Earlier this summer, managing editor Mark Mann caught up with McKenna to find out what she thinks about Canada’s current trajectory for climate policy and the energy transition.

This conversation has been edited and condensed for publication.

Mark Mann: I want to get a pulse check with you on where you think Canadians are at with climate change and climate policy.

Catherine McKenna: Look, 80% of people around the world actually care about climate. But when you’re faced with Trump, there’s one issue and it’s Trump. The thing we need more from leaders right now is to make the direct link between affordability and climate. Right now, regular people go to the pump and it’s terrible, and this is directly linked to the fact that their vehicle relies on gas. They are directly impacted. That is the affordability crisis. It’s housing, too, and other things, but a lot of it is our dependency on gas to fuel our cars and oil and gas to heat our homes. So those prices fluctuate and people are the ones who are hurt. Meanwhile, oil and gas companies are making massive profits, apparently, because of the Iran war. Affordability is an oil and gas issue, and the energy transition is the best way to protect Canadians and to lower their costs with solutions that are cheaper and better. We need to see policies that actually support getting people off oil and gas. Heat pumps are better. EVs are better, but we need cheaper EVs. We need to be able to have solar we can put on the grid, and we need to push our utilities to allow this. It’s time for leaders to make the connections so that Canadians understand the opportunity in the short, medium and long term to make the transition.

MM: Yeah, there’s the energy transition and then there’s emissions reductions. And Carney’s whole strategy has been that we should run, not walk, to the oil and gas industry to find emissions reductions. What do you think of that approach?

CM: I mean, the problem with the oil and gas industry is that all they’ve done is increase emissions. They made all these promises when I was minister and they broke all of them. Our emissions now continue to rise, and they continue to demand subsidies. They give their profits back to their fat-cat CEOs and their largely U.S.-based shareholders. We’re not winning, we’re subsidizing the problem, and we’re not helping people. We should not be beholden to large oil and gas companies, because it’s not helping regular people.

MM: Are you worried that there’s going to be a big fossil-fuel infrastructure investment that is going to be shoehorned into the nation-building agenda, and that we’re going to be locked in with the risk of a major stranded asset?

CM: I think the stranded asset risk is real. We also have unfunded liabilities that are massive: tailings, abandoned wells. I work globally. No one is saying, “I can’t wait for Canadian LNG.” That is a myth. I approved [a liquefied natural gas] project that didn’t go ahead a long time ago because of the risk associated.

I think there is no one in their right mind who would invest in a pipeline, given the projections for fossil fuels. Mark Carney knows this. But I think a lot of folks on Bay Street, when I talk to them — I’m not sure that they’re having the same conversation that people are globally. I don’t think they understand how transformative it has been. The uptake of EVs is huge and you have countries now saying they are only going to sell EVs, or they’re not going to allow, you know, new gas hookups in homes because it’s too much of a risk. We are diluted in a way because we’re a fossil-fuels-producing country. Other countries are starting to leapfrog because there are better solutions. If we could get basic EVs here in Canada, people would choose them because it would be cheaper both in terms of the purchase price but also in terms of maintenance and you’re not using gas.

I want Canada always to win, and I worry that we’re not going to win. We make it seem like we can’t do things because of the affordability crisis or we can’t care about climate. The energy transition is happening. Do we want to get with the program and lead? We’re very fortunate in Canada to have a lot of clean electricity. We’re very fortunate to have a talented workforce, to have critical minerals. But you’ve got to make the investment now and recognize that Donald Trump at one point will not be around as president. But the climate process is accelerating and the solutions are better, and we’re pulling ourselves back.

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MM: We’re now gearing up for a new struggle over whether LNG should qualify as a transition fuel. What’s your take?

CM: New natural gas should not be considered green in a green taxonomy. If you look globally, that’s not a thing. We won’t be taken seriously. I get that oil and gas companies would really love that. It doesn’t mean, by the way, that you can’t invest in natural gas. It just means it doesn’t fit under the category of green.

MM: So you wouldn’t say an investment in LNG should be completely off the table?

CM: If you want to invest in LNG, you’d better be looking at the markets and the projections. If you had LNG now, sure, but in the future you’re going to have a stranded asset. The problem is they get to privatize the profits and socialize the risks. Right now, we already know that unfunded liabilities in Alberta around the oil sands is bonkers. And then layered on that, we’re going to have unfunded liabilities if we continue building new fossil-fuel infrastructure.

The oil and gas companies have to clean up their act if they want a hope of continuing. These are the richest companies, largely U.S.-owned. Why should Canadians give their hard-earned tax dollars to these folks when they have massive profits that they could be reinvesting? I have called for a windfall tax like we’ve seen in the U.K. and other places because they are making so much off of this war, while Canadians can’t pay for gas. For Canadians, the heating costs of their homes have gone up exponentially. There’s not that much the government can do unless they’re actually going to take money for these windfall profits off of the Iran war. These companies are making money off of an illegal war against Ukraine and now the Iran war; those profits should be reinvested in a way that supports Canadians, not given back to your largely U.S.-based shareholders.

MM: What role should China have in Canada’s energy transition?

CM: That’s kind of weird. I don’t want China to have a role in Canada’s energy transition. I think that we have to figure out trade, and how trade and climate can go together. These are not easy decisions. We’ve seen Mark Carney open up the market to a small percentage of Chinese EVs. The reality is that people are going to decide based on price. That’s how it works. The EVs they’re producing are just a lot cheaper. Yes, there’s been some subsidies, but they’re also producing some of the models that are really basic. If our auto manufacturers want to compete, then they should be producing EVs that are really basic, not expensive EVs. I’m not an auto manufacturer, but it seems pretty clear this is where it’s going.

MM: You built a global network of women leading on climate. How is that network bringing its influence to bear on Canadian climate policy?

CM: These are women that are sitting at the table, whether they’re at the boardroom table or they’re at the negotiating table or in the council chambers or they’re in universities or they’re young women who are activists who are on the streets. These are women who are often speaking up, and it is hard. What I realized when I was minister is that sometimes I was the only person at the table raising climate change, and I knew some people would be like, “Oh, is that woman going to bring up climate again?” Of course, every time I talked about climate, I was actually talking about the economy. I’d be like, “Yeah, damn right I’m going to talk about climate.” Once I knew that other women in similar positions in Canada and around the world were talking to climate, it made me feel stronger and better able to just stand up for the right thing.

Women are two and a half times more likely to talk about climate change. They are two and a half times more likely to act on climate change. If you have a woman on board, it’s more likely to disclose emissions. That is a theory of change that has real evidence behind it. So we need to empower those women.

We bring an agenda. In Canada, we wrote a letter that was signed by hundreds of women to security regulators, saying you need to require disclosure of climate risks. That’s a basic principle. We need to be more sophisticated in how we understand this. I am on the board of the Singapore sovereign wealth fund. I work with financial institutions in Europe. They’re working on this. They understand there’s a risk and an opportunity and an obligation to shareholders. Women are pushing the envelope, and we’re trying to bring that voice and make it stronger.

MM: Are you going to go back into politics?

CM: Nope. But I will help other people.

Mark Mann is the managing editor at Corporate Knights.

The post Catherine McKenna wants Canada to get smarter about climate and affordability appeared first on Corporate Knights.

A new report from the Institute for Sustainable Finance, published today, assesses whether anti-woke financial activists in the United States are gaining ground in Canada, too. The authors find that the anti-ESG movement is able to exert influence on Canadian institutional investors, but there are enough legal protections in Canada to keep climate-aware investing secure, at least for now.

