Evidence of meeting #107 for Environment and Sustainable Development in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was taxonomy.
A recording is available from Parliament.
Liberal
Lloyd Longfield Liberal Guelph, ON
I feel compelled to ask you to finish your sentence, because you haven't had a chance to finish some of them today. Are you finished with that sentence?
Member, Canada’s Expert Panel on Sustainable Finance, As an Individual
If the Government of Canada can issue credible green bonds, there is literature and research out there that say you can save on the cost of capital. They estimate, if you have a credible issuance, that it's somewhere between one and nine basis points. That means for a $10-billion issuance, you save, on average, about $4.5 million a year.
It comes back to investors, but it has to be credible. It is not credible without a taxonomy.
Liberal
Lloyd Longfield Liberal Guelph, ON
Great. Thank you for the work you've done on the taxonomy.
I remember having a few conversations with Kathy Bardswick, who was chairing the action council. That was an area we really needed to get across the line. There were many complications internationally, and through business and the different levels of government in Canada.
Ms. Zvan, can you speak to the remaining challenges? I'm thinking of Alberta politically moving away from clean technology, and what that might do to investor confidence or what it might do to the taxonomy. Is the taxonomy pretty well set now?
Member, Canada’s Expert Panel on Sustainable Finance, As an Individual
Globally, about 40 taxonomies are now done or are being developed. The question is whether Canada does one and follows the pattern. These are recommendations that come from the World Bank, the OECD and the Coalition of Finance Ministers for Climate Action. This is not new. Alberta can do whatever. It's about whether Canada puts this in place. That's the question.
Liberal
Lloyd Longfield Liberal Guelph, ON
Mr. Chisholm, to see your professionalism and the membership list.... This was the who's who in financial markets. These are the people who, like you, look objectively at this and say that capital will find a place. If you don't send the right signals, open the right doors and make sure things are being followed through on, capital will just pass you by and go into another region.
Member, Canada’s Expert Panel on Sustainable Finance, As an Individual
I think that is a very strong point, and we're already seeing it to a degree. We're seeing countries like China, ironically, much maligned for their coal use, dominating solar, wind, EVs, batteries, battery materials and electric transmission.
We have an outsized opportunity in Canada, for a lot of reasons, to participate in some of the change and take advantage of it, and ultimately end up with a bigger slice of the pie than what we have right now economically around the world. However, we have to be early, we have to be thoughtful and we have to be aggressive.
I see in my clean-tech work that already some young companies that have potential are moving to the U.S. for various reasons. We run big risks here.
Liberal
Lloyd Longfield Liberal Guelph, ON
It's not fair to ask witnesses to weigh in on the political discussions of the day. I think capital is one of those fortunate—or unfortunate—areas where politics almost doesn't matter; it's the markets that decide. China is an example showing that even a regime that's not democratic and that doesn't respect human rights can still attract capital.
Could you comment on the importance, though, of having a stable political climate where we are working together on climate change versus one where we're all going to axe the tax and walk away from any financial incentives?
Member, Canada’s Expert Panel on Sustainable Finance, As an Individual
There's no question that in a democracy you'll always have differences of opinion, and that's a good thing, and ebbs and flows in political leadership will occur. Stability can be useful, but democracy has its own aspects to it.
The kind of stability that's essential is long-term planning around what expectations are going to be, around market functions and around rule bases. As we said at the expert panel, as an example, we thought having a price on carbon was important. It is important that there is a price on carbon that one can rely on for some period of time. However—
Member, Canada’s Expert Panel on Sustainable Finance, As an Individual
—how you do it is up for debate, and a lot of people can have different opinions.
Liberal
Liberal
The Chair Liberal Francis Scarpaleggia
We'll have to go to Madam Pauzé now. I know this is a passionate discussion.
Liberal
Bloc
Monique Pauzé Bloc Repentigny, QC
Okay, thank you.
I am going to talk to you about what is happening south of our border in the United States.
Last month, for example, the United States Senate budget committee and House of Representatives oversight committee released a report that, broadly speaking, said that the companies' massive public campaigns depict carbon capture and storage as a viable, available solution to address the rise in greenhouse gas emissions. However, the companies admit internally that they do not plan to deploy the technology needed to solve the global warming crisis. The report also says that the industry's real objective is to extend the use of fossil fuels unabated and perhaps indefinitely.
I would also like to tell you that on May 1, Capital Power Corporation in the United States announced that it was pulling the plug on its carbon capture and storage project, the value of which had been pegged at $2.4 billion. What justification did it give? It said the project was not economically feasible. In other words, the project would not generate profits for the investors. This is also absolutely not a good thing for achieving our targets under the Paris Accord.
So why is the financial sector supporting the proposal to include carbon capture and storage in the next taxonomy?
Member, Canada’s Expert Panel on Sustainable Finance, As an Individual
CCUS is not just for oil and gas; it's also for heavy industry. We said that it should be explored and that people with technical expertise should put specifications around it. Companies will decide if it's economically viable, but as investors have said, for many industries—not just oil and gas—CCUS is a reality for meeting their net-zero commitments.
On the point about companies and their net-zero transitions, I'll give you a good case in point of what we're starting to see. Woodside, which is a big LNG producer in Australia, recently had their climate plan turned down by investors by 58%. That means investors told the company, “We don't believe in your climate plan. It's not aggressive enough. Go back and redo it.” Typically, that is the first step, and if investors don't see a change, they start voting off the directors. That is the power of investors. However, how do we know whether it's credible or not? It's because there's disclosure and there's a taxonomy that helps form the analysis of what is credible.