Canada’s climate journey is entering a more uncertain phase. Emissions are trending lower, investments continue to flow, and clean technologies remain in play. Yet momentum is clearly weakening. That is the central message of Climate Action 2026: Retreat, Reset or Renew, the third annual report from the RBC Climate Action Institute.
The report paints a nuanced picture. Progress has not stopped. But it has slowed. Policy reversals, economic pressures, and shifting public priorities are weighing on climate ambition at a time when speed matters most.
Canada now faces a defining question: retreat from climate action, reset its approach, or renew its commitment with a sharper focus.
Emissions Are Falling, but Not Fast Enough
Canada’s total greenhouse gas emissions are projected to be 7% lower in 2025 than in 2019, according to RBC’s estimates. That marks real progress, especially after years of volatility during and after the pandemic.
However, this pace remains well short of what Canada needs to hit its longer-term targets. The country has committed to reducing emissions by 40% to 45% below 2005 levels by 2030 and by 45% to 50% by 2035. Current trends suggest those goals will be difficult to reach without stronger policy signals.
Several sectors have reduced emissions intensity:
- Electricity: down 27%
- Buildings: down 19%
- Oil and gas: down 19%
These gains reflect cleaner power generation, improved efficiency, and gradual technology upgrades. Still, absolute emissions reductions remain modest, especially in sectors tied to economic growth and population expansion.
Climate Action Barometer Hits a Turning Point
For the first time since its launch, the Climate Action Barometer declined. This index tracks climate-related activity across policy, capital flows, business action, and consumer behavior.
The drop was broad-based. No single sector drove the decline. Instead, multiple pressures hit at once.
Key factors include:
- The removal of the consumer carbon tax
- The rollback of electric vehicle incentives
- Economic uncertainty and rising trade tensions
- Alberta’s restrictions on new renewable energy projects
Together, these shifts weakened confidence. Businesses delayed or canceled projects. Consumers pulled back on major clean-energy purchases. Climate policy slipped down the priority list for governments focused on affordability and job creation.
While climate action remains above pre-2019 levels, the trendline has clearly flattened.
Capital Flows Hold Steady, but Growth Has Stalled
Climate investment in Canada has leveled off at around $20 billion per year. That figure has barely moved in recent years.
Public funding remains a stabilizing force. Nearly $100 billion in incentives for clean technology and climate programs is already budgeted for deployment through 2035 by Ottawa and the largest provincial governments.
However, private capital is showing signs of caution. Investment declined compared to 2024, driven largely by cooling sentiment toward early-stage climate technologies. Policy uncertainty has amplified investor risk concerns, especially in capital-intensive sectors like renewables and clean manufacturing.
Some bright spots remain. Wind projects on Canada’s East Coast have supported investment flows, even as renewable development slowed elsewhere.
Carbon Pricing Changes Ease Pressure
The federal government eliminated the consumer carbon tax in April 2025, refocusing carbon pricing solely on industrial emitters. The change had a limited impact on national emissions coverage, as only around three percent of agricultural emissions were subject to consumer pricing.
For farmers, the move delivered meaningful financial relief. Many agricultural operations rely on propane to dry grain or heat livestock facilities. Few cost-effective, lower-carbon alternatives exist in rural regions, making the tax a direct burden on operating costs. Removing it eased pressure without significantly weakening the overall emissions policy.
Still, the decision lowered Canada’s climate policy score and sent mixed signals to investors and businesses evaluating long-term decarbonization strategies.
EV Slowdown Signals Shifting Consumer Priorities
Consumer behavior has become a significant hindrance to climate momentum. Electric vehicle adoption slowed sharply in 2025. EVs accounted for just eight percent of total vehicle sales in the first half of the year, down from twelve percent during the same period in 2024. Passenger EVs now make up only about four percent of Canada’s total vehicle stock.
Higher interest rates, the removal of purchase incentives, and uncertainty around future mandates all contributed to the pullback.
