Canada’s crackdown on greenwashing: ‘Gag order’ for oil & gas industry’s climate action or greater transparency?

Given the global rise in greenwashing attempts through puffed-up environmental records and unsubstantiated claims, Canada has now tightened the reins on environmental stewardship with a bill that brings multimillion-dollar fines and jail time into play for those prone to bragging about climate action they cannot back up. While this green bill has been dubbed as draconian by those who do not look favorably upon it, the move to implement it has caused strife between the government and the country’s fossil fuel lobby, as no clear principles have been set up yet. Should the oil and gas industry roll the dice, where will the chips fall?

Key highlights:

• Canada brings new anti-greenwashing bill into play to tackle climate change
• Greenwashing policy – open to interpretation
• Carbon capture and greenwashing claims: Who will come on top?
• Oil & gas cast in the role of climate villain
• Navigating oil & gas shifting tides with ‘compromised’ transparency as another flaw
• Green wave engulfing businesses: Lawyers’ take on adequate test or internationally recognized standard requirements
• Antitrust immunity and environmental certificates: Saving grace or not?
• Investment tax credit – Silver lining for CCUS amid uncertainty over greenwashing umbrella
• From greenwashing to greenhushing: Canada’s final destination still green trust

The rise in climate change concerns is pushing the envelope on greener policies, pursuits, and actions, thus, governments around the globe are trying to come up with ways to bolster sustainability through different laws and regulations. This begs the question of tackling the overinflated green marketing and environmental whitewashing that have become par for the course to weed out genuine climate action from bogus claims.

António Guterres, Secretary-General of the United Nations, urged “every country to ban advertising from fossil fuel companies.” The UN chief also asked news media and tech companies to stop taking fossil fuel advertising money. In a powerful speech, Guterres summoned fossil fuel companies for “distorting the truth, deceiving the public and sowing doubt” about climate science and for their insufficient investments in clean energy solutions.

Seemingly answering these calls, Canada is said to have taken historic steps in June 2024 to join the ranks of the first movers and shakers on the global stage thanks to a nature accountability bill, Bill C-73, with Steven Guilbeault, Environment Minister, proudly exclaiming that as the Great White North has now become “only the second country in the world to do something, certainly puts us ahead of the game.”

On the other hand, one of the perks of the country’s latest addition, Bill C-59, is a right of private access to the Competition Tribunal for greenwashing cases, which is expected to facilitate a greater level of prosecution of companies at fault since only the Competition Bureau was allowed to initiate such recourse in the past. The bill has sparked another ideological split between the federal Liberal government and the stance the Alberta government and the energy industry have adopted.

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Leah Temper, Health and Economic Policy Program Director at the Canadian Association of Physicians for the Environment (CAPE), emphasized: “This is an important first step in ensuring that companies can no longer get away with talking green and walking dirty. What we would like to see next is to give this legislation teeth through mandatory data disclosure, clear standards in the form of a green claims guide from the Competition Bureau, and timely and transparent enforcement.

“Misleading environmental claims can have very real implications for human health. We hope that this sends a clear message to polluters that they will no longer be able to lie to the public about their environmental credentials with impunity.”

However, some claim the bill is a “gag order” and has designs to silence the oil and gas industry’s voices in climate roadmaps and set them up to pay millions in litigation fees and fines over promoting decarbonization tools such as carbon capture utilization and storage (CCUS), which do not enjoy widespread support from all or most players engaged in coming up with ways to combat climate change and reach net zero goals.

Infused with fears over potential legal actions on climate grounds due to the vogue guidelines the new bill is adding to the climate litigation playbook, the oil and gas industry embarked on a mission to rid its websites of huge chunks of content dedicated to its environmental efforts. Certain climate groups, organizations, and even government officials have seen the removal as an exaggeration.  Others justify the steps the fossil fuel players have taken by claiming that the uncertainty surrounding the new greenwashing rules, which are yet to be fully explained, has given rise to widespread panic among energy players.

