in new fossil gas, thereby guaranteeing even more carbon lock-in and delaying the transition,” Price says.
That move would fly in the face of multiple harsh analyses questioning whether CCS is ready for prime time, the global industry’s poor record of delivering on its targets, and the Canadian industry’s acknowledgement that it won’t be able to deliver at scale before 2035 at the earliest. The list includes analytics shop Wood Mackenzie’s warning in February that CCS deployment would likely be “scuppered” without permanent taxpayer subsidies.
A commitment to gas, meanwhile, would lead toward the risk of delayed emission reductions and stranded assets that the federally-funded Canadian Climate Institute detailed in a recent research report on gas heating.
A spokesperson for Freeland said the taxonomy file is still a work in progress.
“The government is actively working on the taxonomy, in collaboration with independent experts and relevant stakeholders, to complete the process as quickly as possible,” press secretary Katherine Cuplinskas told The Energy Mix in an email. “We will provide an update on the development of a Canadian taxonomy later this year.”
The government did commit to promote “credible climate investment” and combat greenwashing in the 2024 federal budget.
Last week, Environmental Defence Canada published a mock-up of what government inboxes might have looked like after ministers received more than 50 emails urging them to keep fossil fuels out of the taxonomy.
“The key message was that it would be better to scrap a taxonomy than to publish one which includes oil or gas,” EDC’s senior program manager for climate finance, Julie Segal, wrote in an email of her own.
