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Kevin Krausert writes that Ottawa's Bill C-59 will hit businesses, including solar developers, hard. Jeff McIntosh/The Canadian Press
Kevin Krausert is CEO and co-founder of Avatar Innovations, Canada's first energy transition enterprise venture studio.
Just when it seemed Canada was on the verge of taking a big step forward with emissions-reducing technology and investment, it shot itself in the foot at the finish line.
Canadian investors in energy transition technologies have long called for a stable regulatory environment so they can make final investment decisions on multi-billion-dollar projects that could bring generational wealth to our country, help Canada address its climate challenges, and fuel new green technology innovations that can be exported around the world.
As other jurisdictions race to develop clean technology, our opportunities are narrowing. Unfortunately, we have taken another step back.
Bill C-59, which received Royal Assent from the Governor General on Thursday, is an omnibus bill that underwent dramatic last-minute changes just three weeks ago. Notably, the bill includes a provision that would impose fines of up to $10 million on anyone who makes statements about mitigating the effects of climate change that are not justified by an undefined “internationally recognized methodology.”
Investors, consumers and governments have a right to accurate information to make decisions based on sound science and sound accounting. But we already have world-class financial, environmental and social disclosure systems, regulations and institutions. These mechanisms have been so successful that 85% of publicly traded Canadian companies now produce sustainability reports to track and measure their risks and commitments to addressing climate change, according to existing, clearly defined, rigorous standards.
In addition to holding companies accountable, these systems are one of the few mechanisms to encourage companies to invest in emissions-reducing technologies: signaling that a company is contributing to a low-carbon future increases consumer confidence in their choices and makes the company more attractive to investors.
And therein lies the problem: by introducing new, poorly defined and legally defined regulations around reporting on corporate performance on climate change, this new Bill C-59 puts a strain on companies’ ability to tout the good work they are doing, which in turn impacts their ability to contribute to and invest in the future we all want.
As an investor in Canada’s decarbonization technology ecosystem, I believe the role of industrial commercial adopters is critical in achieving our net-zero commitments.
The reality is that net zero in 2050 will not happen without the construction of large infrastructure projects, and it will not happen without the industrial capacity of the corporate sector, which in turn requires the ability to communicate climate change goals and outcomes.
For example, consider a major solar power developer looking to build one of the many solar power projects proposed in the country. Massive investments in the sector have dramatically lowered the technology cost curve for solar power, making it one of the best electricity options.
To develop this new technology, companies need to raise capital from international investors who have other jurisdictions where they can invest. They need to apply for lots of permits to get local approval. They need to communicate the emissions reduction benefits of this project to all the stakeholders in this process. We've taken away that ability to communicate — or, at the very least, created enough legal uncertainty for them to believe they could be hit with large fines.
This solar project will not gain investor confidence, will not be built, will not gain community support, and will not be approved. The sad result is that the country's emissions will remain the same. This is why Bill C-59 is impeding 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 the principles of free speech and open debate, and are able to challenge and improve policies for the benefit of our entire people. Bill C-59 amounts to a government-imposed gag order and is an obstacle to a spirit of openness and progress. It is another example of bureaucracy that stifles innovation and investment in our country.
We may have stumbled near the finish line in the race to build a vibrant net-zero tech future, but the race is not lost yet. The government needs immediate legal clarity to clearly define the vaguely defined “internationally recognized” standards contained in this bill so that investors, consumers and governments can win this race again, unleashing the power of Canada's world-class innovators, entrepreneurs and investors to build the future we all want.