As a result, these do not agree that the oil and gas industry has blown things out of proportion or acted in such a swift manner because it has something to hide and is unable to prove its decarbonization efforts and corroborate that its energy emission reduction tools are working. Instead, they defend the industry’s stance by indicating that desperate times call for desperate measures given the cloud of uncertainty that hangs over the industry’s head due to the potential legal rigmarole the new bill may set into action.

The evolving rules on greenwashing need to be clearly defined to avoid loopholes and ambiguities that could cause a spike in litigation over something the companies did not fully understand and were not even aware was a requirement due to the lack of guidelines the company needed from the government to avoid such pitfalls and ensure its practices and claims are aligned with Canada’s laws on climate.

The Competition Bureau, an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses, appears willing to play by the book and provide guidance on interpreting new provisions aimed at stifling greenwashing, which require companies to be able to substantiate environmental claims made to promote a product or business interest.

Having become aware of the widespread ambiguities and torrent of contradictory conclusions and depictions, the Bureau has reassured that it will not only develop guidance on an accelerated basis in consultation with a broad range of stakeholders but also launch a public consultation in the coming weeks to gather views and input.

One of the major titans of Canada’s oil and gas industry, Pathways Alliance, was not willing to take a shot in the dark on uncertain legislation and evolving rules that could invite complaints without companies fully understanding what they did wrong and what would be the right course of action.

This consortium of the six largest companies operating in the oil sands underscored that “amendments to the Competition Act will create significant uncertainty for Canadian companies that want to communicate publicly about the work they are doing to improve their environmental performance, including to address climate change.”

As a result, it removed all traces of carbon capture and storage (CCS) and similar technologies from its website before Canada’s Competition Act officially came into play. Other players in the oil and gas industry followed suit as well.

This move did not go unchallenged nor did it sit well with environmentalists, who were quick to seize on this as alleged evidence that the fossil fuels lobby was running scared as it was aware that it had no way of backing up the low-carbon repertoire spiel it has been crafting and spouting over the years as decarbonization gospel.

Nola Poirier, Senior Researcher and Writer at Greenpeace Canada, noted: “Canadian companies who are walking their climate talk need not worry about changes to Bill C-59. This law will merely ensure that companies do not make false environmental claims. However,  the Pathways Alliance does have reason to worry. If scrubbing all information from their website in the face of truth-in-advertising legislation doesn’t make Pathways look guilty of something, I don’t know what does, but like Kenny Rogers said, ‘a gambler’s got to know when to hold ’em, and know when to fold ’em.’

“Already the Competition Bureau is investigating the Pathways Alliance to determine whether they have contravened the Competition Act by ‘making false or misleading environmental representations’. For too long fossil fuel companies have been able to greenwash their products and actions. We look forward to strong laws that put an end to false environmental claims and hold companies accountable when they aren’t telling the truth.” 

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Canadian government’s attempt to rein in greenwashing is seen by many as a step in the right direction, however, without clearly set and defined benchmarks to monitor performance, very few companies, if any, would be willing to tempt fate and risk being found guilty of misleading the public with false environmental claims that could slap them with a fine to the tune of even up to $10 million.

The rise in global awareness of topics such as climate change has spurred the demand for low-carbon, carbon-free, and zero-emission products and services, which has propped up the growth in the supply of green products. Like any other business, this one also has genuine providers and products alongside crooks that try to sell fakes by claiming they are the real, in this case, green deal.

With this at the forefront, the Canadian government has taken steps to weed out these false or misleading environmental ads and claims to tackle greenwashing and protect consumers from such practices with amendments to the Competition Act, which entered into force on June 20, 2024, as a part of the modernization of the country’s competition regime.

Based on this newly minted law, advertising or marketing something in a false or misleading manner is illegal. The catch for the oil and gas industry is encapsulated in the changes that deal with unsupported environmental claims. The goal of these additions is to take a crack at greenwashing by requiring that claims about the environmental benefits of a product be supported by adequate and proper testing, and those of a business or business activity be based on adequate and proper substantiation per an internationally recognized methodology.

