1a. The first phase of taxonomy development will focus on climate mitigation. In subsequent phases of the Canadian taxonomy, which objectives should be prioritized? Please select your top choices.

• Protection of biodiversity and healthy ecosystems
• Water and marine resource conservation

2a. Do you agree or disagree with these proposed principles as the foundation for the taxonomy?

Disagree

2b. Please share the reason for your answer in the space provided

The ‘Taxonomy Objectives’ definition should be sharpened to make reference to explicitly mention alignment with science-based climate goals. This alignment is rightly included under ‘ambition’ as well, but it should be clear that our objective is not mere marginal ‘climate mitigation’, but rather a credible, systemic transition pathway. Here is an proposed amendment to the wording:

“Focuses on labelling climate mitigation activities in line with the required transition for achieving Canada’s Paris Agreement obligations, as is legislated for achieving net zero emissions by 2050 in the Canadian Net-Zero Emissions Accountability Act.”

We support the proposed principles, however we see no clear justification for why ‘regionally specific’ changes to eligible activities or technical screening criteria would be required. While some regionally specific challenges certainly exist in the deployment in green or transition activities, these do not fundamentally alter the definitions of activities which would align with science-based transition pathways. In the context of climate mitigation, it is inappropriate to distort a taxonomy labelling system around regional considerations which can be complex, politically driven, or highly subjective. Including this as a core principle opens the door to political interference and inappropriate distortions in the identification of eligible activities, and in the development of credible technical screening criteria. The menu of available ‘green’ or ‘transition’ label options should provide a wide enough range of science-aligned, regionally relevant tools, that solutions can be implemented without the need for customization of activities or screening criteria. The local challenges faced in implementing a specific activity do not ultimately alter whether or not an activity meets science-based guardrails for science-based alignment. Take for example, the application of ‘green’ labels to activities for decarbonizing electricity systems in remote northern communities, such as adding new solar, wind, or battery capacity into a remote grid system currently powered by diesel combustion. While studies show that these technologies can cost effectively displace significant quantities of diesel, eliminating diesel dependency entirely (using today’s technology) may be cost prohibitive in some circumstances. The appropriate labelling and financing of clean energy activity investments is not, however, fundamentally altered by this reality. Clean energy investments can be discretely financed and deployed within the electricity system and receive a ‘green’ label, while any required diesel generation elements remain unlabelled.

While we do not think ‘regionally specific’ should be included in the list of core principles in the design and implementation of this taxonomy, this does not mean that regionally specific barriers should be ignored. Identifying these barriers and developing appropriate policy tools to overcome these challenges is a critical area for governments, communities and finance stakeholders that should continue outside the taxonomy system. However, those considerations are outside the remit of a system designed to provide a standardized, usable, interoperable, and credible labelling system.

Stringer, T., & Joanis, M. (2023). Decarbonizing Canada's remote microgrids. Energy, 264, 126287. https://doi.org/10.1016/j.energy.2022.126287

Hermann, V. (2017). The Geographies of Energy Poverty: Where North and South Intersect. The Arctic Institute. https://www.thearcticinstitute.org/geographies-energy-poverty-north-south-intersect/

Gharali, K., Sarshar, S., Rafiei, B., Bahreinian, S., Fraser, R., Dusseault, M.B., Nathwani, J., Soltani, M. (2026). Renewable energy impacts on Canada's remote areas: A review study. Energy Strategy Reviews, 63, https://doi.org/10.1016/j.esr.2025.102006.

3. Please rate each of the principles below on a scale from “very important” to “not at all important.”

Credible

Very important

Usable

Very important

Interoperable

Important

Dynamic

Important

Regionally Specific

Not at all important

Prioritized

Important

4a. Do you agree or disagree with the proposed partial alignment approach, which would require entities to disclose the extent to which DNSH/MSS criteria are or are not met rather than requiring full alignment with all DNSH/MSS criteria?

Disagree

4b. Please explain your answer in the space below

A voluntary system for partial alignment disclosures opens the door to allowing projects which fail to achieve the basic guardrails laid out in the DNSH/MSS framework. The definitions discussed in the Methodology Report should be viewed as essential minimum safeguards, which are not optional.

