ENVIRONMENTAL DEFENCE, CARBON TRACKER INITIATIVE, CLIMATE ACTION NETWORK – RÉSEAU ACTION CLIMAT CANADA, ECOJUSTICE, INTERNATIONAL INSTITUTE FOR SUSTAINABLE DEVELOPMENT, SHIFT: ACTION FOR PENSION WEALTH & PLANET HEALTH, WEST COAST ENVIRONMENTAL LAW
Business Future Pathways reveals the significant opposition it received to the oil and gas-focused “abatement measures” category proposed for Canada’s sustainable finance taxonomy.
Toronto | Treaty Lands and Territory of the Mississaugas of the Credit First Nation, and the traditional territory of the Anishinaabeg, the Haudenosaunee, and the Wendat – Today, Business Future Pathways published a What We Heard report which presents the main themes from the public consultation on Canada’s proposed sustainable finance taxonomy methodology. While receiving broad support for ‘green’ and ‘transition’ labels, the report acknowledges the controversy and critiques of the proposed “abatement measures” category. Climate expert groups have advised that excluding the proposed abatement measures category is necessary to keep the taxonomy credible, usable, and science-based.
The majority of submissions to the public consultation opposed the inclusion of the abatement measures category, which would primarily focus on the upstream oil and gas industry. Responses presented sophisticated critiques and opposition to the category.
The What We Heard report shares that:
- Two-thirds of public respondents opposed the abatement category. Roughly one quarter articulated conditional support depending on the development of strong guardrails.
- Opposition came from a wide range of stakeholders, including NGOs, consultants, research institutes, international organizations, financial institutions, and individuals.
Experts advised that the creation of an ‘abatement measures’ category would undermine the taxonomy’s credibility. As a tool, the taxonomy is meant to classify investments that align with Canada’s climate goals and our commitments under the Paris Agreement. Any category that allows continued investment in oil and gas while only marginally reducing emissions, like the abatement category, could never be Paris-aligned and would come with a high risk of carbon lock-in. It would direct scarce capital towards projects with limited emissions reduction benefits, like carbon capture and storage, limiting capital flowing to needed ‘green’ and ‘transition’ activities. Proposed guardrails for the abatement category would be insufficient, both in terms of scientific validity as well as practical implementation and enforcement.
The feedback summarized in the What We Heard report will directly inform the final version of the taxonomy methodology, which is scheduled for publication later in 2026.
A course correction away from the ‘abatement measures’ category would protect the taxonomy’s credibility with global investors and help Canada’s economy remain resilient through the global energy transition. By listening to expert feedback on the abatement category and addressing opposition, the Taxonomy Council can keep Canada’s taxonomy system grounded in climate science and stay true to its mandate of outlining a path to net-zero.
Background:
- In July 2026, the Methodology Report for Canada’s taxonomy was released for public consultation. The abatement category was proposed by Business Future Pathways to reduce emissions from the oil and gas sector by “enabling select, tightly ring-fenced emissions-reduction investments”, however the category was met with significant opposition. None of the 40+ other taxonomies that exist in other jurisdictions around the world include such a category.
- Environmental Defence analyzed the public consultations, concluding that 52 per cent of respondents opposed the abatement category while only 20 per cent supported it.
- See credibletaxonomy.ca for core principles to guide the taxonomy, and for video testimonies of experts presenting their concerns with the abatement category.
Quotes:
Keith Brooks, Programs Director, Environmental Defence says:
“The report that Business Future Pathways has shared, reflects that there is significant opposition to the inclusion of an oil and gas ‘abatement’ category in Canada’s taxonomy. This should be the end of any further conversations about the abatement category. Giving a gold star to marginal oil and gas emission reductions through an abatement category would be mission-drift for the taxonomy, and would cause Canada to stumble sideways on climate progress instead of moving forward. Given the federal government’s intention to use the taxonomy to guide government bond issuances, it is important the taxonomy points to the best and most efficient decarbonization pathway for Canada. Removing the abatement category would be a step in the right direction.”
Kyra Bell-Pasht, Senior Advisor, Canada, Carbon Tracker Initiative
“The taxonomy’s governance is working. Concerns about an abatement category for oil and gas production are resounding. Feedback from the Technical Advisory Working Group and public consultation both warned that it would risk greenwashing Canada’s unsustainable oil and gas production, the key driver of the climate crisis.”
Karine Péloffy, Lawyer & Finance Lead, Ecojustice
“The addition of an abatement category tailor-made for the fossil fuel industry is a fundamental flaw in a “sustainable” finance taxonomy. If fossil fuels belong in a category, it should be called “unsustainable” or “rapid phase-out.” Anything less undermines the credibility of the framework meant to guide us towards a safe, climate-aligned economic future.