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Currently, the Bureau is looking into the impact of these requirements to provide guidance, in due course, that will offer transparency and predictability for the business and the legal communities in enforcing the law. Companies wishing to work together to protect the environment can seek environmental collaboration certificates from the Competition Bureau, confirming that the Competition Act’s conspiracy, bid-rigging, and civil agreement provisions will not apply to the collaboration.

Matthew Boswell, Commissioner of Competition, underlined: “The Competition Bureau is focused on implementing these important changes to the Competition Act. We won’t hesitate to use these new tools to take enforcement action and protect competition so that all Canadians can benefit from lower prices, better services, and more choice.”

Giant oil and gas corporations are often accused of underreporting their greenhouse gas emissions and doling out millions on greenwashing ads that make them look environmentally friendly, as they continue to lobby against climate policies. The lion’s share of climate and environmental groups do not recognize carbon capture technology as one of the tools in the emission reduction toolbox, as they consider this to be the lifeline fossil fuel players use to burn more oil and gas.

While fossil energy companies tout carbon capture as a decarbonization path that will lead to a low-carbon and even carbon-free future, when pressed, most acknowledge that the technology is far too expensive currently on top of not being ready or reliable. For climate campaigners, CCS is just another tactic giant corporations employ to continue with fossil fuel production and expansion business as usual, condemning climate progress to stagnate.

Therefore, activists and climate-conscious groups, like Environmental Defence, do not want carbon capture technologies to get a free pass and be deemed a valid climate mitigation option, instead, they want this to be thrown onto the pile of greenwashing scams. The activists use findings from the International Energy Agency (IEA) to give more credence to their views.

Since Fatih Birol, IEA’s Executive Director, dismissed the hopes placed on carbon capture to slash emissions while oil and gas production continues unabated as “fantasy” last November, the climate groups believe this gives them a leg to stand on.

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This offers more insight into Pathways Alliance’s decision to scrub its website so that no trace is left of its previous efforts to promote carbon capture technology, including all information about its proposed carbon capture and storage project in Alberta, which served as its primary tool in fighting climate change. The Canadian Association of Petroleum Producers (CAPP), Canada Action, Canadian Natural Resources Limited (CNRL), Cenovus, and ExxonMobil’s Imperial Oil are also some of the companies that have made it onto the list of those that recently erased information about carbon capture pursuits.

Emilia Belliveau, Energy Transition Program Manager at Environmental Defence, stated: “It’s clear that rules to rein in greenwashing are needed, and that C-59 is doing its job effectively if organizations like the Pathways Alliance are scrambling to take down their unsubstantiated environmental claims and rethinking their misleading advertising plans.”

While acknowledging and welcoming the progress, the Quebec Environmental Law Center (CQDE), Ecojustice, the Canadian Association of Physicians for the Environment, and Équiterre still see the bill as “insufficient,” even though the scope of the bill was amended to ensure that the obligation to substantiate environmental claims applies not only to products but also to claims about companies and their activities while covering allegations related to the cause of climate change and environmental restoration. 

Julien Beaulieu, Lawyer and Researcher with the CQDE, said: “Bill C-59 will require companies that make claims promoting the environmental benefits of their products and activities to back their allegations with evidence. A company that makes environmental allegations without providing this evidence will be subject to legal action. This will enable consumers, investors and decision-makers to make more informed decisions, which is an essential condition.”

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Since Bill C-59 has seen the light of day, opponents have issued warnings from left to right about the share amount of litigations this bill will bring if adopted. However, such legal challenges are nothing new for the oil and gas industry, as it has experienced more than its fair share over the years and even recently. A case in point is Greenpeace Canada’s complaint to the Competition Bureau from March 15, 2023, about what they have labeled as false and misleading advertising by the Pathways Alliance.