For this system to function with practical and operational clarity, a DNSH / MSS framework is best applied in the form of a pre-screen. Essentially, the work required to ensure an activity is eligible and meets basic criteria should happen well before it is considered for a label under the Taxonomy process. This way, clear and transparent criteria published in advance, in the Taxonomy framework, will shape projects in their design phases, rather than attempting to close the barn door after the horse has left the stable. The long-term taxonomy steward will have limited capacity to adjudicate individual activity labels in detail, and will struggle to parse the credibility, complexity and subjectivity of partial alignment disclosures. It will not be workable to continually engage with entities after the fact to ensure improvements or implementation. This binary screen approach is broadly comparable to the EU Taxonomy process.

5a. Do you agree or disagree with the proposed scope of objectives to be covered under the DNSH and MSS frameworks?

Agree

5b. Please explain your answer in the space below

These are important objectives for consideration under Canada’s DNSH framework and MSS frameworks. We support these listed objectives using a binary pre-screen approach to their application.

6a. Do you agree or disagree with the proposed approach to grounding the DNSH/MSS frameworks in Canadian legislation and going beyond existing laws and standards where necessary?

Agree

6b. Please explain your answer in the space below

While these frameworks should be grounded in existing legislation, the objectives and application should go beyond these laws and standards. Canada’s current regulatory framework is incomplete in several key areas (i.e. implementation of UNDRIP, the implementation protection of biodiversity and endangered species, or measures to achieve science-based climate objectives) and are not in line with international best practices required for the credibility and interoperability of the Taxonomy system. DNSH/MSS criteria should supersede existing laws and standards.

7. In which areas, if any, is it necessary to go beyond existing laws and standards for the DNSH/MSS framework?

While Canada has endorsed the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), which lays out minimum global standards for the survival, dignity, and well-being of Indigenous peoples, it has yet to harmonize Canadian laws with these standards. The process of harmonizing UNDRIP into federal and provincial laws is complex, piecemeal and ongoing. The MSS framework should include these minimum standards to ensure consistency and prevent harm.

Similarly, while Canada is a signatory to other international minimum standards such as the Paris Agreement treaty on climate change and The Kunming-Montreal Global Biodiversity Framework, implementation in Canadian law remains incomplete and inadequate for achieving minimum efforts to minimize harm to climate and ecosystems. Significant, unacceptable loopholes are preexisting, or have been recently created by both federal and provincial governments (i.e. Federal Bill C-5 – the Building Canada Act, Ontario’s Bill-5 – Protect Ontario by Unleashing our Economy Act) which undermine minimum safeguards for endangered species protection, biodiversity, climate, and Indigenous Rights. Going beyond existing laws to achieve minimum safeguards is required here to prevent significant harm and to future-proof the taxonomy system.

8a. Do you agree or disagree that different DNSH/MSS standards should apply to projects or entities of different sizes? E.g. more comprehensive disclosures required for larger projects and/or entities, with more streamlined disclosures for smaller projects and/or entities?

Agree

8b. Please explain your answer in the space below

We support differentiating disclosure requirements with respect to project size, within reason, as this links directly to the potential for harm within the minimum standards and the capacity of entities to report on them. This should not lead to lower standards, however. Rather this differentiation is a recognition that smaller scale entities may require additional support or flexibility for achieving these standards.

9. Are there any gaps in the proposed DNSH/MSS framework that could result in unintended environmental or social harms?

As noted before, allowing partial compliance with minimum standards opens the door to distortions and significant harm. The DNSH/MSS framework should be applied as a binary up-front screen on activities.

10. How should the taxonomy operationalize the principles of the UN Declaration on the Rights of Indigenous Peoples and, in particular, the principle of Free, Prior, and Informed Consent, in the MSS framework?

The taxonomy should operationalize UNDRIP principles, with a focus on the core principle of ensuring Free, Prior, and Informed Consent (FPIC) and the right to self-determination in the MSS framework by ensuring entities:

1. Clearly identify all Indigenous rights and title holders impacted by the activity
2. Disclose a record of providing relevant information up front, well in advance to these entities in appropriate formats based on each community’s unique system of government with accommodation of all information requests, and where relevant: financial support provided for rights holders to independently assess and verify relevant information required for decision-making.
3. Disclose that all identified rights holders have provided explicit free/voluntary consent where required under UNDRIP, in advance of final investment decisions, or commencement of project activities. Any dissent or rejection should also be fully disclosed.
4. Provide a factual record of all required Crown/Indigenous consultations and FPIC where required by law (the crown duty to consult cannot be discharged by project proponents, investors or corporate entities).

