Interview

Climate in Motion

Canadian Liberal MP Ryan Turnbull outlines the importance of building consensus to stimulate debate on environmental issues and accelerate climate-related policy.

Canada has made slow progress on tackling climate change. According to Climate Action Tracker, the country is seemingly incapable of kicking its oil and gas addiction, maintaining its support for the expansion of the Trans Mountain pipeline, despite rising costs to completion, and remains committed to exporting liquified natural gas (LNG) to Europe even though it will put the 1.5°C global warming limit at risk. 

The country’s greenhouse gas (GHG) emissions are steadily decreasing, down 8.4% between 2005-21, as the government implements its climate policy agenda. But gaps remain between current policies and Canada’s nationally determined contribution (NDC) target and 1.5°C compatibility.  

In May, in a bid to accelerate its climate policy agenda, MPs from four of the five parties in Canada’s House of Commons expressed support for Motion 84, a measure sponsored by Liberal MP Ryan Turnbull that calls on the government to “use all legislative and regulatory tools at its disposal” to align Canada’s financial system with the Paris Agreement.  

This strong cross-party support is a good sign of consensus building,” Turnbull tells ESG Investor, adding that the aim is to limit average global warming to 1.5°C, although he acknowledges that achieving this goal is now more challenging than when the Paris Agreement was first agreed. 

Nevertheless, striving for science-based targets and adhering to Canada’s climate commitments remains vital, he says. 

Turnbull explains that the motion is “intentionally general” to increase the likelihood of unanimous consent in the House and demonstrate all parties’ support to the government, encouraging them to take necessary and urgent action.  

Each sitting day, the House sets aside one hour for the consideration of bills and motions presented by MPs who are not cabinet ministers or parliamentary secretaries. Given the parliamentary schedule, Motion 84 is expected to be considered as early as December this year.  

Once the motion is debated and voted on, it will be scheduled for the next two votes and will need to be voted through a third reading in the House. Given the length of these procedures, says Turnbull, it will take some time, and, therefore, could theoretically get through the House by the spring of 2024. 

Raising awareness 

Motion 84 is designed to be complementary to the Climate Aligned Finance Act (CAFA), which was tabled in the Canadian Senate on March 24, 2022, sponsored by independent Senator Rosa Galvez, who convened a group of expert advisors when drafting the bill, including Julie Segal, Senior Manager, Climate Finance at Environmental Defence.   

CAFA, if passed, will require major banks, corporates and other federally regulated financial institutions to align their activities with Canada’s climate commitments, including the Paris Agreement goal to limit global temperatures to well below 2°C and the Net-Zero Emissions Accountability Act’s target to reach net zero emissions by 2050. 

CAFA, which is currently progressing through the Senate, had been stalled at the second reading stage, but Turnball says the introduction of Motion 84 in the House helped its movement.  

“The main purpose of introducing this motion is to raise awareness and stimulate a more profound debate in the House of Commons regarding climate-related issues,” says Turnbull. 

“By tabling the motion, it served as a signal to the Senate, urging them to move CAFA to the next stage, which eventually happened, indicating a positive development,” he says.  

CAFA edged a step closer to becoming law on 8 June after the bill was advanced to the next stage of study in the Senate. The bill will be examined by members of the Canadian Senate Banking and Finance Committee from Autumn this year. 

CAFA – also known as Bill S-243 – is more prescriptive than Motion 84, going beyond disclosure by requiring financial institutions to align capital with climate action.  

Turnbull hopes that CAFA will be introduced in the House, as he wishes to support its progression through the legislative process. “CAFA is ambitious, which is important when tackling critical issues like the climate crisis.” 

Climate-aligned finance 

More than C$100 billion (US$76 billion) of Canadian assets are at risk of being stranded by fossil fuel expansion amid rising climate-related risks, while the global energy transition is seen as outpacing the country’s climate policy. Further, Canadian banks rank in the bottom third globally when it comes to financing clean energy but are leaders in oil and gas investments.  

A report card issued by Investors for Paris Compliance (I4PC) on the latest climate disclosures of Canada’s six largest banks found them to be “dragging their feet” in decarbonising their portfolios, raising concerns about the lenders’ pledges on sustainable finance.  