Once October 2023 rolled in, the Canadian branch of the environmental group submitted further information to support its complaint in the form of an addendum. Greenpeace recently confirmed that it had saved various versions of the Pathways Alliance website on the Wayback Machine. The climate activist group has criticized the Pathways Alliance’s plan to reach net zero, as it was based only on emissions from their upstream production, not on the 80% of emissions that come from the use of products.

Aside from this, Greenpeace argues that the plan relied heavily on carbon capture, which in its opinion, is “an unproven technology that they have not yet constructed, as they have been waiting for taxpayer money to cover the bulk of the costs.” The group uses a recent Deloitte report, commissioned by the Alberta government, to support its argument that carbon capture is “unlikely” to provide a solution to the greenhouse gas emissions of the fossil fuel industry, as the report’s findings show that “curtailing production would be a more cost-effective option compared to investing in CCS.”

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Climate and environmental activists see the oil industry as the biggest impediment to climate action, not only through greenhouse gas emissions but also by pushing what they interpret to be “a dangerous agenda” for weaker climate policies. Greenpeace and other groups note that the oil and gas industry has a vast network that spreads its message including law firms, lobbyists, PR firms, advertising agencies, academia, and other institutions to sway the public and increase the political power of fossil fuels.

While aiming to back its claim that the fossil fuel industry’s work to halt or stall climate action appears almost daily in the news, the climate group uses a few relatively recent examples, such as the Alberta Environment Minister raging against a bill aiming to make oil companies prove their environmental claims, a request for a large CCS project, fight to avoid impact assessments, and Conservative Party leader Pierre Poilievre campaigning against the carbon tax while shilling for LNG expansion.  

The environmental activists underscore that the Canadian Association of Petroleum Producers (CAPP) released a report on the costs of mandating an emissions cap modeled on reducing emissions by 40% by 2030 when the proposed federal cap only requires a $20-$23 cut in actual emissions. In addition, it also assumes that companies will not maximize methane reductions, which are the quickest and cheapest way to meet that target while ignoring the jobs and environmental benefits that come with investments in alternatives to oil and gas. 

Climate groups are adamant that the industry wants to make the cap appear to be a burden for taxpayers. Greenpeace and other groups highlight that climate change already costs more than $16 million an hour, thus, for them the path forward is clear. With the industry not decarbonizing on its own and given that dragging the country’s feet on climate action has dire costs, they urge for a quick and fair decarbonization of the sector to avoid the worst impacts of climate change. Environmentalists believe the emissions cap is the right tool to help Canada mitigate the worst climate impacts, slow climate change, and reduce some of the current risks.

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In line with this, the Canadian Renewable Energy Association (CanREA) celebrated the passage of Bill C-59, as a step to implement the long-awaited Clean Technology Investment Tax Credit (Cleantech ITC), which it sees as a way to make Canada a more competitive place to invest in renewable energy and energy storage.

Additionally, CanREA underlines that the bill makes the Cleantech ITC available to companies looking to invest in the country’s wind energy, solar power, and energy storage industries. It allows companies investing in renewable energy and energy storage projects to recoup between 20% and 30% of their capital costs as a refundable tax credit. 

Fernando Melo, CanREA’s Federal Director, noted: “The Cleantech ITC is potentially worth billions to the renewable energy and energy storage industries. Its relatively straightforward design and refundability will put Canada in a competitive position relative to the US and other jurisdictions that are looking to decarbonize their electricity systems.” 

Looking up to the Joe Biden administration’s green policies, CanREA has been at the table with Finance Canada since August 2022 to advocate for a Canadian response to the Inflation Reduction Act (IRA) in the U.S. which would enable the government to put the Great White North on track to meet its climate targets and stay economically competitive in a rapidly digitizing economy while giving investors confidence that Canada will remain competitive in the long term, as the bill specifies that the Cleantech ITC will remain available to 2034. 