Operationalizing this framework itself requires up front consultation with Indigenous rights and title holders, and inclusion of Indigenous rights experts in both the design and implementation stages.

11. Is there any other feedback you would like to provide on the proposed MSS/DNSH framework?

n/a

12a. Do you agree or disagree with this approach?

Neutral

12b. Please explain your answer in the space below

We broadly agree with the ‘green definition’ used in the classification framework. However, the criteria for alignment with the taxonomy process needs further strengthening to ensure that activities within all taxonomy categories are systemically aligned with science-based climate change transition pathways. The definitions provided in the Taxonomy Foundations section for Ambition: ‘Canada’s legislated net zero target’ and ‘anchored in the Paris Agreement’ should be more clearly referenced within the classification framework as well. While the Methodology Report Draft frequently and correctly references the importance of science-alignment for this system, neither the ‘green’ or ‘transition’ category definitions directly reference a requirement for activities which align systemically with a science-based climate alignment pathway, beyond the expectations of demand increase or demand decline.

An explicit science-aligned requirement creates an important linkage to the relevant climate science on which to gauge eligibility at the technical level, including adherence to carbon budgets, assessed project/activity timelines, and the requirement to remove fossil fuel combustion from energy systems as quickly as possible.

We are pleased to see it clearly stated in section 3.1 that ‘Not all economic activities can make a substantial contribution to mitigating climate change…’ and that ‘These activities would be screened out of the framework…’ as this acknowledgement is an essential element in ensuring a credible taxonomy system. This taxonomy cannot and should not attempt to label all potential mitigation activities. Nor does exclusion from this taxonomy prevent those activities from occurring or receiving finance.

We are calling for fossil fuel linked activities to be explicitly excluded from the taxonomy labelling categories, as they do not align with the stated ambition or core principles in the taxonomy design. Fossil fuel production and combustion are the primary cause of the climate crisis, and labelling activities linked to fossil fuel production and combustion undermines the ‘Taxonomy Foundations’ outlined on page 6 of the methodology report. (see further discussion in responses to questions 13b, 14b, and 15b).

We are also concerned about the wording of the test outlined in Box 5. “Determining whether an activity has a zero to near-zero emissions substitute”. While the spirit of this assessment criteria is valuable for ensuring that taxonomy labels are applied only to activities in line with science-based transition pathways, and not to activities that compete with those activities, the addition of an assessment of whether a substitute can deliver ‘a functionally equivalent economic output’ is not an appropriate wording. The perceived ‘economic output’ of a given activity could be interpreted to imply a dollar value equivalent contribution to the Canadian economy, which is irrelevant for how it would be categorized for systemic alignment with the objectives of this taxonomy system. An energy system which has completed a required transition will be dramatically more energy (and economically) efficient and will deliver comparable (or improved) ‘utility’ or ‘use value’. We recommend amending a clear definition to avoid misinterpretation.

13a. Do you agree or disagree with this approach?

Agree

13b. Please explain your answer in the space below

Shift supports the use of a transition label category. While this is a useful and appropriate way to define important ‘transition’ category activities, the definition should be further strengthened.

A science-aligned goal requires systemic, long-term convergence of all economic activities with net-zero emissions pathways by 2050. Entities which have high scope 1 emissions today have only one of two logical pathways to follow under science-aligned transition pathways:

Entities in sectors which have a credible alignment pathway, pursuing activities which have a credible long-term systemic pathway for aligning with the green definition, must develop, disclose, and continually update credible climate transition plans, while pursuing a credible decarbonization pathway. As proposed, the taxonomy should label these systemic decarbonization activities as ‘transition’, guiding capital flows appropriately into systemic decarbonization.

Activities which do not have a credible systemic pathway for long-term climate alignment must instead achieve emissions reduction and convergence through a rapid, managed, and systemic decline. While the proposed ‘transition’ category in the framework is correct in explicitly ruling out activities related to oil and gas production, this exclusion should be applied to all activities under the taxonomy based on the same logic.