“Canada is literally on fire, but our banks are showing no urgency shifting their financing from activities that are making things worse,” said Kyra Bell-Pasht, Director of Research and Policy with I4PC. “The banks’ voluntary net zero pledges will need to be backed up by regulation if they continue to stall.” 

The six banks – Royal Bank of Canada, Scotiabank, TD Bank, BMO, Canadian Imperial Bank of Commerce and National Bank of Canada – scores range from B- to D on disclosure of finance emissions, oil and gas sector targets and transition planning. Further, each of the banks continues to engage in financing of fossil fuel expansion projects such as Coastal GasLink and the Trans Mountain pipeline, with no policy to stop.  

According to Turnbull, the key to addressing climate change lies in aligning the financial system with climate targets.  

The Canadian Climate Institute has estimated a financing gap for climate investment of approximately C$115 billion a year until 2050.  

“Despite significant efforts on climate action, which surpass those of any previous Canadian government, there is still a considerable gap to achieve key targets,” says Turnbull, adding that success ultimately hinges on mobilising private credit markets and the wider financial system.  

“Failing to do so could put the stability of the financial system at risk.” 

To address these challenges, the Canadian government formed the Sustainable Finance Action Council (SFAC) in May 2021, which is working on important initiatives like the green and transition taxonomy frameworks. This collaborative effort includes 25 of the country’s largest financial institutions that have reached a consensus on various policy and regulatory changes. 

“The aim is to enable these financial institutions so that they can effectively contribute to achieving the climate targets and advancing sustainability goals in Canada,” says Turnbull.  

Left in limbo 

Earlier this year, ESG Investor reported that Canadian experts cautiously welcomed a new proposal for a green taxonomy, but expressed concerns that it leaves the door open for untested-at-scale and controversial technologies, such as carbon capture utilisation and storage (CCUS) and blue hydrogen, that will allow for continued investment in fossil fuel industries, thereby slowing the net zero transition. 

According to Turnbull, the debate around CCUS is ongoing, arguing that it is important to consider all perspectives before drawing conclusions or making “knee-jerk” reactions. However, he admits that those sceptical about CCUS raise valid concerns about its cost, effectiveness and unproven nature.  

“Investing in CCUS might divert funds and capital away from renewable energy projects and necessary infrastructure updates, potentially slowing progress towards net zero,” he says.  

There are different viewpoints on the role of CCUS and blue hydrogen as transitional solutions on the trajectory towards net zero, he says, with some arguing that they might have a temporary fit for a period but won’t remain eligible as green or transition investments in the future. 

While he approaches the CCUS topic with a degree of scepticism, he recognises the potential benefits of capturing carbon from the atmosphere to aid in the overall transition.  

“We must be realistic, evidence-based, and not overstate the potential of CCUS,” he says. “It is essential to be cautious and not place excessive hope solely on this technology.” 

However, time is not on Canada’s side, with the green taxonomy stuck in limbo, according to a recent report. 

“We cannot wait for all evidence and conclusions to draw transition definitions before implementing it,” says Turnbull, adding that “waiting for perfection” will cause unnecessary delays. 

“Both the green and transition taxonomies should be considered evergreen, with room for evolution and adaptation as we gain more research and understanding,” he says. “It is crucial to move forward with the green taxonomy urgently.” 

Turnbull also notes that it is vital to finalise the green taxonomy before launching the Canada Growth Fund, which is aimed at accelerating the country’s decarbonisation strategy.  

“This blended finance initiative requires credible definitions as a foundational element,” he says. “The green taxonomy can serve as the keystone, ensuring the entire initiative is grounded in science-based definitions and aligned with international best practices.” 

Feeling the heat 

Canada is experiencing the real impacts of climate change, with wildfires raging, causing poor air quality across many towns and cities, and floods occurring with increasing frequency. These events have led people to realise that climate change is not a distant threat but an immediate reality. 

“The Canadian public has awakened to the fact that addressing the climate crisis cannot be postponed to future generations; it must be dealt with urgently to safeguard our children’s future,” says Turnbull, adding that while certain obstacles still hinder progress on climate policy, extreme weather events are galvanising political and public will to address the climate crisis.  

“The public will play a significant role in driving political interest and action on climate change,” he says.  

“When a greater proportion of the public demands urgent and ambitious action on climate change, it compels politicians to take notice, engage in debates on these issues, and be more willing to support and act in ways they might not have otherwise.”

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