While environmental activists and renewable energy enthusiasts have welcomed Canada’s new bill, oil and gas players are issuing dire warnings about the consequences of such a bill. Suncor Energy, alongside other members of the Pathways Alliance, has reiterated its commitment to environmental performance and operational emissions reduction. However, the Canadian player and its peers underscore that their ability to remain transparent has been “significantly compromised,” as a result of Bill C-59, which is related to environmental and climate disclosure.

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“With these changes, it is possible that certain public representations by a business about the benefits of the work it is doing to protect or restore the environment or address climate change will violate the Competition Act and subject it to significant financial penalties unless the business can adequately and properly substantiate their claims according to ‘internationally recognized methodology,’ which may or may not exist,” elaborated of the Pathways Alliance.

“Creating a public disclosure standard that is so vague as to lack meaning and that relies on undefined ‘internationally recognized methodology’ opens the door for frivolous litigation, particularly by private entities who will now be empowered to directly enforce this new provision of the Competition Act. This represents a serious threat to freedom of communication.”

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Suncor Energy and other Pathways Alliance members further point out that these amendments bring uncertainty and risk for all Canadian companies regardless of sector, as long as they disclose publicly their environmental performance, such as actions to tackle climate change. The Canadian firms firmly identify this as the reason behind their decision to remove information on environmental and climate performance, progress, and plans from its website, social media platforms, and other communications channels at this time.

“These actions are a direct consequence of this legislation and are not related to our commitments or belief in the accuracy of our environmental communications. The result of this legislation, which has been quickly put in place with little or no consultation, is to silence Canadian businesses taking climate action,” emphasized the Pathways Alliance.

“We will continue to impress on the federal government the need for clarity regarding these new amendments so that we and all other industries can share the important work we are doing to preserve and restore the environment and address climate change.”

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Jonathan Wilkinson, Canada’s Minister of Energy and Natural Resources, vehemently denied that Bill C-59, which requires companies to back up environmental claims, is part of a reckoning with the oil and gas industry, and underlined: “It was an overreaction. And I think it was an unfortunate overreaction because I think the message that it sent to folks, to the average citizen, was that what they had on their website was not something that they could stand behind.

“And for those who say that somehow the oil and gas industry is being picked on, that’s just not true. The pharmaceutical industry, for example, has exactly the same requirement, which is you’ve got to have some basis on which to actually justify the claims that you make. That’s just a reasonable thing.”

Canada Powered by Women (CPW), a non-partisan, non-profit organization committed to representing Canadian women who believe sound energy policies are vital for continued economic prosperity, has submitted a comment on the bill, which raises similar concerns to the ones the Pathways Alliance has identified. 

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“As an organization committed to bold conversations and informed dialogue, we believe this legislation will hamper our ability to communicate openly and transparently with our members, women who are seeking balance between economic prosperity, energy security and the environment. We are concerned about being able to maintain our commitment to providing comprehensive information if we are not able to address environmental performance and discoveries, claims about emissions reduction or technology and innovation developments across the energy industry,” explained CPW.

While Wilkinson said that it was “legitimate” for Pathways and others to ask about the methodology, he also stated in no uncertain terms that they should have waited for the Competition Bureau to provide them with more information, adding: “I think everybody would have been fine, in terms of people waiting until they understood how this was going to work. Simply pulling it all down, I actually think was counterproductive for them.”

“Like many other Canadian organizations, CPW has removed certain content from our website in response to Bill C-59, leaving us in a position of self-censorship that stands at odds with our mandate. We believe dialogue, not deletion, is the key to achieving sound energy policy in Canada. As such, CPW does not support the progression of Bill C-59 in its current form and asks that the Competition Bureau reviews and revises the legislation in such a way that does not encourage self-censorship, offers much more clarity and does not impede national dialogue,” noted CPW.