Including a label for capital allocations to marginal emissions reductions for fossil fuel linked activities is not credible or workable for inclusion in either a transition or an proposed ‘abatement’ category. While fossil fuel linked activities will certainly continue to exist on a declining basis through the transition period, inclusion within this labelling system would lead to perverse outcomes: delaying transition and extending the lifespan of fossil fuel activities (carbon lock-in), diverting scarce capital away from actual green and transition assets (opportunity cost), deepening market exposure to transition risk (stranded assets), and misleading market actors on the realities of a science-based transition pathway (greenwashing).

Neither the Taxonomy Council, nor the forthcoming long-term Taxonomy steward can put in place guardrails which could credibly minimize these perverse outcomes (for more on guardrails, see 15b).

United Nations High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities. (2022). Integrity matters: net zero commitments by businesses, financial institutions, cities and regions. United Nations. https://www.un.org/en/climatechange/high-level-expert-group

Stockholm Environment Institute, International Institute for Sustainable Development, Climate Analytics, & United Nations Environment Programme. (2025). The Production Gap Report 2025: 10 years after the Paris Agreement, governments plan to produce more than double the volume of fossil fuels in 2030 than would be consistent with limiting global warming to 1.5°C. Production Gap. https://productiongap.org/wp-content/uploads/2025/09/PGR2025_full_web.pdf

Muttitt, G., & Stockman, L. (2016). The Sky’s Limit: Why the Paris climate goals require a managed decline of fossil fuel production. Oil Change International. https://oilchange.org/publications/the-skys-limit-report/

14a. Do you agree or disagree that the proposed guardrails for the transition category (both for the whole-of-activity and measures pathways) are sufficient to protect the science-based credibility of the category and reduce the risk of carbon lock-in, while supporting usability?

Neutral

14b. Please explain your answer in the space below

Shift recommends the inclusion of entity-level guardrails for both the whole-of-activity and the transition measures pathways. Guardrails are required for both categories to ensure activities do not slow the transition or prolong the use of fossil fuels, including liquified natural gas (LNG).

‘Fuel switching’ is a problematic definition here for inclusion as a guardrail for the transition category, as it could wrongly be applied to coal-to-gas switching (which is not a credible transition aligned activity) or other non-aligned fuel sources. The term ‘electrification’ is appropriate, and captures credible transition aligned pathways in most cases, with few exceptions.

15a. Do you agree or disagree that the taxonomy should include a third “abatement” category, as proposed, that covers demand-decline activities?

Strongly disagree (i.e., disagree on fundamentals)

15b. Please explain your answer in the space below

The Taxonomy Council should not proceed with creating an ‘Abatement Measures’ category which applies to marginal emissions reduction activities for fossil fuel production or consumption. Providing a marginal abatement label to industries which cannot credibly transition creates a significant risk of carbon lock-in and emissions growth, diverts scarce capital away from genuine ‘green’ and ‘transition’ assets, increases stranded asset risk, and misleads taxonomy users on the nature of credible transition alignment. Given the nature of the taxonomy system and the capacity constraints of its long-term steward, it is clear that these perverse outcomes cannot be mitigated through the application of strong guardrails. A taxonomy system steward cannot credibly assess stranded assets, carbon lock-in, or the technical feasibility of proposed abatement projects on a case-by-case basis. It cannot practically ring-fence labelled finance only to abatement activities. It is functionally unable to enforce activity timelines, abatement performance, or lifecycle emissions after the labels are issued. The creation of this novel category, which no other jurisdiction has used, will undermine both the credibility and interoperability principles.

At a high level, activities which seek to achieve marginal emissions reductions for coal, gas or oil production activities – upstream, mid-stream, or downstream, and end uses (i.e. generating electricity), simply do not have credible pathways for aligning with science-based emissions pathways, other than through a phase-out and structural decline to zero emissions over time.

