2024 was a busy year in Canada for climate change related regulatory and policy developments. In this article, we summarize seven key updates that industrial facilities will find pertinent and useful.

1. Greenwashing is now officially illegal

On June 20, 2024, Bill C-59 the first formal initiative which curbs greenwashing claims – received royal assent and came into effect. This bill builds upon and amends provisions within the Competition Act of Canada, specifically sections pertaining to deceptive marketing practices. Bill C-59 expands the scope of civil deceptive marketing practices provisions through the addition of two new environment focused provisions.

The first provision is new language regarding performance of products specifically related to a ‘product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change’. The second provision addresses all representations ‘with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change’. The provision requires that any such representations be based on ‘adequate and proper substantiation in accordance with internationally recognized methodology’. It should be noted that the term ‘internationally recognized methodology’ is not defined in the law and, as such, raises some uncertainty for interpretation.

The new bill also broadens the scope of who can file a complaint since private parties can now directly file a complaint application with the Competition Tribunal for any alleged greenwashing activities. Significant monetary penalties (up to $10 million dollars for the first offence) are included in the new bill for proven violations of the greenwashing provisions. On December 23, 2024, the Competition Bureau released draft guidelines for stakeholder input and they are accepting comments through February 28, 2025.

In December 2024, the Canadian Sustainability Standards Board (CSSB) released CSDS 1 (General Requirements for Disclosure of Sustainability-related Financial Information), and CSDS 2 (Climate-related Disclosures). These are the first-ever sustainability standards that are for Canada and by Canada. The CSSB was formed in 2023 with a mission to advance the adoption of sustainability disclosure standards in Canada. The CSSB develops Canadian Sustainability Disclosure Standards that align with the global standards developed by the International Sustainability Standards Board (ISSB) under the auspices of the International Financial Reporting Standards Foundation (IFRS) – but with modifications to serve the Canadian public interest.

CSDS are effective January 01, 2025. They contain some additional transition relief compared to the ISSB standards, mainly: two additional years of relief for the start of aligned reporting (beginning Jan 1, 2027); three years of relief for only the quantitative aspects of scenario analysis data reporting (not qualitative aspects) (beginning Jan 1, 2028); and an additional year of transition relief for Scope 3 GHG emissions reporting (beginning Jan 1, 2028).

The CSDS 1 and CDSD 2 are voluntary at the moment and are available for companies to use for their disclosure needs if they choose to do so. The Canadian Securities Administrators (CSA) issued a proposal in October 2021 for climate related disclosure requirements for publicly traded Canadian companies. That proposal has been dormant; however, with the recent finalization of CSDS, it is to be seen if the CSA moves forward with the finalization of their proposal in 2025. In October 2024, the federal government proposed a plan to require mandatory climate-related financial disclosures for large, federally incorporated private companies. It is not clear if this proposal will move forward in 2025 given the current political uncertainties at play.

In 2024, the federal government released a detailed technical guidance document on the implementation of their Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit (ITC) program. The CCUS ITC is a refundable tax credit that applies to eligible expenditures incurred for a qualified CCUS project, from January 1, 2022, to December 31, 2040.

The ITC is available for CCUS projects (including Direct Air Capture or DAC) to the extent that 10% or more of the captured carbon dioxide (CO₂) goes to an eligible use. Eligible uses include storage of captured carbon in geologic storage and use of captured carbon in producing concrete (in Canada or the U.S.) using a qualified process for sequestration of the captured CO2 in concrete.

The Advantage Energy’s Glacier plant in Alberta’s Peace Country, which is touted as the world’s first abated natural gas facility, is one example of a company taking advantage of the ITC program. Canada Growth Fund (CGF) invested $200 million into this project and further established a carbon offtake agreement to facilitate carbon contract for difference. CGF is a C$15 billion independent and arm’s length public fund designed to help Canada to catalyse the deployment of technologies in its efforts to reduce emissions and transform its economy.

Alberta announced a new program called Alberta Carbon Capture Incentive Program (ACCIP) under which eligible project proponents can avail a grant for up to 12% of a newly eligible CCUS project’s capital costs. This program builds on the federal government’s investment tax credit (ITC) for CCUS projects and, as such, will commence once the federal instruments are in place. ACCIP will be available for a variety of industrial sectors, especially the hard to abate sectors, including oil and gas, manufacturing, and cement production.