From the perspective of at least some institutional investors, the logic of climate-aware investing is clear, explains Julie Bernard, the report’s lead author: “One of the ways I can manage my risk is to make sure that I integrate climate because, from a risk perspective, I know that the climate will change, whether I like it or not,” she says in an interview. “And the best way to make sure that I can have return is if I can mitigate some of those risks.” The main motivation of the report was to reassure those investors that “what’s happening in the U.S. is not happening here, and that so far we’re navigating the storm,” Bernard says. “A lot of the things that are happening down in the U.S. could not be happening here, just because of the legal framework we have.”

Canadian corporate law explicitly permits directors to consider material ESG factors and stakeholder interests, the report states. By contrast, the U.S. system relies on a “shareholder primacy” model that emphasizes shareholder value to the exclusion of other considerations, leaving U.S. investment managers more vulnerable to legal challenges from anti-ESG activists. Since 2021, some state legislatures like those in Texas and Florida have enacted anti-ESG measures, while several Republican-led states also withdrew or threatened to withdraw public pension assets from managers over their climate positions. Last year, the Securities and Exchange Commission ended its defence of Biden-era climate-disclosure rules.

Canada has multiple regulatory frameworks that support ESG integration, the report points out, including traditional fiduciary duties for corporate directors and pension trustees, as well as securities disclosure rules, prudential regulations and anti-greenwashing laws. “That doesn’t mean that there is no pressure [or] that there is no tension,” Bernard says. “But we’re not facing the same situation as in the U.S.”

That said, “we’re not bulletproof,” Bernard warns. There have been signs that the anti-ESG movement is weakening climate integration in Canadian investing, according to the report, the clearest of which was last year’s decision by the Canadian Securities Administrators to pause development of a mandatory climate-related disclosure rule. Also, U.S.-based asset managers own large stakes in many Canadian public companies, which sometimes translates to reduced support for climate-related shareholder proposals.

In order for pension and investment boards to do their job well – which is to protect the long-term financial interests of their members – “governance vigilance remains essential,” the report concludes, because “anti-ESG pressure may evolve in ways that create new challenges for Canadian investors.”

Mark Mann is the managing editor at Corporate Knights.

The post The U.S. anti-ESG movement can’t stop climate-aware investing in Canada appeared first on Corporate Knights.

Nature, however, has mostly been left out of these regulatory schemes – even though preventing deforestation, averting wildfires and restoring landscapes are effective ways to lower the amount of carbon in the atmosphere. Chris Costello, chief economist at Environmental Defense Fund, wants governments to bring nature into their mandatory carbon markets. Here, managing editor Mark Mann asks him about the opportunities – and the risks.

This interview has been condensed and lightly edited for publication. Watch the full conversation here. 

Mark Mann: I’m on a learning curve with this space, and I imagine many of our readers are, too. So let’s start at the beginning. What is a carbon market?

Chris Costello: You’re not the only one on the learning curve. I mean, to be honest with you, we’re all on the learning curve and things are shifting every day, so there’s always something new to learn. In a way, it’s better to do that in order to understand the failures of the current system. Why do we keep hearing “Oh, we’re supposed to be happy about this thing,” and then the next day there’s an exposé about a big corruption scandal around carbon markets. How do we sort these things out? How do we actually move forward together?

MM: There’s a hot debate here in Canada right now because we have an industrial pricing system and we see think tanks and institutes trade barbed articles over it. But it’s a debate that’s hard to follow for anyone outside of it.

CC: We can talk about all of carbon pricing and carbon markets, but I think a big opportunity that’s been untapped is in nature. That’s actually where the controversy gets most heated.

We all want to make progress on climate change, but we want to do it affordably. There’s a thousand ways you could convince people or force people to emit less carbon. But a lot of those ways are really expensive and really burdensome and really difficult to get people to swallow. I think carbon markets, if they’re designed right, offer an opportunity to make fast progress on climate change, but do it in a cost-effective, affordable way that’s really transparent.

So what is a carbon market? What are we even talking about here? There are really two kinds of carbon markets. There are what are called compliance markets, and there are 50 or 60 of those around the world. These are markets that at a whole-country level or sometimes a regional level put a cap on all carbon emissions, usually from the polluting sector. That’s great because now we actually are working towards some kind of goal and maybe that cap gets reduced a little bit each year, so we’re making progress. Canada’s got a net-zero claim by 2050. So by mid-century, they have to get there. How are you going to get there? Well, you set a cap and you keep reducing the cap and pretty soon it’s zero. That’s basically how it works.

The clever thing about the market side is that you put a cap – let’s say it’s 100 tons are allowed to be emitted – then polluters get to trade those tons. So if I want to pollute a little bit more because I’m starting up a new factory, I have to buy a ton from you. And if you’re willing to reduce your emissions because you have a new electrification of your production line, you can reduce tons, and we can trade. The trade part means that we’re getting those tons that we want in the cheapest way.

Watch the full conversation on YouTube

CC: Exactly. Someone’s doing the math. And if you look globally, the equation doesn’t add up. So 53 gigatons — 53 billion tons a year — is the total amount we emit as polluters in the world. And if we actually want to get to net-zero, we have to turn 53 billion into zero. Those caps have to start emerging all over the world and they have to be reduced.

Believe it or not, we are making progress on that front. If you look at these compliance markets around the world, they really do have strict caps, and they really are reducing those caps. They really are causing an energy transition in the countries that have them.

There are also voluntary markets, which are not compliance markets, so there’s no government or entity saying, “Here’s the cap that you have to meet.” They’re more like individual contracts, and they take lots of different forms. There are some success stories out there, but a lot of the controversy comes from that type of market.

It gets particularly fraught when you think about nature, because nature is not part of compliance markets, except in New Zealand. All the other 60 or 70 carbon compliance markets don’t include nature. There are lots of contracts on the voluntary side in nature, but they don’t have this structure where there’s a cap and there’s a whole jurisdiction that is being measured and you’re reducing that cap over time.

If we get it right and bring nature into the compliance markets, I would argue this is the world’s largest untapped opportunity to make progress on climate change. What my whole team has been working on at Environmental Defense Fund is how to do that in a really effective and durable way.

Here are some of the numbers. I mentioned 53 gigatons. That’s 53 billion tons a year. That’s our net emissions. Right now, if you add up all the compliance markets of the world and you look at how much they are reducing emissions, it’s on the order of one to two gigatons out of that 53. If you look at nature and you say, at a relatively low price, if we were to put these into compliance markets and do it properly, how many tons could we get out of those? Our numbers are like eight to 14 gigatons per year. So nature could dwarf everything we’re already doing in the polluting sectors, if we do it right. There’s a lot we have to do to get there.

MM: What are we already doing? What is the distinction if nature could add so much value?

CC: So here’s the interesting thing: if you want to make progress on climate and have an energy transition, it’s really easy to think about the smokestack coming out of the coal-fired power plant or the steel mill, or maybe the tailpipe of your car. We don’t think of nature as an emissions source. But there is a smokestack coming out of nature.

Every time you deforest an acre of land in the Amazon, you are releasing carbon. That’s just like the smokestack from the coal-fired power plant. When you mismanage your forest and get megafires, that is a smokestack coming out of nature. Canada’s annual carbon emissions from forest fires are in the same ballpark as their annual emissions from all industrial and transportation activity. So nature is just as important an emission source in Canada as other emission sources.