Brian Jean, Alberta’s Minister of Energy and Minerals, who adamantly disagreed with Wilkinson’s take on the issue and reinforced the view that the bill panders to anti-oil and gas sentiments within the federal Liberals, emphasized: “I don’t think there’s an overreaction. I think it’s, frankly, a bit of fear and uncertainty the federal government in how they’re going to actually enforce it. It’s draconian.”

Canada’s Bill C-59 has left more unanswered than answered questions at this point, thus, the competition law amendments are a minefield that no one is yet certain how to pick their way through due to the vast amount of variables and potential pitfalls these unchartered provisions regarding claims and conduct about greenwashing and collaborations intended to improve the environment.

Three members of DLA Piper, a global law firm operating through various separate and distinct legal entities, have provided their take on the issue, shedding more light on the complexities Canada’s new bill sets in action. According to Kevin Wright, Amy Pressman, and Stephanie Wright, businesses that publicly disclose environmental matters regarding their sustainability, net-zero, carbon neutrality, eco-friendliness, or recyclability must review and adapt all existing and future statements, including third-party ones, to be aligned with the new provisions that have come into force.

The trio emphasized that Canada’s new act applies to all business activity and comes with “broad criminal and civil reviewable conduct provisions prohibiting materially false or misleading representations used to promote products or business interests.” Therefore, statements, and warranty guarantees of the performance, efficiency, or length of life of a product really must be based on “an adequate and proper test,” the proof of which lies with the business.

Otherwise, Wright, Pressman, and Wright warn that remedies could be very harsh and entail monetary penalties of up to $10 million and even $15 million for subsequent orders, or three times the benefit derived from the misrepresentation, or if that cannot be reasonably determined, up to 3% of the corporation’s annual global gross revenues. 

Things have taken an even more complex turn, as the Competition Bureau has secured remedies against businesses for alleged greenwashing, which DLA Piper trio labels reverse-onus provisions. This is because during court proceedings the Bureau does not have to prove that the claims are false or misleading, it only needs to show the nature of the representation.

Afterward, it is up to the entity that made the representation to prove that it was appropriately substantiated before being made. However, Wright, Pressman, and Wright advise caution by elaborating: “It is not necessarily sufficient for a business to make the representation in good faith believing it to be true or even believing it to be supported by studies, tests or methodologies. When determining what representations may be made, businesses will be faced with several practical challenges.”

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The trio from the DLA Piper law firm highlights three particular challenges that businesses may need to contend with, such as difficulty in determining whether a test or substantiation provides “adequate or proper” support for a statement or whether a methodology would constitute “internationally recognized” substantiation. They warn about the possibility of enormous financial penalties and other negative consequences if the business is found to have made an incorrect determination.

The second challenge Wright, Pressman, and Wright have identified states the possibility that there exists no adequate test or internationally recognized standard to support a representation in an evolving field relating to environmental effects, especially when one takes into account the impact on the environment at all stages of the chain of production and eventual usage by end-users or consumers.

Last but not least, the trio also notes that a third challenge may stem from the fact that there may be different standards that are contradictory, or which place different emphasis on beneficial and harmful aspects of a product or practice.

Wright, Pressman, and Wright underlined: “Concerns have been raised that this development may have the unintended consequence of discouraging businesses from pursuing and publicizing innovations in their practices to address climate change or to otherwise protect the environment.

“Businesses must immediately take stock of their existing and future public claims and representations about the sustainability and impact of their practices, products and plans with respect to climate change and other environmental matters. This should involve careful review of how representations are developed, framed, qualified and substantiated.” 

While previously only the Commissioner of Competition, the head of the Bureau, could bring proceedings to enforce the reviewable conduct provisions of the act, things have now changed, thus, next year on June 20 private parties will gain the ability to seek leave from the Competition Tribunal to enforce reviewable conduct provisions, including the new greenwashing provisions.

However, the Tribunal will decide whether to grant leave, thus, if it determines that it is in the “public interest” to do so, this will be given and the applicant will not have to show that they suffered loss or damage. This is bound to bring more climate-related lawsuits and claims from activists against corporations, primarily those with ties to fossil fuels.