While it is certainly true that fossil fuels will continue to play a role in the energy system in the future on a declining basis, and that Canada’s upstream oil & gas sector is the largest (and fastest growing) single sectoral source of greenhouse gas emissions in Canada, distorting the ambition and objectives of the taxonomy labelling system to flow capital to investments into bolt-on marginal emissions reduction activities is a perverse and ineffective tool for addressing a problem that should instead be addressed through effective laws and regulation enforced by governments.

Carbon lock-in. Directing new capital into marginal abatement for fossil fuel activities creates new financial incentives to extend the operation lifetimes of those activities, requiring the amortized repayment of debt, and the realization of long-term netbacks for investors over future decades. Marginal abatement investments provide the illusion of emissions progress to regulators, financial institutions, and the public while real world emissions continue to increase. This misdirection has the effect of confusing the public and markets while limiting the ambition of regulation, leading to the redirection of capital flows away from real transition-aligned activities. Addressing the climate crisis requires absolute emissions reductions as quickly as possible.
Because marginal abatement activities, such as CCUS, are only technically capable of mitigating a small percentage of Scope 1 emissions, with most of an oil or gas producer’s carbon footprint coming from the use of their products (i.e. Scope 3, Category 11), such investments can have a marginal or even negative impact on reducing lifecycle climate pollution, and can practically function to slow the energy transition.

Opportunity cost. The proposed ‘abatement measures’ category would introduce a perverse loophole into the labelling system, allowing scarce ‘sustainability’ labelled capital to flow into dead-end marginal abatement activities such as CCUS for gas-fired electricity generation or for an oil sands production facility, instead of into high integrity ‘green’ activities such as transportation electrification investments (which systemically reduce crude oil demand) or ‘transition’ category investments such as the electrification of steel-making (which systemically reduce the use of coal). This creates a significant opportunity cost, limiting the net benefits and effectiveness of the entire taxonomy system.

Stranded Assets. Because marginal abatement investments do not remove the requirement for steep demand declines for fossil fuel linked activities, capital which flows into the category has a high likelihood of becoming stranded if science-based transition pathways are achieved. Canada’s economy and its financial sector is already dangerously exposed to stranded asset risk as a result. A labelling system which provides added incentive for marginal abatement investments deepens this exposure as the energy transition accelerates globally.

Greenwashing. Including an ‘abatement measures’ category in a taxonomy design methodology which is anchored in Canada’s Paris Agreement obligations, specifically to flow finance into activities that do not credibly align with systemic science-based transition pathways, is a form of greenwashing. Capital that flows within this category does not meet the definition of ‘sustainable finance’, as the activities included could not make the underlying entities sustainable.
Climate science literacy remains low across much of Canada's financial sector. Canada’s Sustainable Finance Taxonomy has the real potential to raise that level of literacy, while providing valuable tools for navigating the significant financial risks and opportunities of the global energy transition. The Taxonomy Council should proceed with the ‘green’ and ‘transition’ categories, and discontinue development of an ‘abatement’ category.

Guardrails can not resolve these flaws. A number of theoretical guardrails were identified in the SFAC Taxonomy Roadmap Report (for a broader definition of transition activities), with many similar ideas referenced at a high-level in the Methodology Report for the new proposed ‘abatement category’ on page 40. These include screening criteria which could potentially limit investment only into existing assets, to activities which wouldn’t extend the lifespan of these assets, to fixed emissions reduction thresholds, require decommissioning/sunset requirements, include requirements for secondary green investments, and for requirements for ‘transition plans’. While promises to develop and implement strong guardrails may initially appear reasonable, careful consideration of how these could be applied in practice leads to several major concerns.
Credible guardrails should block marginal abatement finance. In our view, credible and effective application of these proposed guardrails would prevent any fossil fuel linked activities from ever qualifying under the ‘Abatement Measures’ category. An oil sands company could not in practice credibly promise not to expand operations, not to extend the lifespan of their operations, to achieve required science-based lifecycle emissions reduction thresholds on a Paris-Aligned pathway, or credibly set a sunset date for activities. None of those guardrails could be credibly assessed and certified up front, and would rely on taking companies at their word and hoping for the best. We cannot afford to cross our fingers and trust these companies to follow through. In practice, a credible and effective application of these guardrails would not be possible given the real-world constraints of a future taxonomy steward.