MM: Why does it emit to cut down a forest? How is it a smokestack?

CC: It’s a great question. There is a subtlety here. Trees store carbon, so there’s a lot of carbon embedded in that tree trunk and the leaves and everything. When you cut that tree down, it depends on what you do with it. If you’re in the rainforest, often what’s happening is you’re deforesting in order to make room for agriculture. And often the way we deforest to do that is by burning. So that makes it really clear. Now if you’re cutting trees down to make furniture and you’re embedding that carbon in furniture that’s sitting in your house, it isn’t being released. So there’s some subtlety there, and we have good data on how much is actually being released.

MM: The takeaway is that actually most people wouldn’t really expect or realize that nature is contributing to the climate problem.

CC: Yes, but it’s our mismanagement of nature. I’m an economist; I’m trying to bring a market-based approach to change the incentives around forest management so that you don’t get the severe megafires. 2023 was the worst fire year ever, I think, for Canada. There were, like, three billion tons of carbon emissions that came from the forest fires in Canada in a single year. It completely dwarfed all industrial emissions combined. We have to think of that side of the equation. There’s a huge, untapped opportunity to manage those emissions by incentivizing.

That’s trying to stop the bad thing from happening. We have to do that. But the real magic of nature, and one of the reasons I’m so excited about it, is that it’s also a machine to suck carbon out of the atmosphere. And if you manage forests and ecosystems in the right way, you can suck more carbon out of the atmosphere. If you get those incentives right for both of those things, you have an enormous, untapped potential in nature to make rapid progress on climate.

MM: The situation you’re in is that you’re making this pitch at a moment when there’s huge skepticism for the idea of pricing nature and trading in this way because of what happened in the voluntary carbon market. Is that fair to say?

CC: That’s fair to say, yes. But I’m not coming into this naively saying, “I’ve got snake oil here, I’ve got the next big thing.” I’m borrowing from the successes of the 60, 70 or 80 carbon markets out there in the world that we’ve learned a lot from, that are reducing tons, and that are solving the very problems in the voluntary market through the compliance architecture. So I’m taking that compliance architecture and asking, “How do we apply that in nature?”

MM: What is the smaller narrower thing that the compliance architecture is doing? Where are they currently getting their emissions reductions?

CC: Almost all compliance markets except New Zealand don’t include nature. So in those compliance markets, how are you getting the carbon reductions? It depends on the sector. You’re getting it in transportation; you’re getting it often through EVs and electrification. In other sectors, you’re getting it through transformation of production processes or even sometimes electrification of historically fossil [fuel] production processes. The key point is when you have to pay for every ton of carbon you’re emitting or you get rewarded financially for reducing your carbon emissions, there’s an enormous carrot out there to innovate. That’s what we want people to do. We can try to legislate and tell people how to produce stuff, but that doesn’t work very well. What you want to do is give them an incentive to do it and then they invent the best way to do it. And that’s what I meant by low cost.

MM: You’re not telling them to implement a particular technology. You’re just setting the cap and then they have to meet it however they can.

CC: Exactly. We think that the same kind of incentive structure can be used in nature, both to incentivize someone to not deforest when they otherwise would and to incentivize restoration. If you have degraded land but you can restore it to a healthy forest and get paid to do that because you’re now pumping carbon out of the atmosphere, why wouldn’t we want to incentivize that? Especially if the data suggests that’s one of the cheapest ways to get reductions.

MM: Clearly the voluntary market broke ground here and then faltered. The voluntary market is tiny compared to the compliance market. So now you want to level it up into this regulated system of incentives. How do you do it better this time? What are the solutions to the problems that happened before?

CC: I want to give some credit to the voluntary market. My interpretation of the exposés is that when you find one project that failed or didn’t deliver on what it was supposed to, that casts a shadow on the whole enterprise. But the intent of the voluntary is great. The idea is that someone wants to get carbon reductions and they want to do it in a cheap way, so they find a project, often in a developing country. But what happens is, if I said, “Hey, I’m looking for someone who will agree not to deforest next year, come sign up for my program,” the first people to sign up are the people that wouldn’t have deforested anyway. This is called the “additionality problem”: you’re paying somebody for a ton of carbon, but the payment isn’t really translating into a change on the ground. And if you want these things to function at scale, it has to be true that you’re actually changing something on the ground.

The way the compliance approach fixes that additionality and several other problems is that you’re not just measuring the emissions from one project. You’re taking the whole jurisdiction and you’re measuring emissions every year, or even more frequently, from all the properties in that place. And then you set the cap on all those entities and that’s where trading is allowed. That cap ensures that your tons are additional.

MM: Is there not a challenge with making trade-offs in nature? You’re losing some nature over here but gaining more over there, but can you really compare these things?

CC: It’s a really important question. The way I think about the climate problem — the 53-gigaton problem — is that I want to reduce that number quickly and affordably. If we can get the cheapest tons from nature, and they’re just as valid as reductions from a coal-fired power plant, I want those tons.

I want net emissions to fall, and I think compliance markets are the way to do that. If nature can be put on a level playing field with industrial emissions, it could lower the cost of reducing emissions and allow governments to set more ambitious climate targets. If reductions cost $30 a ton instead of $80, you can set a more ambitious target. If the tons are real and cheap, we should be going for them.

MM: This is another facet of the debate that I personally find confusing. What I’ve seen with the debate about the Canadian industrial carbon price, the struggle for Ottawa is to keep the price high enough. And I think a critique is that if the price is too low, then it’s too cheap to pollute. Could you explain that dynamic?

CC: It’s a hot topic right now, with a lot of debate around it. I think your question is, if we’re really successful with this nature approach and it lowers the carbon price, is that a problem?

There are two reasons prices can be low in a carbon market. The first is a lack of integrity or credibility. If you’re not sure something is actually delivering what it claims, you won’t pay much for it. It’s like buying a used car when you can’t drive it, look under the hood or inspect it — you might be skeptical of its quality. That has been responsible for low prices in some voluntary-market transactions historically.

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But there’s another reason prices can be low: you have fully credible, real tons being removed from the atmosphere, and you’ve found an inexpensive way to make progress on climate change. I like that. I want more of those tons, not less.

So which is it? Is the price low because of integrity problems or because we’ve found an opportunity that lowers the cost of addressing climate change? I want to live in the second world, not the first. That’s how we’re designing this: to be fully robust from an integrity standpoint while using the market to find the cheap, credible tons we want.

MM: So if you can make tons that are essentially beyond reproach and also they’re cheap, then people will buy them. One hurdle here, I think, is the quantification aspect. You have to know what you’re getting out of these. That’s got to be part of making these tons real and authentic. But then it just seems like it’s a tall order as a data exercise. What’s the story there?

CC: We’re still learning and trying to improve. People call this “MRV” — monitoring, reporting and verification. Even in a compliance market for polluters, you have to measure emissions. Even if you simply told people, “You can only emit 30 tons today,” you would have to measure their emissions to know whether they are above or below that limit.

Most climate action requires some kind of measurement. We tend to think it’s easier to measure carbon from a smokestack than to measure emissions from cutting down a tree. Nature is harder in that sense. But we already have an MRV architecture for compliance markets.

The surprising thing is that, much of the time, we aren’t measuring carbon emissions directly. We’re measuring proxies. Every gallon of gasoline burned emits about this many tons of carbon, for example, so we can measure gallons of gasoline and use that conversion.