The DLA Piper trio also confirmed as much by stating: “We anticipate that persons who may have otherwise only complained to the Bureau may take matters into their own hands and advance cases directly. While we expect that the Bureau will eventually provide guidance on its approach to the amendments, ‎those guidelines will not bind the Tribunal or private applicants. “

Inspired by initiatives that recently popped up in Europe and other places in recognition that competition laws may chill legitimate efforts by members of industries to collaborate or coordinate practices and standards to address climate change, the Canadian bill amendments bring into play a new certification mechanism, which enables the Bureau to certify certain environment-related agreements, exempting parties to such an agreement from the criminal and civil competitor collaboration provisions under the Act. 

As a result, the Commissioner could decide to issue a certificate, if certain, that a party or parties have proposed to enter into an agreement or arrangement, to protect the environment, and that this is not likely to prevent or lessen competition substantially in a market. Once the Commissioner receives a request for an environmental certificate, they have to consider the request as soon as practicably possible, and the party or parties seeking the certificate must provide the Commissioner with any information related to the agreement or arrangement on request.  

After the certificate has been issued, it needs to be registered with the Tribunal and parties to the certified agreement or the arrangement will be exempt from the competitor collaborations provisions under the Act, including conspiracy and bid-rigging offenses and civil competitor collaborations concerning that agreement. Since the Commissioner may refuse to grant a certificate on the basis that the agreement is likely to lessen or prevent competition substantially, DLA Piper trio underscores that that is the same standard for whether the Tribunal may issue an order under the civil conspiracy provision.

Wright, Pressman, and Wright, who do not seem to be overly optimistic about the use and realization of such certificates, said: “The development will likely be most useful to relieve businesses from concerns about the application of the per se criminal conspiracy provisions which may be violated regardless of the likely economic impact or benefits of a competitor agreement. ‎

“Nevertheless, it is unclear how effective the new regime will be as currently formulated. Unlike many of the changes introduced through Bill C-59, the Bureau did not advocate for the environmental certificate. In fact, the Commissioner opposed this amendment in submissions to Parliament.”

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The trio explains their views in more detail by outlining that the certificate may be deemed unnecessary if it is related to the civil conspiracy provisions, thus, the agreement is unlikely to lessen or prevent competition substantially, or the certificate will not be issued because there is a likely substantial lessening or prevention of competition.

On the other hand, one more prospect comes to mind as measures that benefit the environment, such as an industry-wide agreement to adopt a more expensive but less environmentally harmful manufacturing process, may lessen competition, in which case the Commissioner may decline to issue the certificate.

While climate activists are hailing these amendments in Canada as a major win for the climate, the new legislation does not expressly address the balancing of pro-environmental measures against the potential anti-competitive effects, thus, which way the wind will blow in such cases remains a mystery for the time being.

As the legislation is silent on the effect of a certificate for applications under the abuse of dominance provision, Wright, Pressman, and Wright conclude that it is possible under the abuse provision for the Commissioner or a private party with leave of the Tribunal to apply alleging that two or more persons jointly control or dominate a market, as might be the case if significant market participants were to collaborate. 

Unmasking what exactly constitutes greenwashing under the terms of the new amendments is likely to remain open to interpretation until further guidelines and methodology make an appearance, however, Bill C-59 did also establish an investment tax credit (ITC) for a clean economy. Global CCS Institute, which underlies that this includes carbon capture, utilization, and storage projects, believes the ITC will cover qualified projects capturing carbon that would otherwise be released to the atmosphere, direct air capture, carbon transportation, and carbon storage.

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While credit rates vary depending on the project, qualified expenditures between 2022 and 2030 for direct air capture (DAC) are eligible for a 60% credit, capture other than DAC are eligible for a 50% credit, and carbon transportation, storage, and use are eligible for a 37.5% credit. For all projects, ITC credit rates decrease by half from 2031 to 2040. 

