While Canadians were focussing on Canada-U.S. trade relations over the past week or so, a very interesting consultation period was winding up in Ottawa on something called the “green taxonomy.” The purpose of this policy exercise is to divide different economic activities into three categories – green, transition or abatement. Of course, things like oil and gas investment will fall into the abatement category, the least green of all. Supposedly, this will provide a guide to investors as to where they may want to direct their capital if, for example, they want to bias it toward so-called green businesses or activities.
Anyone who has read Prime Minister Mark Carney’s book Value(s) will recognize these concepts. In that book, Carney explains why he believes it is essential to control capital flows to industries such as oil and gas to supposedly protect the climate. A taxonomy that classifies industries or sectors as a means of encouraging or discouraging flows of capital in particular directions – so-called climate aligned finance – is something Carney has been promoting for some time.
This whole consultation process proceeded very much under the radar, which is what the government wanted. There are always consultations of one kind of another taking place within government, but this current federal government in particular doesn’t seem to view consultations as a means of actually learning something. Instead, this government seems to view consultation as a necessary evil they must endure to pretend they are consulting concerned parties whose advice they will ignore and do what they wanted to do in the first place.
If this green taxonomy should take on real meaning in the Canadian investment environment, it would likely have serious negative impacts on many of Canada’s key industries such as oil and gas, as well as other resource sectors such as mining. It should also be mentioned that judging exactly which activities qualify as green, transition or abatement involves quite a bit of subjectivity, so that political motivations could well overcome any more factual considerations in assigning these categories.
It’s interesting that the federal Liberals say they support pipelines, more oil and gas production and Canada emerging as a global energy superpower, while at the same time looking at things like the green taxonomy that flies directly in the face of other claims the government is making. It makes you wonder what their real objectives are and what they truly believe in. They can’t have it both ways.
The government is stating at this time that adhering to the green taxonomy will be voluntary. Governments regularly introduce new policies in this way to downplay concerns about them. For instance, the United Nations Declaration on the Rights of Indigenous People (UNDRIP) was originally announced as voluntary. Then a number of jurisdictions enshrined these principles into law, such as B.C. did with its Declaration on the Rights of Indigenous People Act (DRIPA). And now these provisions are mandatory and private property rights are being threatened in B.C. and across Canada. Always beware when any government says something will be voluntary, as far too many voluntary things become mandatory very quickly.
In the early days of enthusiasm around so-called alternate energy sources, electric vehicles, incentives to direct investment to climate-friendly businesses and industries and achieving climate goals found in the Paris Accord and Net Zero by 2050 initiatives, many countries jumped on the climate bandwagon and incorporated these measures into their domestic policies and practices. After all, who wouldn’t want to save the planet! However, after years of experiencing the very disappointing impacts of these policies, how immensely expensive they were and witnessing how they destroyed economies while doing little or nothing for the environment, most nations have moved away from this approach toward more proven solutions to economic growth and prosperity.
Similar policies to the green taxonomy exist in the EU, the place that Carney seems most inclined to ally with Canada. Yet the EU is deindustrializing as a result of its “climate” policies, are having major societal issues because of chaotic mass immigration and have had sluggish economies for decades. The EU is the last place Canada should want to emulate.
There were also investment funds set up years ago intended to direct capital toward green investments instead of more conventional industries. They all lost money and turned out to be abject failures. Consequently, many of the international entities Carney helped to establish, such as the Global Financial Alliance for Net Zero (GFANZ), have fallen apart in the last couple of years as it has become apparent their goals were not feasible and were often economically harmful. Yet exercises such as the recent establishment of the green taxonomy in Canada indicate that Carney is still interested in directing investment away from fossil fuels and other resources, while still claiming he supports more pipelines and developing Canada into an energy superpower.
Needless to say, this green taxonomy exercise is very worrisome for many reasons. The consultation period on it is now closed, and very few Canadians are aware it even happened at all. Any further development of this policy deserves close examination as its implications could be very dire indeed for Canada’s future economic growth.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