Canada needs science-based legislation that puts climate and financial stability at the centre of our financial framework. The solution is not theoretical or out of reach — it already exists. The Climate-aligned Finance Act provides the roadmap for rigorous transition planning and clear financial guardrails, ensuring Canada’s financial sector and economy are equipped to compete long-term and stay relevant in global markets. All that’s missing is the resolve to implement it.”
Jessica Kelly, Senior Policy Advisor, International Institute for Sustainable Development
“A strong majority of respondents oppose the abatement category, which would allow capital to be labelled as sustainable when directed to oil and gas activities. Following this broad agreement in expert opinion, Business Future Pathways should feel emboldened to exclude the abatement category and ensure only truly green and transition categories remain. With this taxonomy, Canada has the critical opportunity to prioritize sustainable activities and sectors that will grow Canada’s net-zero economy by 2050. It should not be used to prop up demand decline sectors.”
Adam Scott, Executive Director, Shift: Action for Pension Wealth & Planet Health
“It’s heartening to see public feedback broadly matching the advice of climate experts, with strong support for high integrity ‘green’ and ‘transition’ category labels, and opposition to the creation of a new abatement measures category. Sustainable finance labels are important to ensure capital flows align with a credible science-based climate transition. However, voluntary labelling systems are not the correct tool for ensuring that fossil fuel producers clean up their significant climate pollution, as they wind down in the coming decades. That imperative is best left up to high integrity, enforceable government regulation.”
Joanna El-Mikati, Staff Lawyer, West Coast Environmental Law says:
“The consultations on a sustainable finance taxonomy made clear that fossil fuel and other high-polluting activities should not qualify as sustainable investments—not even through an ‘abatement’ category based on promises to pollute less. Including key drivers of climate change in a sustainable taxonomy risks greenwashing, directing capital toward activities that undermine Indigenous and other human rights, and supporting activities incompatible with a climate-safe future. For the taxonomy to have any credibility, fossil fuel activities must be excluded altogether.”
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ABOUT ENVIRONMENTAL DEFENCE (environmentaldefence.ca): Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.
ABOUT CARBON TRACKER (carbontracker.org): Carbon Tracker is an independent financial think tank working to align capital markets with an accelerated energy transition. Through data-driven research, we assess the risks associated with continued fossil fuel investment and opportunities arising from changes in energy demand, technology and climate policy. Our work empowers investors, policymakers and companies to make informed decisions that support an orderly shift to a net zero emissions future.
ABOUT CLIMATE ACTION NETWORK – RÉSEAU ACTION CLIMAT CANADA (climateactionnetwork.ca): Climate Action Network – Réseau action climat Canada (CAN-Rac) is a network of nearly 200 Canadian organizations taking action on climate and energy issues from coast to coast to coast. CAN-Rac’s membership draws environmental NGOs together with trade unions, First Nations, social justice, international development, health and youth organizations, faith groups, and local, grassroots initiatives.
ABOUT ECOJUSTICE (ecojustice.ca): Ecojustice uses the power of the law to defend nature, combat climate change and fight for a healthy environment. Its strategic, public interest lawsuits and advocacy lead to precedent-setting court decisions, law and policy that deliver lasting solutions to Canada’s most urgent environmental problems. As Canada’s largest environmental law charity, Ecojustice operates offices in Vancouver, Calgary, Toronto, Ottawa and Halifax.
About INTERNATIONAL INSTITUTE FOR SUSTAINABLE DEVELOPMENT (iisd.org): The International Institute for Sustainable Development (IISD) is an independent think tank championing sustainable solutions to 21st century problems. Our mission is to promote human development and environmental sustainability. Through research, analysis and knowledge sharing, we identify and champion sustainable solutions that make a difference.
ABOUT SHIFT: ACTION FOR PENSION WEALTH AND PLANET HEALTH (shiftaction.ca) is a charitable initiative that works to protect pensions and the climate. Shift is a project of MakeWay Canada.
ABOUT WEST COAST ENVIRONMENTAL LAW (wcel.org): WCEL is a non-profit group of environmental lawyers and strategists dedicated to safeguarding the environment through law. West Coast works to develop proactive legal solutions, transform environmental decision-making and strengthen legal protection for the environment through collaborative legal strategies that bridge Indigenous and Canadian law.
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For more information or to request an interview, please contact:
- Alex Ross, Environmental Defence, media@environmentaldefence.ca
- Alexis Stoymenoff, Director of Communications, West Coast Environmental Law, astoymenoff@wcel.org, 604-684-7378 ext. 228
- Cari Siebrits, Communications Strategist, Ecojustice, csiebrits@ecojustice.ca, (416) 368-7533 ext. 504