If I get my wish, we’ll use this approach in forests and agriculture. I want farmers to be incentivized to improve soil management, because soils can sequester a lot of carbon. I also want to incentivize mangrove restoration and, in Canada, kelp forests — both of which can take up a lot of carbon.

MM: My secret is if I could throw it all away and do something else, I would go and be a kelp farmer.

CC: [Laughs] Okay, so how do you measure kelp — the amount of kelp, the carbon it sequesters, or the emissions released by deforestation or a forest fire? Different aspects of nature require different technologies.

We’re pretty good at measuring carbon fluxes in forests. We’re less good in agriculture, and we’re kind of terrible at measuring them across most of the ocean. We know it’s happening because the physics and chemistry tell us it has to be, but it’s very hard to say it was eight tons rather than seven.

For me, as an economist thinking about market design, the question is how precise you have to be and what technologies you need to underpin a market. I think we know enough to start with forests and build a market there. We probably don’t know enough to start on day one in the oceans. There’s work to do, but I don’t think it’s insurmountable, and I think there are places we can start right now.

Mark Mann is the managing editor of Corporate Knights. He is based in Montreal. 

The post The case for putting nature at the heart of carbon markets appeared first on Corporate Knights.

Finisterre means “the end of the world,” which feels a bit too on the nose these days. We bought our tickets before Israel and the United States launched their war on Iran, and we certainly never expected to be travelling during a global oil shock. But more frightening than travel interruptions is the strong likelihood of a “Super El Niño summer” that’s now developing in the Pacific Ocean. As Europe bakes under record-breaking temperatures, a key part of our travel prep is mapping contingency plans for extreme heat at each leg of our journey.

In short, global heating is progressing faster than expected, fossil fuel economics are as nakedly violent as ever, and life goes on.

The seduction of doomerism

Doomsayers have always held an important voice in the climate movement, but defeatism and pessimism have gained even more prominence as the oil and gas industry fights gloves-off to retain its influence and revenues. There’s a reason that hope is in demand: things look bleak. Personally, I don’t see doomerism as wrong so much as one-dimensional. It’s true that most people alive today still seriously underestimate the harms that climate change will cause. Yet on the other, much of what’s happening is best expressed by that one key word: change. There’s bad and good and just different, but plenty that’s good.

For example, nature-based solutions are gaining prominence as an effective and cost-efficient countermeasure to carbon pollution and other environmental damages. A system is now being built that will make restoring ecosystems a much more central field of human endeavour. Leveraging nature’s power to heal the earth does mean accounting for it in financial terms – an exercise in commodification that many will balk at. But we need to remove carbon from the atmosphere, and people need to get paid to do it, so capital has to flow. We can be grateful when it goes to forests and wetlands.

Travelling across a changing landscape

To get to Europe and back, our round-trip carbon dioxide emissions – not including the baby, who’ll ride on our laps – is roughly two tonnes, which is about what we’d pollute on a drive from our home in Montreal to Vancouver and back. For that quantity of emissions, I can buy decent carbon offsets from tree-planting projects for as little as $20. I could even contribute to projects that support sustainable aviation fuels, though it’s hard to see a viable path for air travel to switch to lower-carbon fuels. Carbon reduction programs that involve biofuels have proven particularly problematic, such as in Brazil, where criminal networks of “carbon cowboys” are exploiting the state-run system. When greenwashing overlaps so closely with climate urgency, every path forward lies somewhere between skepticism and pragmatism.

The new edition of the magazine, out this week, is themed on travel and tourism. In it, our writers examine different ways that climate change is altering how we move around and explore. Some are visiting glaciers before they disappear; some are using their holidays to remove trash from the environment. Some are just picking different destinations: cooler climes instead of the traditional equatorial getaways. Humans aren’t the only ones changing our trajectories. Other species are shifting, too, often toward the poles, like trees, bacteria and even great white sharks.

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The most important climate migrations are not for pleasure or discovery. Tens of millions of people are already leaving their homes, and the rate of displacement could rise to hundreds of millions by mid-century. In more targeted – and certainly privileged – fashion, digital nomads are also leaving their mark on territories and exposing some of the contradictions that belie our times.

Finisterre in Spain is not the end of the world, though people in Europe used to think it was. Climate change is not the end of the world, either. Nor is it simply a physical description of how our planetary ecosystem is evolving in response to a massive, human-caused carbon explosion. Climate change is more like a calling to adjust, adapt and grow. Like a long walk across an unfamiliar landscape, we cannot predict exactly how it will unfold. But it will surely teach us resilience. To that end, we may permit ourselves a sense of humour, a good dose of curiosity, and maybe even a taste for adventure on the journey.

Mark Mann is the managing editor of Corporate Knights. He lives in Montreal.

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Canada has some of the lowest industrial power prices among high-income economies, and 85% of the grid is non-emitting, with nuclear and hydro playing an important part of the mix. But as artificial intelligence and electrification drive up demand faster than expected, Canada’s edge for attracting big industry is at risk of eroding, the authors write. After a decade of flat growth, Bank of America Institute now forecasts 2.5% compound annual growth until 2035. Investment will flow to regions with the best grids, not just the most resources, but Canadian jurisdictions are systematically underplanning for industrial demand, they argue.

The report, titled Power Play: How to Supercharge Canada’s Clean Electricity Advantage, contends that for Carney’s economic strategy to work, the country must overcome an ethos of risk-avoidance at the planning level. Utilities and regulators are wary of overbuilding infrastructure and passing the bill to ratepayers. But the bigger risk now is underbuilding, the Climate Institute suggests, especially as faster-moving regions take advantage of low-cost renewable technologies to improve their offer for energy-hungry industries.

The new research presents side-by-side comparisons of Canada’s four largest electricity systems with other jurisdictions around the world. Alberta and Texas are treated together as “market-led systems,” while Ontario and the United Kingdom are compared as “coordinated market systems.” Four other jurisdictions – British Columbia, Quebec, Washington and Norway – are grouped as “hydro-led systems,” whose reservoir storage gives them an inherent advantage with clean, dispatchable power. Quebec’s tie-in with California’s well-functioning carbon market is an added bonus for investors.

Implementing growth

Increasing grid flexibility across all regions is one of the foremost recommendations of the report. That means more “firm” power from low-emissions sources like batteries, as well as more interties with neighbouring grids so that available clean energy is more likely to be shared and less likely to be wasted. The report also points to better long-term planning, more predictable procurement for renewables, modernized rate design, and stable climate policy as critical to sharpening Canada’s offer. It argues that funding interregional transmission lines should be a national policy imperative.

Increasing Indigenous ownership is another strategic priority, to uphold self-determination and bring in capital. “Indigenous ownership could further unlock $12 billion in generation and $5 billion in transmission equity,” the report states, citing the First Nations Major Projects Coalition.

The Climate Institute’s central argument about protecting Canada’s clean electricity advantage echoes a report published in February by SHARE, or the Shareholder Association for Research and Education. “Grid constraints, slow infrastructure build-out, and mounting policy and regulatory barriers are colliding with skyrocketing demand from electric vehicle manufacturing, battery materials, critical minerals, AI and data centres, and green industrial production,” the authors write. Increasing the flow of clean electricity “adds material asset value and enables market access” for industries like tech, AI and mining, SHARE’s Power at Risk report states.

Mark Mann is the managing editor at Corporate Knights.

