Finance Minister Chrystia Freeland released the Liberal government’s green economy investment guidelines and notably excluded any pledge to support nuclear power.
Additionally, the Liberals weren’t clear whether further liquified natural gas projects would be included in the so-called “green taxonomy.”
Proponents of nuclear energy, which include the International Atomic Energy Agency, argue that it is a low-carbon power source and that excluding it could set the world back from achieving net-zero emission targets.
Similarly, the natural gas industry, often seen as a ‘bridge fuel’ in the transition to renewable energy, finds itself on the outside, raising concerns about the impact on the sector and the overall energy mix of Canada.
The taxonomy’s classification system, which aims to direct funds towards green and transition activities, may face challenges in its implementation.
“The development of that Canadian taxonomy will provide guidelines to identify green and transition investments. Green investments are low or zero emitting. Transition investments reduce emissions in high emitting sectors. I think you all know why we’re doing this. We’re doing it because we know markets want certainty,” said Freeland at the UN Principles for Responsible Investment conference on Oct. 9.
While it provides a clear path for investments in hydrogen, solar, and wind energy, the exclusion of nuclear and the uncertainty over future natural gas projects could limit the scope of transition activities, particularly in industries where emissions are virtually impossible to reduce.
Moreover, the requirement for large federally incorporated companies to disclose climate-related financial risks while aligning with global regulatory trends, adds another layer of regulation to an already overburdened Canadian energy landscape.
In contrast, Conservative leader Pierre Poilievre pledged to further support the development of LNG projects including those led by First Nations communities.
The governance of the taxonomy is set to be overseen by a third-party organization, with sector-specific guidelines expected within a year to ensure compliance.
Freeland also pledged alignment with provincial regulators in the pursuit of the guidelines.
“The federal government is going to work with provinces and territories to support efforts by them to require climate disclosures of private businesses that are incorporated at the provincial and territorial level. I’d like to take the opportunity today to encourage provinces and territories to join with us in this important step,” said Freeland.
