Op-ed: Ottawa’s anti-greenwashing bill will cripple cleantech innovation

Author: Kevin Krausert

As seen in the Globe and Mail on 21 June 2024, 09:30AM (MST)

Kevin Krausert is the chief executive and co-founder of Avatar Innovations Inc., Canada’s first energy transition corporate venture studio.

Just when you think Canada is about to take a major step forward in emissions-reduction technology and investment, we shoot ourselves in the foot at the finish line.

For years, Canadian investors in energy transition technologies have been calling for a stable regulatory environment so that they can reach final investment decisions on billions of dollars’ worth of projects. Once achieved, these investments hold the potential to create generational wealth for our country, contribute to Canada’s climate ambitions, and drive a new green technology innovation engine that we can export to the world.

As other jurisdictions race to develop clean technology, our window of opportunity is narrowing. Sadly, we just took another step backward.

Bill C-59, which received royal assent from the Governor-General on Thursday, is an omnibus bill that had some dramatic, last-minute changes inserted only three weeks ago. Notably, this bill includes fines of up to $10-million or up to 3 per cent of a company’s annual worldwide gross revenue for anyone making a statement on mitigating the effects of climate change not justified by an undefined “internationally recognized methodology.” This could amount to billions worth of lost investment.

Investors, consumers and government are rightly entitled to accurate information to ensure that their decisions are guided by proper science and sound accounting. But we have world-class financial, environmental and social disclosure systems, regulations and institutions already in place. These mechanisms have been so successful that 85 per cent of Canadian publicly traded companies now have sustainability reports where they track and measure their risks and commitments to addressing climate change according to clearly defined, existing and rigorous standards.

Besides holding companies to account, these systems also provide one of the few mechanisms to incentivize corporations to invest in emission-reduction technologies, as they can increase consumer confidence in their choices and make them more attractive to investors by making it known that they are contributing to a lower-carbon future.

That’s where the rub comes in. By inserting a new, undefined and legally ambiguous regulation on reporting the successes that corporations are making toward climate change, this new Bill C-59 has thrown a wet blanket onto corporations’ ability to publicize the good work they are doing. In turn, this affects companies’ ability to contribute or invest in the future we all seek.

As an investor in Canada’s decarbonization technology ecosystem, I believe the role of industrial commercial adopters in reaching our net-zero commitments is of profound importance.

The reality is that a net-zero 2050 won’t happen without major infrastructure projects getting built. That won’t happen without the industrial might of our corporate sector, which requires the ability to communicate their climate change goals and accomplishments to do it.

Take, for example, a major solar energy developer that’s trying to build one of the many proposed solar projects across our country. Large investments in this space have dramatically lowered the technology cost curve of solar, making it one of the best electricity choices.

To build this new technology, companies are required to attract capital from international investors who have other jurisdictions they can invest in. They will need to apply for many permits to gain regional approval. They need to communicate the emissions-reduction impact of this project to every stakeholder in this process. We’ve just removed their ability to communicate that – or at least created enough legal uncertainty that they believe they are potentially liable for a major fine.

That solar project won’t now get the investor confidence to build it nor the community support to approve it. The sad result is the country’s emissions stay the same. This is how Bill C-59 hinders progress towards meeting Canada’s climate goals.

As a proud Canadian, I deeply value the role of thoughtful, respectful and intelligent debate. Canada works best when we embrace our principles of free speech and open discourse, allowing us to challenge and refine our policies for the greater good. Bill C-59 amounts to a government-imposed gag order that stands as an obstacle to that spirit of openness and progress. It is yet another example of red tape that is stifling innovation and investment in our country.

While we might have stumbled near the finish line of the race toward building a vibrant, net-zero technology future, we have not lost the race quite yet. Immediate legal clarification needs to be offered by the government to clearly define the loosely defined “internationally recognized” standards involved in this bill so that investors, consumers and government can get back to winning this race. Then, we can unlock the power of Canada’s world-class innovators, entrepreneurs and investors to build the future we all want.