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There really is something quite equanimous in the way Garcetti talks about the deep political rift in the United States over low-carbon energy. Garcetti currently serves as chief ambassador for global climate diplomacy at C40 Cities, an international network of nearly 100 mayors committed to advancing climate action. He served as the group’s chair from 2019 to 2021, during the last part of his nine-year tenure as L.A.’s top official.

Garcetti is on a mission to remind the world that President Donald Trump doesn’t have the last word on the state of climate action in the United States, nor is he the most reliable authority. If you pay attention only to the current administration, you’re missing the bigger story about where climate adaptation and mitigation are headed in the world’s largest economy, Garcetti says.

We spoke with Garcetti about the power of cities and states to implement the green transition, how climate communications are evolving, and why Washington can’t stop the low-carbon economy.

This interview has been edited and condensed.

MARK MANN: Are you building a parallel order of climate diplomacy?

ERIC GARCETTI: Look, we know that things like a pandemic and disease and certainly climate, these things don’t care where we draw borders between cities or countries. It demands a diplomacy that also doesn’t ignore borders but works across them, and that’s really what we’re doing.

MM: You’re here at the Montreal Climate Summit with Gina McCarthy, chair of the America Is All In coalition and former climate adviser to President Biden, who argues that Trump’s power to stymie climate action is exaggerated. I’ve noticed it in the media, that sometimes Trump’s attacks are much more amply covered than the rebuttals. What’s going on there?

EG: Well, go to your business model: what generates clicks is conflict. But at the end of the day, it doesn’t matter what generates clicks; what matters is what generates electricity in a sustainable way. Wind might be controversial in one project off the coast, but meanwhile, take Texas. It’s a very conservative political state right now, run by Republicans, and they’re decarbonizing the Permian Basin, the largest oil field in America, primarily with wind and solar. Maybe they don’t brag about it because it doesn’t fit their politics, but they’re not stopping.

MM: Do you take a page and talk less about climate?

EG: Yeah, not because of Trump, but because I think “climate” is an abstract word for many people. Climate literally means weather. It doesn’t have a value to it. Climate isn’t environmentalism or green, and those things, while they were good early on, were too segregated. You felt very special if you were a green activist or if you worked on environmental issues, when it requires a billion people to be incorporating sustainable values.

I like talking about jobs, health and safety. And in the face of extreme weather and climate change, we have communities that don’t feel safe because of floods and fires and everything else. The economy is rapidly changing, and so responding to what’s happening requires us to retrain people and to generate jobs through the work that needs to be done.

MM: What’s the best evidence, in your view, that climate action is still winning in the United States? That the momentum is still there?

EG: Sometimes there are setbacks that reduce the acceleration, but there’s nothing that’s reversing the direction. You read headlines and you think, “Oh, people are going backwards.” No. Coal plants are still being shut down, even if the president is trying to save a handful of them over the wishes of the actual power companies that own them. We are seeing the more conservative states – like, 70% of the new [low-carbon power] installation was done in Texas, Ohio and Florida, all run by Republican governors.

California continues that. Los Angeles, the largest municipal utility, is still on path to be at 97% carbon-free power in four years – it’s so exciting to even say that – and 100% by 2035. Transportation investments are continuing. The number-one car sold in California is still an electric car.

It’s hard to find a measure where we are moving backwards. When you look at capital flows, too, there’s never been more deals at a better price than right now. When I talk to investors, they’re like, “Maybe we don’t talk about it as loudly, but in some ways all that shouting coming out of Washington has helped us find even better deals.” Everybody knows it’s the cheapest way to get power. It’s the best way to move forward with transportation. It’s the healthiest thing to do for communities. We struggle to find evidence against it, [despite] what the White House claims.

MM: Do you think energy is shifting to the local level? Is there any sense that the centre of gravity is moving away from federal politics?

EG: No, I don’t think many people ever cared what Washington was doing, even when they might be pro–climate action. I mean, there have been moments, like when Joe Biden passed the Inflation Reduction Act. That was huge. It was the biggest piece of environmental legislation ever passed by any nation. But they also knew that if you could add up all the local and state money spent, it would dwarf [the IRA]. We’re the ones who maintain sewer systems, who do private investment, build houses. We invest and build our transportation networks. In America, most spending on climate-related sectors is done at the sub-national level. I think anybody who has been active has always known that’s where the fight is.

MM: In Canada, cities can be disempowered relative to the provinces. Often there’s a dynamic where politicians at the provincial level gain more power from rural voters than from urban voters. I’m wondering how powerful cities really are?

EG: It’s different from state to state, but in the United States, big cities have tremendous power, whether it’s formal or informal. Even if you’re a drop of blue in a red state, the state leaders know they need to have a Houston work, or Atlanta work or Nashville work. There’s often political conflict, but when it comes to spending money and getting things done, it’s the same voters and the same people who are demanding answers.

I also think that urban–rural divide is disappearing a little bit based on some issues. For instance, data centres are being built in the most rural areas and the most urban areas. And people are like, “Whoa, why are my energy bills going up 20% in a year? What is the impact of having this around me? How are we actually generating that electricity?” Folks who might not have in the past cared about whether it was coal or gas are suddenly questioning, “Do I really want that, just to help an AI system develop?” In urban areas, they’re finding new coalitions between people.

The majority of people really do live now in urban areas in America, overwhelmingly. Depending on how you measure it, up to 80% of Americans live in cities. So that is allowing cities to hit above their weight class, even if they don’t have the formal power. They really have the influence, even sometimes when they’re led by people from a different party.

MM: I don’t know if people are still talking about “abundance” as much, but I’m curious if you think that’s the type of shift that we need?

EG: I’m not a huge fan of the word “abundance,” because what does that mean? It’s another one of these academic-sounding words. But making shit easier to get done: yes.

There are some basics we should never, ever sacrifice. But we’ve put so many boulders in our backpack, it’s so slow to move. For instance, imagine a New York subway system getting built in this day and age. It would take 100 years to build that, and it would cost a trillion dollars.

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I’ve become simultaneously more progressive and libertarian as I age. Libertarian, like, get the hell out of the way. Get the basics covered, but let people do stuff because there’s a crisis. And more progressive: make sure it has a conscience. Don’t just let bad design and capital flow in however it wants. But if you let capital flow in in a predictable way, there are smart ways to be both progressive and caring, but also a little bit more libertarian and less regulatory.

MM: Do U.S. mayors who engage in the C40 or in other types of sub-national climate diplomacy face threat or pushback from the federal government?

EG: Yeah, when they’re not focused on something else, like wars in the Middle East or going after our immigrants. It’s somewhere in that agenda. It’s not frequent, and it’s not a friendly partnership, but [Washington doesn’t have] a lot of tools. They can’t tell Los Angeles “You can’t create renewable energy for your energy mix.” They can’t write our building code. They can’t tell us where to invest our transportation dollars.

There are moments when federal funds would be useful, and can help accelerate the greening of our ports, the building of more public transportation, the environmental-justice issues of restoring communities cut up by bad infrastructure decisions, and that’s frustrating at times.

But no, I think that there are bigger targets that they have their attention on. And we actually welcome collaboration with them. If you can get past some of the fixations they have, whether it’s offshore wind or this, that and the other, there are opportunities for America to be strong and have jobs the same way that Prime Minister Carney is talking about. This is the age of more national sovereignty, reshoring jobs. I’d love for us to be talking about in the United States, as Canada is doing, really being one of the green manufacturing hubs that can export to the world. Don’t cede that to China, as marvellous a job as they’ve done. They shouldn’t be creating every future car. We should have Canadians and Americans that build cars, but it’s probably not going to be an internal combustion engine 20 years from now. So we’re going to lose a decade by winding away all those subsidies. And we’re going to be behind the eight ball for a long time.