Ontario started creating the necessary regulatory framework to regulate geologic carbon storage in 2024 by removing barriers to carbon storage. The province lifted the ban on geological storage by amending the Oil, Gas and Salt Resources Act (OGSRA). Ontario also proposed changes to OGSRA which would allow projects to test and demonstrate geologic carbon storage on private land and increase public safety and corporate accountability. The Ministry of Natural Resources and Forestry also finalized changes to allow for project proponents to request a ‘special project’ designation from the ministry for the purpose of assessing, testing, piloting, or demonstrating the feasibility of carbon storage.

In May 2024, Canada released its 2024 National Inventory Report (NIR) for 2022 as part of its submission to the United Nations Climate Change Secretariat every year, as required by the United Nations Framework Convention on Climate Change and the Paris Agreement. While the NIR for 2022 showed a reduction in economy wide emissions compared to 2019 (pre-pandemic year), the emissions were up by 9.3 megatonnes compared to 2021. Some noteworthy changes in emissions between 2021 and 2022 include:

In November 2024, the federal government published draft regulations to cap GHG emissions from the oil and gas industry. The public consultation on the draft regulation closed on January 8, 2025. According to the 2024 NIR discussed above, Canada’s oil and gas sector accounted for 31 percent of national emissions in 2022, making it the largest contributor to Canada’s national emissions. The stated goal of this regulation is to establish a national cap-and-trade system that would apply to upstream oil and gas activities including onshore and offshore oil and gas production, oil sands production and upgrading, natural gas production and processing, and the production of LNG. The proposal is to use data reported by operators for 2026 to set the first oil and gas GHG pollution cap. The oil and gas GHG pollution cap for the first compliance period, 2030-2032, would be set at 27% below emissions reported for 2026, which is estimated to be equivalent to 35% below 2019 emissions.

On April 1, 2024, British Columbia’s Output-Based Pricing System (B.C. OBPS) came into effect. The OBPS supersedes the CleanBC Industrial Incentive Program (CIIP), the province’s former carbon pricing system for large industries. The OBPS is mandatory for large industry operations which emit more than 10,000 tons of carbon dioxide equivalent (CO2e) per year. Subject entities can apply for a carbon tax exemption on the facility’s use of fuel and combustibles. Similar to other OBPS programs, the B.C. OBPS intends to incentivize entities to reduce emissions by rewarding credits to operations that emit less than their annual emissions limit. Operations that exceed their annual emissions limit must adhere to compliance obligations such as purchasing offset units and/or making direct payments. The OBPS aids B.C. with achieving the province’s goals to reduce emissions by 40% by 2030, 60% by 2040, and 80% by 2050.

On October 15, 2024, the Ministère de Environnement, de la Lutte contre les changements climatiques, de la Faune et des Parcs (MELCCFP) of Quebec issued a market notice on the proposed amendments to the Cap & Trade (C&T) program. Quebec’s C&T program is a joint collaboration with the California Air Resources Board (CARB). The MELCCFP intends to publish the draft regulation in early 2025. A 45-day public consultation period will commence following the publication of the draft regulation. The MELCCFP expects to finalize the regulatory amendments in Spring 2025.

The MELCCFP is considering removal of free allowances by 2030, essentially limiting the supply and potentially accelerating decarbonisation. They have indicated potential removal of 17.5 million allowances from Quebec’s cap by 2030. The MELCCFP is also proposing to impose new limits on the use of offsets starting in the 2027 compliance period (i.e., reduce the limit from 8% to a lower number). The MELCCFP is proposing to modify the compliance period from the current three years to two years to better align with Quebec’s emission reduction target years of 2030 and 2050. They are also looking to adjust reserve prices upwards to induce a price ceiling mechanism. Finally, the MELCFFP is considering introducing holding limits and limited exemptions to strengthen market control mechanisms and prevent the risk of manipulation.

We will closely follow climate change related developments in Canada in 2025. If you have any questions on any of the updates discussed in this article or are looking for any sustainability or climate change related support, please contact Sundar Sadashivam from our Trinity’s Toronto Office at 437.291.5891.