Canada’s Climate Leadership Opportunity Expands

Yrjo Koskinen is the BMO professor of sustainable and transition finance at the Haskayne School of Business and research director at the Institute for Sustainable Finance at the Smith School of Business, Queen’s University

Potential Opportunity for Canada in the Energy Sector Amid US Policy Changes

Canada now finds itself with a chance to outperform in the energy sector. With the US Environmental Protection Agency’s recent decision to scrap mandatory greenhouse gas reporting, it’s not only the climate policy that’s been affected but also the essential business infrastructure.

This move impacts businesses taking advantage of the Inflation Reduction Act’s 45Q tax credit for carbon capture, utilization and storage, which rely on transparent and accurate reporting.

Large-scale project financing demands accurate data. Without it, banks won’t invest, insurers won’t back storage liabilities, and boards won’t approve capital expenditure plans. The removal of the mandatory reporting requirement could cause the entire 45Q structure to collapse.

Bankers will not finance billion-dollar projects on vibes; insurers will not underwrite storage liabilities without verifiable data

Additionally, US President Donald Trump’s speech at the UN where he dismissed climate change as a large-scale deception, sends a clear message to the global green capital that they should look elsewhere for investment opportunities.

This is a chance for Canada to rise above the competition by providing reliable and transparent business environments. This can be achieved by treating emission data as a vital part of the business infrastructure – standardized, assured, and made available on a single, robust platform.

The Value of Transparency over Opacity

Should the US embrace a lack of transparency, Canada has the chance to offer a more appealing alternative based on openness and reliability. Imagine a world where accurate emissions reporting is standardized across the supply chain, audited by third parties, and linked to incentive payments.

Compare that to a US project where the core revenue line — 45Q — is no longer assured. Which one would be more appealing to investors looking for a safer return on their capital?

The problem of unreliable data isn’t confined to carbon capture, utilization, and storage. The US Securities and Exchange Commission’s carbon emissions disclosure rules are now in a legal limbo, affecting all businesses negatively.

Companies with science-based emissions targets are currently choosing suppliers based on the quality of their data. If American suppliers become less transparent, Canadian firms that can substantiate their numbers could become a safer choice.

Even the engineers and founders are aware that the most attractive places to work are those where results matter and the rules do not change on a whim.

In a world of rising greenwash risk, trust is not a slogan — it is an asset you can amortise

The plan is simple. Keep things transparent and offer financial incentives only for verified results. Write this into law so that businesses can calculate future cash flows without a cloud of uncertainty.

Additionally, provide faster permit approvals for projects with credible storage geology and community benefits. If businesses can provide accurate data, the state should be able to provide predictable timelines.

Transparency as a Business Strategy

Businesses need to see transparency and disclosure as strategic tools, rather than mere compliance issues. Companies with data that can withstand scrutiny will be the ones to win the cost of capital race.

Companies should produce a transition plan that links capital expenditure to measurable milestones and ties executive pay to verifiable outcomes. The reward is not just recognition from activists, but also cheaper debt, equity, and a preferred status in customer supply chains looking to validate their own numbers.

Sceptics might say that Canada has its own credibility issues, such as missed targets and increasing emissions from oil sands. However, the key to transforming ambition into bankability lies in transparent and verifiable data.

Even imperfect progress garners investor patience if the numbers are consistent, comparable, and assured. The goal of mandatory disclosure is not to chastise but to reduce capital costs and speed up the implementation of real projects.

Washington may have stumbled, both by weakening the data infrastructure supporting the 45Q tax credit and by dismissing climate change. Yet this presents an opportunity for Canada. The focus needs to be on delivering reliable and verifiable numbers, not overblown rhetoric.

If we verify our measurements, pay only for proven results, and establish long-term rules, businesses will come. Not because we are necessarily friendlier, but because we are clearer.

In a world searching for reliable places to invest in the energy sector’s future, clarity is a competitive advantage. The US may have just forfeited some of it, and Canada should seize this opportunity to step up.