Mark Mann is the managing editor of Corporate Knights. He lives in Montreal. 

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That coral bleaching is an old story obscures the fact that it is also a new story. First reported in the early 1980s and then extensively in the 2000s and 2010s as mass bleaching events became more common, the tragedy of tropical reef habitats being drained of their kaleidoscopic beauty has long been a familiar trope in the climate-change narrative. But the situation changed during the last El Niño phase, between 2023 and 2025, when prolonged heat stress afflicted 84% of the world’s coral reef area, of which half didn’t survive, according to estimates by Carlos Duarte, a leading marine scientist.

“We’re in a new reality whereby we can now say that we’ve passed the first major climate tipping point, which is the coral reefs,” said Steve Smith, a research fellow at the Global Systems Institute, in an interview with CBS News. Smith is one of the co-authors of an October 2025 report by the University of Exeter that found that warm-water corals – where 830,000 species live, and upon which 33% of marine life depends – are the first planetary-scale system to enter irreversible decline. The latest mass bleaching event came soon after the previous one, from 2014 to 2017. “They don’t have time to recover,” says Marinez Scherer, who served as special envoy for the ocean at the COP30 climate conference in Brazil, in an interview. “The water is staying far too warm for them to survive.”

Scientists are horrified. “We’re talking about an extraordinary, catastrophic collapse,” Oliver Steeds, director of the species cataloguing initiative Ocean Census, said at a summit in Montreal in March. He called the coral dieback “an apocalyptic situation that is happening in our oceans.”

The start of the heat wave that killed off so many warm-water coral reefs coincided with another grim milestone: 2023 was the year the planet first sailed past the critical threshold of 1.5°C of global warming. The Intergovernmental Panel on Climate Change has found that crossing this marker probably means losing between 70% and 90% of tropical shallow water coral reefs, which are the vast majority of the world’s reef ecosystems. Go up to 2°C of warming and we’re facing 99% die-off. The world is currently on track for about 2.6°C by the end of the century, and fossil fuel emissions have not stopped rising.

While warming is generally measured as an average across decades, many scientists consider “overshoot” to no longer be a risk but rather a fact. We may still be at the gate, but we now live in the land beyond 1.5°C, where coral disappearance is but one of multiple cascading transformations – melting polar ice sheets, disruption to North Atlantic Ocean circulation, the dieback of the Amazon – that can no longer be considered merely theoretical.

“We know that scientists have told us that [overshoot] territory exposes us to potential non-linear trajectories of climate change,” said Ricken Patel, founder of the global online campaigning network Avaaz, speaking on the Outrage + Optimism podcast. Patel’s focus has shifted from pressuring governments to keep warming below 1.5°C to preparing for more catastrophic tipping points, because, he said, we are unlikely to avoid them: “I haven’t met anyone who said that we’re on track. Not a single person.”

The truth is that 1.5°C is not the magic number when corals start to wobble into irreversible decline. That was likely 1.2°C of warming, which we started to traverse about a decade ago.

But 1.5°C has been freighted with significance since it became the main reference point in international climate policy following the Paris Agreement, the climate accord agreed to by 195 countries in 2015. (The United States has since dropped out – twice.) At the time, the signatories set a goal to limit warming to well below 2°C but committed only to “pursuing efforts” to stay below 1.5°C. Even so, 1.5°C became one of the central pillars of global climate governance, particularly as the science coalesced around that marker as the real upper boundary for what’s relatively manageable.

“It’s a limit. It’s a ceiling. It’s a maximum temperature level,” Christiana Figueres, the Costa Rican diplomat who led the UN climate talks at COP21, has said. “It’s not a target.”

Whatever it is, it’s not happening, and the climate movement is still working out how to adjust to that fact. Some are calling for a reckoning, as climate action weathers a prolonged period of political hostility and public disaffection, with climate coverage down 35% across major U.S. networks in 2025. But even missed, 1.5°C won’t be killed, because it still retains its scientific significance and legal status. In short, we’ll have to get back to it in the future. But can the movement keep rallying around its most glaring failure?

A movement in crisis

The story of human-caused climate change follows three interconnecting pathways: what the science says, how it’s received, and what we’re doing about it. But it’s the science that runs down the middle, laying the track for the others to follow.

When the greenhouse effect was discovered in the mid-1800s, it did not take long for scientists to recognize that fossil fuel pollution would build up in the atmosphere and heat the earth. Through research and observation spanning disciplines and decades, the theory was validated and its impacts described and anticipated. But as the picture crystalized and the imperative to stop burning fossil fuels became apparent, the response split into two distinct dynamics.

On one track, applied scientists recognized the reality of the impending climate crisis and began to innovate. They invented solutions, started companies – many failed, some succeeded – and ultimately spawned whole new industries that are now pillars of the economic landscape. Wider society, too, reflexively accepted the science, but this response was hijacked by oil and gas companies, who spent billions on misinformation, greenwashing, legal attacks and lobbying. And so the climate crisis became, on one side, a technical challenge and an economic opportunity, and on the other, an actual “climate fight” between environmental campaigners and the incumbent industry, with scientists decidedly in one corner and policymakers trying to play both sides.

Stopping climate change has always been popular, but consensus around appropriate and effective climate action has been dazzlingly hard to produce. That impasse has never felt more stark. Humanity’s civilizational story of encountering existential peril and making a hard switch to a new energy system feels, on a bad day, like one of failure and defeat. Just ask David Suzuki. The famed environmentalist said in an interview with iPolitics last summer that it’s “too late” and that “we have lost the fight against climate change.”

Consider the evidence. There’s the spectacle of President Donald Trump swinging his golden wrecking ball through U.S. climate policy, obliterating environmental protections and stamping out climate science – and apparently without much opposition. There’s an ascendant cultural movement that derides and attacks climate ambitions, and anti-green political parties poised to seize power in Europe, the United Kingdom and elsewhere. There’s the sad scene of countries and corporations quietly shedding the goals they proclaimed only four or five years ago. And then there’s the annual Conference of the Parties to the Paris Agreement, shuffling from petrostate to petrostate, yielding less and less.

Arlo Brady, CEO of Freuds Group, a London-based PR agency with a history of supporting climate and sustainability campaigns, said in October that the movement “has lost the battle for hearts and minds.” Accepting that fact “paves the way for the adoption of a new approach, but only if we treat this as a learning moment,” Brady told a crowd at a taped recording for the Overshoot podcast, a documentary series by Laurie Laybourn about the implications of transgressing 1.5°C.

Brady decries the lack of “populist narratives for climate action” and warns that the environmental movement’s staple response of “outrage and turning up the volume” won’t work anymore. He argues that “the jargon and the ideology and the groupthink has gotten in the way” and that the sustainability movement should rally around the idea “that people might be able to live better lives.”

In that vein, BloombergNEF’s Michael Liebreich launched a manifesto for a “Pragmatic Climate Reset” in the fall, accusing climate campaigners of being tribalistic, elitist and unrealistic about the costs and challenges of a rapid transition. The movement’s main mistake, he says, was pinning policy to 1.5°C and net‑zero‑by‑2050 as non‑negotiable absolutes, despite the unlikelihood of achieving them. “It’s time to put the decade of 1.5°C behind us,” he wrote, and aim instead for “the hard 2°C target that lies at the heart of the Paris Agreement.”