Based on the legislation, capture projects must meet defined eligibility criteria, including dedicated geological storage or qualified use of captured carbon in concrete, but carbon utilization in enhanced oil recovery (EOR) is excluded from the ITC. 

After Matthew Boswell, Head of the Competition Bureau, urged regulators to strengthen greenwashing governing rules, Bill C-59 was introduced as a tool to protect Canadian consumers and increase the transparency and integrity of companies’ claims. It seems that the bill has spurred greenhushing instead, as fears over what it constitutes need to be allayed first before it can get an opportunity to start building green trust brick by brick.

This was confirmed by Pamela Wallin, Senator and Chair of the Senate Banking Committee, who asked the Competition Bureau to respond to the concerns of Pathways Alliance, which is currently operating under the assumption that the new greenwashing provisions to be added to the Competition Act would prevent companies from making statements about their environmental performance or plans.

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“While companies must be careful with their statements to avoid greenwashing risks and the other risks arising therefrom, they should not fear or refuse to publicly disclose climate-related information. This practice is called greenhushing. Instead, companies should engage in real climate actions, avoid boilerplate disclosures, get third-party verification, and be transparent in their communications,” underlined Canada Climate Law Initiative (CCLI).

Moreover, CCLI points out that the reputational, litigation, and regulatory risks companies may face from greenwashing allegations can be curbed and even eliminated by mitigating greenwashing risk. Currently, several Canadian players from different industries have found themselves under scrutiny for greenwashing.

The list of these companies includes, but is not limited, to the Royal Bank of Canada over its financing of the fossil fuel industry allegedly outweighing its statements regarding climate and achieving net zero by 2050, and the Canadian Gas Association over calling natural gas sustainable, clean, budget-friendly, and good for the planet and human health.

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The Competition Bureau is still investigating these cases and CCLI expects to see more such greenwashing claims in the future if regulations to prevent this are not strengthened.

Navigating the fast-evolving energy landscape interspersed with sustainability and climate-related reporting pitfalls will be a tall order and nearly Sisyphean task for Canadian producers and developers unless clear guidelines and regulations are in place.

Once ambiguity has been removed, Canada’s businesses will be in a position to speed up their sustainability journey to hit climate and decarbonization milestones in time to reach net zero aspirations.

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In the meantime, companies need to tackle greenwashing and greenhushing risks to set the ball rolling on the buildout of green trust, if Bill C-59 and other net zero agendas around the globe are to achieve their climate and sustainable economy goals.

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𝐃𝐨 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐠𝐫𝐚𝐛 𝐭𝐡𝐞 𝐚𝐭𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐢𝐧 𝐨𝐧𝐞 𝐦𝐨𝐯𝐞? 𝐋𝐨𝐨𝐤 𝐧𝐨 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐭𝐡𝐚𝐧 𝐎𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐄𝐧𝐞𝐫𝐠𝐲! 𝐎𝐮𝐫 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐫𝐞𝐚𝐝 𝐛𝐲 𝐭𝐡𝐨𝐮𝐬𝐚𝐧𝐝𝐬 𝐨𝐟 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 𝐞𝐧𝐠𝐚𝐠𝐞𝐝 𝐢𝐧 𝐨𝐢𝐥 & 𝐠𝐚𝐬, 𝐦𝐚𝐫𝐢𝐭𝐢𝐦𝐞, 𝐨𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐰𝐢𝐧𝐝, 𝐠𝐫𝐞𝐞𝐧 𝐦𝐚𝐫𝐢𝐧𝐞, 𝐡𝐲𝐝𝐫𝐨𝐠𝐞𝐧, 𝐬𝐮𝐛𝐬𝐞𝐚, 𝐦𝐚𝐫𝐢𝐧𝐞 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐟𝐮𝐞𝐥𝐬, 𝐬𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐨𝐧 𝐚 𝐝𝐚𝐢𝐥𝐲 𝐛𝐚𝐬𝐢𝐬.

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