A draft framework that will serve as the foundation of Canada\u2019s\u00a0sustainable finance taxonomy is now \u00a0\u2014\u00a0and\u00a0it\u2019s\u00a0raising\u00a0a\u00a0critical question about whether investments\u00a0in the oil and gas sector\u00a0should be included in the\u00a0set of\u00a0voluntary\u00a0sustainable investment guidelines.\u00a0<\/p>\n
Released Thursday, the\u00a066-page\u00a0draft methodology\u00a0report\u00a0lays out\u00a0the\u00a0objectives, principles,\u00a0scope\u00a0and overarching \u201cambition\u201d of the\u00a0science-based\u00a0taxonomy,\u00a0which is\u00a0to help Canada attract capital so it can meet its legislated target of achieving net zero emissions by 2050, in line with the Paris Agreement.<\/p>\n
It also identifies six priority sectors where it sees the greatest impact in decarbonizing Canada\u2019s economy and positioning it for long-term economic growth in a net-zero world: electricity, buildings, transportation, mining, manufacturing, and agriculture and forestry. Technical screening criteria will be developed for these sectors over the next two years.<\/p>\n
The\u00a0development of the\u00a0voluntary sustainable finance guidelines<\/a>\u00a0is being led by the Canadian\u00a0Climate\u00a0Institute,\u00a0Business Future\u00a0Pathways\u00a0as well as a\u00a0dedicated\u00a0taxonomy council and advisory groups.\u00a0\u00a0<\/p>\n In a backgrounder, the council\u00a0states that\u00a0in order for\u00a0the taxonomy\u00a0to be credible, effective and attract the capital needed to achieve\u00a0the country\u2019s net-zero-by-2050\u00a0target,\u00a0\u201cCanada\u2019s taxonomy must align with climate science and reflect the realities of the country\u2019s\u00a0emissions\u2011intensive economy.\u201d\u00a0<\/p>\n In that\u00a0vein, the draft\u00a0methodology\u00a0report\u00a0proposes\u00a0three\u00a0categories\u00a0for assessing sustainable investments\u00a0\u2014\u00a0\u201cgreen\u201d\u00a0and\u00a0\u201ctransition\u201d\u00a0categories, which\u00a0were previously included in a\u00a0Taxonomy Roadmap Report<\/a> developed by the government-funded\u00a0Sustainable Finance Action Council, along with a new \u201cabatement\u201d category.\u00a0\u00a0<\/p>\n As set out in the draft framework, the new\u00a0abatement\u00a0label will \u201capply to select investments that achieve substantial, near-term emissions reductions in emissions-intensive activities that are highly likely to experience demand decline in Paris-aligned pathways.\u201d This could include\u00a0\u201cmajor decarbonization investments\u201d in the upstream production, refining and distribution of oil and gas, it notes.\u00a0<\/p>\n Unlike the green and transition categories, which will see the introduction of sector-specific technical screening criteria over the next two years, the report says further research and engagement will be done to determine appropriate guardrails for the abatement category in 2027. Technical screening criteria for measures in the novel category are expected in a later phase.<\/p>\n \u201cBy proposing the abatement category, the Council is asking: is it possible to significantly drive down emissions in the oil and gas sector in the short and medium term without locking Canada into higher emissions in the long-term?\u201d\u00a0Marlene Puffer, chair of the Canadian Taxonomy and Transition Planning Council, said\u00a0in\u00a0a\u00a0backgrounder\u00a0accompanying\u00a0the draft report. \u00a0\u00a0<\/p>\n \u201cGiven that oil and gas production and refinement\u00a0represents\u00a0nearly one-third of Canada\u2019s total greenhouse gas emissions, it is incumbent on us to ask this question.\u201d\u00a0<\/p>\n Puffer added that\u00a0it\u2019s\u00a0an \u201copen question\u201d as to whether the abatement category will\u00a0ultimately be\u00a0included in the taxonomy\u00a0and that the council is \u201cvery interested in people\u2019s feedback on this topic.\u201d\u00a0\u00a0<\/p>\n Prior to the\u00a0publication\u00a0of the council\u2019s report, a coalition of environmental organizations, investors and sustainable finance advocates called Credible Taxonomy Canada released their own report<\/a>, warning that\u00a0any inclusion of oil and gas-related activities in the taxonomy\u00a0would \u201cinvite manipulation and greenwashing from industry in practice,\u201d \u201cbe unworkable in practice\u201d and \u201cbe misguided.\u201d\u00a0\u00a0<\/p>\n \u201cBoth the production and combustion of oil and gas must decline to ensure a\u00a0livable\u00a0future,\u201d that report, released July 2,\u00a0states. \u201cEndorsing investments in reducing the emissions marginally from production without associated production declines creates carbon lock-in and further sunk costs into oil and gas infrastructure, slowing the required transition. This risk applies to all types of oil and gas, including LNG.\u201d\u00a0<\/p>\n The Credible Taxonomy Canada\u00a0report\u00a0also\u00a0argues that Canada should follow in the steps of Australia, which has developed a \u201cfossil fuel free\u201d taxonomy. And it contrasts that guidebook with the European\u00a0Union\u2019s taxonomy for sustainable activities,\u00a0which, due to its inclusion of gas,\u00a0has\u00a0triggered multiple\u00a0legal battles<\/a>.\u00a0\u00a0<\/p>\n The federal government has said that Canada needs\u00a0to scale up climate investment rapidly to\u00a0make up for an estimated $115-billion annual shortfall in spending required for the country to achieve net zero by 2050.\u00a0<\/p>\n The draft\u00a0methodology\u00a0report is open for public comment until Aug. 13, with work on sector-specific criteria to follow.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"A draft framework that will serve as the foundation of Canada\u2019s\u00a0sustainable finance taxonomy is now \u00a0\u2014\u00a0and\u00a0it\u2019s\u00a0raising\u00a0a\u00a0critical question about…\n","protected":false},"author":2,"featured_media":128195,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[17,2754,42573,234,1880,4679,42753,40150,1884],"class_list":["post-128194","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-canada","tag-climate-change","tag-climate-risk","tag-environment","tag-esg","tag-greenhouse-gas-emissions","tag-greenwashing","tag-sustainable-finance","tag-sustainable-finance-taxonomy"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/128194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=128194"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/128194\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/128195"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=128194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=128194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=128194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}