But 1.5°C isn’t something we can quit like a bad habit. “The primary temperature goal is 1.5°C and not 2°C degrees,” climate lawyer Harj Narulla says in an interview. “In an overshoot scenario, that legal standard does not change. All that changes is that the factual emissions reduction pathway shifts and becomes more difficult, [because] we need to have more removals.”

Narulla was among the litigators who brought evidence and legal arguments before the International Court of Justice for its advisory opinion on states’ climate obligations, delivered last summer. That opinion, he says, effectively locked 1.5°C in as the legal standard for warming. Even in an overshoot world, the bar does not move; it simply means that states must bend temperatures back down through much faster cuts and large‑scale carbon removal. Equipped with the ICJ’s opinion, litigation is pouring more heat on fossil fuel production and methane emissions, he argues, because courts are starting to treat them as incompatible with getting back to 1.5°C.

Beyond fossil-fuel economics

Political scientist Jessica Green is ahead of the curve. She’s been pushing for a reckoning over the fundamental flaws in global climate governance for years, and she, too, argues for a pragmatic turn. But in her definition, pragmatism doesn’t mean softening ambition, but rather to use existing institutions to pull the props out from under the oil and gas industry. Her book Existential Politics: Why Global Climate Institutions Are Failing and How to Fix Them (Princeton, 2025) makes the case that climate governance has leaned too heavily on voluntary targets and carbon pricing and not nearly enough on industrial policy and confronting corporate power. She calls for “ditching the fiction that markets alone will deliver decarbonization” and instead using the state to plan and build the clean‑energy economy.

There’s an irony to the accusations and hand-wringing in the climate movement growing noisiest at precisely the moment when the energy transition has reached transformative momentum and scale. Global investment in renewables now roughly doubles spending on oil and gas, and electrified technologies are growing much faster than their fossil fuel alternatives in areas like transportation and heating. The oil price shock precipitated by the Iran war will create a lot of pain – and underscore the incentives for switching to renewables and electrification.

“We’re now at a point where clean technologies are cheaper and better for most uses,” says Chris Severson‑Baker, executive director of the Pembina Institute think tank in Canada, “but they still struggle to proliferate in regulatory environments built for fossil fuels.” He argues that climate advocates should focus less on “demonizing fossil fuels” and more on helping policymakers align climate goals with a positive vision of the future economy, showing how cleaner systems mean jobs, security and lower long‑term costs.

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But in the rush to find solutions and successes, climate campaigners are sorely at risk of failing to get credit where credit is due. None of the economic momentum we see now would exist without the many decades of effort by citizens, litigators and campaigners to force governments and markets to take climate seriously in the first place. They shouldn’t be discounted, either, as they are continually gaining economic allies among insurers, investment managers and wealth funds.

For Carlos Duarte, who leads the G20’s Coral Research & Development Accelerator Platform, the biggest challenge is defeatism. We already have a toolbox of imperfect but workable interventions that could keep reefs alive if we deploy them at scale. He estimates that about US$68 billion – roughly the cost of a major harbour or airport – would be enough to safeguard reefs for future generations, creating millions of jobs in the process, so long as we also keep phasing down fossil fuels. Most of that money would go to restoration rather than rescue, which he says “shows that conserving is a lot more cost‑efficient than having to repair when the damage is done.”

In the wider climate crisis, cost efficiency may be swiftly retreating, but ambition need not be. This is a story with many chapters left to be written.

Mark Mann is the managing editor of Corporate Knights. He’s based in Montreal.

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The founders of Red Leaf Pulp say they’ve figured out how to make high-quality pulp from agricultural by-products rather than wood from trees, and they’re ready to start producing at scale. The company’s first-of-a-kind pulp mill, slated to begin construction in Regina, Saskatchewan, in the first quarter of 2026, will manufacture what it calls “climate-positive, non-wood pulp” using a process that consumes 95% less water and 70% less energy than traditional mills – all while running on electricity generated by burning biomass from its own waste stream.

“We think there’s nothing in Canada that’s as sustainable as this project, in terms of what we bring in upstream and downstream benefits,” says William Walls, vice president of strategy and development, in a phone interview. He claims that the carbon footprint of Red Leaf’s wheat straw pulp is a third that of regular wood pulp.

Red Leaf has earned the confidence of investors, raising $42 million in five years, most of it from the container company Dart, as well as about $8 million in government funding and a $1-million angel investment. Walls calls it “probably one of the best-funded cleantechs in Canada.” The company used the funding to build a demonstration plant in Alberta, where it has been testing its process and selling its products for different applications. Once operational in 2028, the facility is expected to convert 400,000 tonnes of straw into 200,000 tonnes of market pulp annually.

There’s a lot for investors to like. For example, Red Leaf doesn’t need to develop any equipment to run its patented process for “making the straw act like a wood chip,” Walls says. They use conventional equipment for wood pulp mills made by Valmet, one of the biggest pulp and paper equipment manufacturers on the planet.

Red Leaf sources directly from farmers and accepts all varieties of leftover wheat straw, as well as oats, barley and flax, much of which would often otherwise be burned or left to lie on the field. This creates a new revenue stream for farmers and positions them in a circular economy, while ensuring a reliable supply of pulp for Red Leaf’s new mill.

An opening in the pulp market

The introduction of wheat straw pulp comes amid an ongoing decline in the supply of “economically viable timber,” which has been devastating for Canada’s forestry industry and prompted one B.C. lumber mill to close in November. The main culprits are wildfires, which consumed 17 million hectares in 2022, and invasive insect infestations, which killed 13 million hectares worth of trees the same year. Those disruptions, plus a reduction in the allowable cuts, caused the whole forestry sector to contract by 22% in 2023 and have shrunk the available wood fibre for products like pulp and pellets by more than 40% in British Columbia since 2018. To make matters worse, the United States raised its duties on softwood lumber to 20.6% last July.

The constrained fibre supply in Canada’s forestry sector creates an opening for Red Leaf, but the company sees its role as complementary rather than competitive, spokesperson Elle Kreitz says in an email: “Red Leaf introduces new, non-wood fibre into an already integrated system, helping to relieve supply demand pressures without competing for forest resources.”

The company believes its wheat pulp should telegraph its authentic sustainability, so they’re not going to dye it bright white, which has long been an industry norm. Red Leaf advertises its pulp as possessing a “natural golden tone” – one that doesn’t require a harmful bleaching process to achieve.

A starring role for lignin

Red Leaf also plans to sell the lignin – a component of plant cell walls that gives them their structure – separately as a stand-alone product. Straw has less lignin, so it’s easier to separate out, Walls says. Lignin comes out of the pulp process as a sludgy brown by-product that’s already a popular binder in animal feed and is considered eco-friendly because it diverts waste that would otherwise contaminate waterways.

But Walls sees much more potential for the sticky residue. Non-toxic but also not directly digestible, there is evidence that lignin has some health benefits as a food additive, and it can also be used in other industries as a natural bonding agent for materials manufacturing and pharmaceuticals. There are also emerging applications in batteries and bioplastics.

“It’s like a unicorn. We’re selling it for more than twice as much money as the pulp,” Walls says. “But someday down the road it may be that this thing is called Red Leaf Lignin and the pulp is the by-product.”

Mark Mann is the managing editor of Corporate Knights.