A long-term Taxonomy host organization would lack the capacity and authority to effectively apply these guardrails. The future home and design of the taxonomy system is still under consideration, but it is hard to imagine that such an organization would have the internal capacity to assess activity labelling at the level of detail and expertise required on a case-by-case basis to apply these guardrails in practice. Unlike with ‘green’ or ‘transition’ assets, for which entities or activities being labelled are expected to meet expected criteria up front for activities taken right away (i.e. the construction of an energy storage project), the safety of ‘abatement’ activities would rely on companies continuing to live up to promises over the long-term (i.e. that a carbon capture project will perform as promised, or that a company won’t ever expand production or extend project lifespans).

Effective enforcement is simply not possible. Once an ‘abatement activity’ label is granted, the organization overseeing the application of the taxonomy system will have little long-term ability to ensure use of proceeds matches what was proposed, measure an abatement project’s real-world performance, or hold project life-spans to match what was originally proposed. A taxonomy steward would have little ability to remove the label after the fact, as the capital will have already flowed through a corporation's books. Oil & gas companies and electrical utilities have an established record of failing to achieve the long-term stated objectives of experimental carbon capture projects (i.e. Shell Quest or SaskPower Boundary Dam) and companies frequently change leadership or ownership and go back on voluntary commitments (i.e. Oil Sands Pathways Alliance CCUS proposal was scaled back and may never get built). A voluntary taxonomy steward would have no way to hold entities to their initial commitments over the long-term.

Ringfencing ‘abatement’ finance is not practical. Limiting ‘abatement measures’ labelled finance only to abatement projects for fossil fuel linked activities sounds reasonable in theory, but in reality, finance is fungible. Any reduced cost of capital effects triggered as a result of the label could ultimately be applied anywhere throughout a corporate entity through a lowered corporate debt burden and increased CAPEX budgets, further incentivizing fossil fuel expansion along with increased lifecycle emissions. Companies can also layer various government incentives for abatement activities to magnify this effect.

A taxonomy label is not an appropriate tool for reducing marginal corporate pollution.
The ‘polluter pays’ principle is a core foundation of the Canadian Environmental Protection Act (CEPA). In Canada, polluting companies are legally and financially responsible for cleaning up the pollution they release. Voluntary labelling applied to activity finance for marginal abatement is a poor tool and an inappropriate incentive for fossil fuel companies and electrical utilities to marginally reduce pollution in line with Canada’s legislated climate obligations. The required reductions should be driven instead by robust federal and provincial regulations, enforced by governments who have the required legal authority to do so. In addition to existing legal and regulatory systems, Canada’s federal and provincial governments already provide significant subsidies and market incentives for marginal abatement activities, including significant government tax credits, capital cost allowances, and research and development grants. Abatement projects can also generate corporate revenue or cost-savings through existing layers of climate policy incentives such as Alberta’s ACCIP or through the generation of TIER carbon credits. Because of this, the application of an ‘abatement measures’ label is unlikely to generate additional emissions reductions, but will allow the ‘sustainable finance’ label to inappropriately apply to existing financial flows.

Environment and Climate Change Canada (2026) National Inventory Report 1990-2024: Greenhouse Gas Sources and Sinks in Canada.https://www.canada.ca/en/environment-climate-change/services/environmental-indicators/greenhouse-gas-emissions.html#oil-gas

Seto, K. C., Davis, S. J., Mitchell, R. B., et al. (2016). Carbon lock-in: Types, causes, and policy implications. Annual Review of Environment and Resources, 41, 425–452. https://doi.org/10.1146/annurev-environ-110615-085934

International Energy Agency. (2023). Emissions from oil and gas operations in net zero transitions. https://www.iea.org/reports/emissions-from-oil-and-gas-operations-in-net-zero-transitions

Bois von Kursk, O., & Muttitt, G. (2022, June 7). Lighting the path: What IPCC energy pathways tell us about Paris-aligned policies and investments. International Institute for Sustainable Development. https://www.iisd.org/publications/report/ipcc-pathways-paris-aligned-policies

Finance Canada. (2023) Taxonomy Roadmap Report.
https://www.canada.ca/en/department-finance/programs/financial-sector-policy/sustainable-finance/sustainable-finance-action-council/taxonomy-roadmap-report.html

