A roadmap for net-zero investment

NEWS

Canada’s green investment roadmap

What happened: The federal government signed off on plans to create a guide (or taxonomy) for sustainable investments. The taxonomy aims to give investors clarity on which investments are aligned with limiting warming to 1.5 degrees or play a role in the transition.

The taxonomy includes a “green” label for projects with little or no emissions and a “transition” label for projects that decarbonize emissions-intensive sectors (e.g. installing electric furnaces for steel production). Beyond emissions, the guide also considers whether the market that the project depends on will grow or decline in a 1.5 scenario.

Finance Minister Chrystia Freeland also said the government plans to require climate-related financial disclosures for large companies. Large banks and insurance companies already need to disclose their climate risks at the end of this year following new rules by OSFI, Canada’s financial regulator.

Why it matters: The new guide is a critical step for the transition to net-zero. It can direct capital into projects that are aligned with scientifically-credible paths to net-zero by giving investors more clarity and confidence that they’re investing in the right assets. That could close the $115 billion shortfall in annual spending needed to get Canada to net-zero by 2050, from clean energy projects to building retrofits to sustainable agriculture. 

What’s the context: Sustainable finance is gaining more attention globally, and is a critical bottleneck (or accelerant) for the transition to net-zero. Canada has a particularly important role to play, as it’s home to some of the biggest fossil fuels financers and is the fourth-largest producer of oil. 

But the feds have been slow to move - this announcement comes two years after the taxonomy was developed by the Sustainable Finance Action Council (SFAC) and is still at least another year away from implementation. In that time, other countries have stepped up and adopted parts of the SFAC report for their own frameworks. 

Sticking point: A key issue is the role of “transition” investments like decarbonizing fossil fuel generation or heavy industry. Too loose, and it doesn’t offer the certainty investors are looking for, essentially becoming greenwashing. But too tight, and it cuts off funding that could be used to clean up sectors that are producing a huge proportion of Canada’s emissions. 

A prime example is natural gas. The gas industry and western provinces pushed to include it, while others argued that including fossil fuels would undermine the taxonomy’s credibility. Under the announced framework, new gas production is “unlikely” but projects that reduce emissions could be eligible.

What’s next: The announcement essentially is a plan to make a plan. The taxonomy will go to an arms-length organization to be built out, and the feds want to see the guidebook covering “priority industrial sectors” within the next year. 

CLIMATE CAPITAL

📊 Deck (Montreal, QC) raised a $6.2 million Seed round led by Golden Ventures to open up utility data. Deck is a new API that allows businesses easy access to their utility data for energy monitoring and climate disclosure. Think Plaid, but for commercial utility bills.

☀️ Heliene (Sault Ste. Marie, ON) closed $74.5 million in growth equity from Transition Equity Partners to expand their North American operations and add a new 550MW production line in the US. Heliene manufactures solar modules for utility, commercial, and residential-scale solar.

💰️ Diagram Ventures (Montreal, QC) secured $80 million for its first climate tech fund. The fund, which exceeded its $60 million target, will focus on launching and investing in early stage climate tech software startups. Diagram previously launched EV charging reliability startup ReliON.

MILESTONES & PRODUCT

🔋 Hyundia Canada selected Lithion, a lithium battery recycling startup, as their official battery recycling partner in Canada.

🛥️ Electric powersports startup Taiga Motors sold to Stewart Wilkinson, the British founder of electric power boat company Vita Power, for an undisclosed amount.

💡 Mercedes opened three incubators with the Ontario Vehicle Innovation Network to support ​​startups working on software, vehicle components and electric drivetrains.

🧱 Low-carbon building materials startup EnviCore is partnering with Heidelberg Materials to repurpose waste and mineral byproducts into low-carbon materials that can replace traditional cement in concrete. Heidelberg also took a minority stage in EnviCore as part of the agreement.

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IN THE NEWS

💵 The Canadian government will buy at least $10 million of carbon removal by 2030. It’s one of the first government procurements of carbon removal and creates a stronger demand signal for carbon removers. Dig deeper with Carbon Removal Canada’s new report Procuring with Purpose.

🏦 Toronto’s top financial institutions could be responsible for 2x Canada’s emissions. A report from the Toronto Climate Observatory found that the financed emissions were responsible for 1.44 billion tonnes of CO2. Inconsistent reporting methods could have institutions under-reporting by as much as 2,000%.

🌤️ Building clean energy in Alberta might get even harder as the provincial government plans to add more restrictions to wind and solar projects. The new rules, which are planned for the end of 2024, could put 40% of land in Alberta off limits.

⚛️ Alberta could get its first nuclear power plants thanks to a second attempt by Calgary’s Energy Alberta. The company plans to rely solely on private capital for the project, a first for Canada. In a sign of how much the discussion on nuclear has shifted, local governments formed a joint committee to advocate for the project.

💧 Hydrogen fuel cell vehicles are only fit for certain niches according to the results of a four-year pilot in Quebec. Government employees used the vehicles for almost 500,000 kms, but ran into a number of issues from lower range in winter to persistent downtime at fuelling stations.

BIG PICTURE

Exported natural gas might have a bigger carbon footprint than coal

The UK plans to invest £21.7 billion to build two industrial carbon capture clusters

Austria’s Revo Foods opened the world’s largest 3D printed food factory capable of producing 60 tonnes a month

Mining giant Rio Tinto will buy Arcadium Lithium and develop more projects in Quebec

The UK also introduced a “cap and floor” mechanism to kickstart investment in long-duration energy storage

Utah kicked off “Operation Gigawatt” to expand nuclear and geothermal energy

Overlooked storage and transportation costs could make green hydrogen a more expensive climate strategy than expected

COMMUNITY

🚀 Smart Renewables and Electrification Pathways: The Utility Support Stream is seeking proposal that support utilities and system operators in modernizing their systems and integrating renewables while maintaining reliability and affordability

🗓️ Climate Action + Energy: Hosted by Deep Tech Canada, this event brings together industry, policy makers, and experts to connect the deeptech ecosystem and explore their role in climate solutions. October 23rd, Calgary.

➡️ Discover more climate events.

💻️ Orennia is hiring a Customer Success Analyst to support clients in platform adoption and capital allocation decision making.

➡️ Find more open roles.