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One year earlier almost to the day, then-UN Special Envoy on Climate Action Mark Carney gave the keynote address at the Sustainable Finance Forum in Ottawa, in a speech titled “Transformational Leadership.” At the time, Carney’s reputation as a climate leader was gold-plated. Regarded as one of the architects of modern sustainable finance, his Glasgow Financial Alliance for Net-Zero had corralled hundreds of major banks, insurers and asset managers to pledge funds for the energy transition. To add to his veneer, he was already being chased by reporters about his prospects for Canada’s top office.

A lot has happened in a year. Carney and his central bank bona fides soon became the hottest commodity on the Canadian political map, for an electorate that was suddenly feeling under siege by a Donald Trump White House. He won the Liberal leadership, then eked out a come-from-behind win in the federal election, upending what had looked to be the dawn of a new Conservative era in Canada.

Now, these two moments – the finance summit and the pipeline deal – mark a full turning for Carney, from climate hero to, in the eyes of some, climate villain. Even so, Carney stated his convictions clearly back at the Ottawa event in 2024. Asked if the federal government should invest in decarbonization in high-emitting industries, Carney said, “I’m suggesting we should run towards that, because that, in the end, is going to have the highest impact on the climate.”

As promised, Carney has now stamped his approval, and his reputation, on so-called decarbonized oil and the infrastructure to move it. It’s a high-stakes gamble, at a different inflection point in the climate battle than the showdowns over the Keystone XL and Trans Mountain pipeline projects. The politics are shifting, as evidenced by the shuttering of Carney’s net-zero banking alliance in October.

The myth of low-carbon oil

So-called decarbonized oil hinges on the deployment of expensive technology to snatch carbon from smokestacks and pump it underground, known as carbon capture and storage, or CCS. While there are many CCS projects already operating around the world, albeit mostly for methane gas processing rather than oil, the technology has not been proven at scale as a reliable climate solution. Critics point out that it is costly, inefficient and unlikely to ever exist independently of government subsidies.

Whether CCS turns out to make sense economically, the marketing belies the fact that oil cannot be decarbonized. It is made of carbon, and you still need to burn it to use it, which is when most of the pollution is released. The word “decarbonization” exists to set the widest possible frame around what reducing carbon dioxide emissions can mean. In this case, it means roughly 10% to 20% of the full life-cycle emissions of a barrel, and those reductions come at such a high price that any market for it is conjectural at best.

The Pathways Plus system agreed to in the new MOU, billed as “the world’s largest carbon capture, utilization, and storage project,” will cost approximately $16.5 billion to deploy in the oil sands, and that’s just for the underlying infrastructure to move the CO2 around and store it. The participating companies still need to buy their own carbon-capture units and install them at their extraction and upgrading plants.

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Few in the world of net-zero finance are buying it. Carney is “legitimizing doublespeak,” says Kyra Bell-Pasht, director of research and policy at Investors for Paris Compliance. “By using greenwashing terms like ‘decarbonized oil’ on his pulpit, he is setting a standard of misinformation at the highest level,” she writes in an email.

Carney has already paid a high political cost for backing the oil and gas industry’s plan to increase production in the era of climate consequences. Just hours after the deal was signed, former environment minister Steven Guilbeault quit his new cabinet post as minister of Canadian culture, saying that he could not have looked himself in the mirror if he’d gone along with the prime minister. Two core members of the Net-Zero Advisory Body, which gives guidance to the government on reducing emissions, also stepped down over the pipeline deal: Catherine Abreu, director of the International Climate Politics Hub, and Simon Donner, the group’s co-chair. The Assembly of First Nations chiefs passed a unanimous emergency resolution echoing coastal leaders who say the project “will never happen,” while B.C. Premier David Eby was more tepid but still dismissed the deal as a “distraction.”

Premier Smith, too, paid a price for collaborating with Ottawa, which Alberta premiers can little afford to be seen doing. She was loudly booed at her party’s annual general meeting just a few days after signing the MOU.

More than half of Canadians still support the proposed pipeline, but any push by Carney would surely be a long, bruising effort, and the prize at the end looks very much in doubt. At the Sustainable Finance Forum in 2024, he told the crowd, “We may be the first generation that understands the risks associated with climate change. We’ll also be the last generation that can do anything about it.” Building an oil pipeline is not something most people in that room would have picked for a next step.

Mark Mann is the managing editor at Corporate Knights. He is based in Montreal. 

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Scale is a challenge when it comes to disclosure. There are around 6,000 cooperatives in Canada, about half of which are non-profits, and many are quite small. They don’t necessarily have the resources to bring a standardized process around sustainability into their operations, Duguid says.

Recognizing the lack of data and the intrinsic barriers, Duguid and fellow researcher Daphne Rixon asked themselves, “Could we help co-ops to do this better?” Together, they set out to build a dashboard to capture the performance of Canadian cooperatives with respect to the United Nations Sustainable Development Goals and the cooperative principles.

The aim is to create an easy-to-use sustainability tool that enables co-ops to better understand their own sustainability performance and impact and share the results publicly, without adding a lot of work. The platform, called ACT (Accounting for Co-operative Transformation), is backed by the Centre of Excellence in Accounting and Reporting for Co‑operatives at Saint Mary’s University in Halifax and will launch next year.

Work by the Corporate Knights research group confirmed the limited visibility on sustainable impact at Canadian cooperatives. Out of more than 140 co-ops or credit unions in Canada with annual revenues exceeding $5 million in 2023 or 2024, researchers found that only 11 reported their sustainable investments and revenue. Ranked by sustainable impact, five of the top 10 were credit unions, which have more advanced sustainability reporting because they operate in the financial sector.

Sustainable impact at smaller co-ops can’t be measured by the same standard as it is at large credit unions, Duguid suggests. “It wouldn’t be fair to the co-op sector to think that a small bike co-op, for example, should be investing sustainably,” she says. “Their raison d’être is to provide sustainable transportation, and that should speak more than their investments.”

Sustainability Solutions Group (SSG) is a prime example of the tension between the commitment to sustainability and the absence of data-driven recognition for this work. Founded in 2001 in Tatamagouche, Nova Scotia, the worker cooperative generates greenhouse gas inventories and climate action plans for cities, provinces and states across Canada, the United States and Chile. But with only 50 employees/members, most of whom work from home, the company doesn’t have the capacity to publish a sustainability report.

Despite the lack of clarity surrounding sustainable impact, no one doubts the deep links between the cooperative sector and sustainability. “Most co-ops were invested in sustainability long before it became fashionable,” says Daniel Brunette, senior director of cooperation and engagement at Co-operatives and Mutuals Canada. Recognizing the critical role that co-ops play toward achieving the Sustainable Development Goals, the UN declared 2025 the International Year of Cooperatives.

Cooperatives are a huge part of the economy. So where’s the training?

Yuill Herbert, founder of SSG, says that the co-op’s shared-ownership model is intrinsically democratic and therefore more likely to pursue sustainable goals. “The co-op is the enterprise manifestation of sustainability,” he says.

Despite the existing core alignment with sustainability, the co-op sector still needs to get on board with reporting, Duguid says. “Co-ops should have been first off the mark with all the reporting about corporate social responsibility and ESG,” Duguid says. “Co-ops do really well in terms of social, economic and community [impact], but environmental can be hard for them to tackle.”

“They were doing that originally, and not just in a greenwashing way, but in a real way,” she says. “But they haven’t done a good job of talking about it.”

Naomi Buck is a writer based in Toronto. Mark Mann is the managing editor at Corporate Knights.

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