Justice Canada. (1999). Canadian Environmental Protection Act, 1999 (S.C. 1999, c. 33). https://laws-lois.justice.gc.ca/eng/acts/c-15.31/FullText.html

Canadian Climate Institute. (2024, March 21). Which Canadian climate policies will have the biggest impact by 2030? 440 Megatonnes. https://440megatonnes.ca/insight/industrial-carbon-pricing-systems-driver-emissions-reductions/

SELLING HOT AIR Lessons from how Shell’s flagship carbon capture project sold $200M of credits for reductions that never happened https://www.greenpeace.org/static/planet4-canada-stateless/2024/02/4b010c8b-en-selling-hot-air-report.pdf

16. Should any additional guardrails be considered?

There are no guardrails which could align the proposed ‘abatement measures’ category with the stated objective of the Canadian Sustainable Finance Taxonomy while preventing perverse outcomes, particularly when the limitations of stewardship capacity and enforcement are considered. Oil and gas linked activities should be excluded from the labelling system.

17. Is there any other feedback you would like to provide on the proposed activity classification framework?

Shift is grateful for the hard work of the Canadian Climate Institute and the Business Future Pathways secretariat in developing this complex methodology report, and for seeking transparent expert and stakeholder feedback as a core step in the taxonomy development process.

We remain optimistic that the Canadian Sustainable Finance Taxonomy can become a valuable and successful tool for guiding Canadian capital flows through Paris-aligned energy transition.

We urge the Council to view the Taxonomy as a gold-standard for labelling climate science-aligned economic activities. By necessity, upholding this standard requires limiting labels only to aligned projects, while excluding coal, gas and oil linked activities.

A voluntary sustainable finance taxonomy does not block any activity from receiving finance, but it can prevent those activities from being mislabelled. For activities activities this standard rightly leaves out, as it highlights priority green and transition activities for which capital must flow, effective government regulation should step in to pick up, to ensure Canada’s emissions fall rapidly in line with legislated Paris Agreement climate commitments.

18a. Do you agree or disagree with the proposed approach for developing technical screening criteria?

Agree

18b. Please explain your answer in the space below

Engagement with technical experts on climate, Indigenous-led organizations and rights holders, international advisory groups, and industry is valuable to the development of technical screening criteria.

19. Please rate each of the proposed elements for the screening criteria on a scale from “very important” to “not at all important.”

Forward-looking wherever possible

Very important

Include sunset and/or sunrise dates where relevant

Very important

Revise as necessary during regular review periods

Very important

Primarily use quantitative metrics

Very important

Primarily focus on Scope 1 emissions but address Scope 2 and 3 emissions where feasible and/or material

Very important

Informed by a range of robust methods

Very important

20. When thinking about the taxonomy’s credibility and usability, how technologically specific or prescriptive should the technical screening criteria be?

Wherever possible, the taxonomy should rely on existing performance-based standards and sector-specific definitions which are in line with systemic decarbonization pathways. The inclusion of prescriptive or technology specific screening criteria should be decided under advice of sector-specific expertise, and will required.

21. Do you agree or disagree with the proposed approach of focusing primarily on Scope 1 emissions, and addressing Scope 2 and 3 emissions where feasible and/or material?

Achieving the required systemic transition of our economy requires systemic thinking. The stated focus on including lifecycle emissions wherever possible is important and essential. The framework should strive to include coverage of scope 1, 2, and 3 wherever it is practical and relevant, and should disregard calls to limit scope 3 inclusion, which is a key metric for understanding transition risk exposure.

22. Overall, how satisfied are you with the proposed sustainable finance taxonomy framework?

Neutral

23. Is there any other feedback you would like to provide on the methodology report as a whole that has not already been covered?

Overall, we are pleased to see a thorough and thoughtful approach to the framework design.

The inclusion of an abatement measures framework does not fit with the stated intention, ambition or identified principles for this process. Removing this proposed category from the framework and avoiding labelling for fossil fuel linked activities significantly will simplify and strengthen the framework, and will limit significant future challenges, industry lobbying and disagreement in design and implementation in developing technical screening criteria in the coming months and years. We urge you to adopt a final framework that is credible, simple, usable, interoperable and prioritizes science-aligned systemic decarbonization pathways.