- The federal government also delayed the Electric Vehicle Availability Standard, which was set to require EVs to represent 20% of new vehicle sales by 2026. That pause further weakened confidence across the market.
At the same time, not all clean technologies lost ground. Heat pump adoption edged higher, supported by new efficiency funding, particularly in Ontario. The province’s $10.9 billion commitment to energy efficiency programs could support further uptake, even as other consumer-facing climate actions slow.
Public priorities have also shifted. Only about a quarter of Canadians now identify climate change as a top national issue. Cost of living pressures, healthcare access, and economic stability dominate public concerns, reshaping how households weigh climate-related decisions.
Buildings Sector Becomes the New Battleground
The RBC Institute’s 2026 “Idea of the Year” focuses squarely on Canada’s buildings sector, which has quietly become one of the country’s most challenging emissions sources. Emissions from buildings rose 15% between 1990 and 2023 and now represent a larger share of national emissions than heavy industry.
Today, buildings account for roughly 18% of Canada’s greenhouse gas emissions when electricity-related emissions are included. Progress remains slow. Emissions from the sector are projected to fall by just one percent in 2025, a pace that leaves Canada far from its net-zero target for buildings by 2050.
New construction adds to the risk. If projects continue to follow prevailing building codes, emissions could rise by an additional 18 million tonnes over time, locking in higher emissions for decades.
Responsible Buildings Pact Points to a Reset
Against this backdrop, the Responsible Buildings Pact offers a potential reset. Launched in 2024 under the Climate Smart Buildings Alliance, the initiative aims to accelerate the adoption of low-carbon designs and materials across the construction sector.
The pact focuses on scaling the use of mass timber and low-carbon concrete, steel, and aluminum. These materials can significantly reduce embodied carbon in new buildings while strengthening domestic supply chains. The approach is particularly timely as Canadian producers face constraints from U.S. trade tariffs, limiting access to lower-emissions materials.
If widely adopted, the pact could transform how Canada builds homes, offices, and infrastructure. By embedding emissions reductions into construction decisions today, the sector could deliver long-term climate gains while supporting industrial competitiveness.
Electricity Progress Slows After Early Success
Canada’s electricity sector remains one of its strongest climate performers. Emissions have fallen an estimated 60% since 2005, surpassing Paris Agreement targets. Coal phase-outs continue to drive reductions, with more than six terawatt-hours of coal power expected to be removed from the grid this year.
Still, progress slowed in 2025. Uncertainty surrounding Alberta’s renewable energy policies led to the cancellation of 11 gigawatts of planned capacity, roughly half of the province’s existing generation. At the same time, natural gas use rose sharply, offsetting some of the emissions gains from coal retirements.
Canada now faces a dual challenge: doubling electricity capacity while fully decarbonizing it by 2050. Estimates suggest the required investment could exceed $1 trillion, underscoring the scale of the task ahead.
Climate Action at a Defining Moment
The RBC report makes one point clear. Canada has not abandoned climate action, but it has lost momentum. Emissions are lower, capital remains available, and technology continues to advance. Yet policy clarity has weakened, consumer confidence has faded, and investment growth has stalled.
With just 25 years left to reach net zero, the choices made now will shape Canada’s emissions trajectory for decades. Renewed coordination between governments, businesses, and consumers will be essential, along with policies that balance economic realities without sacrificing long-term climate goals.
Canada still has time to reset and renew. What it cannot afford is continued drift.
- ALSO READ: Canada to Launch Sustainable Investment Taxonomy in 2026 to Guide Green and Transition Finance
The post Canada’s Climate Momentum Slows in 2026 Despite 7% Emissions Drop, RBC Report Finds appeared first on Carbon Credits.
Insetting program design starts with your supplier map. The carbon claim comes much later.
Consider a coffee procurement team that funds a farm intervention before checking its sourcing data. The supplier aggregates coffee lots from several regions. The buyer lacks farm-level traceability. Another purchaser expects to report the same outcome. A more attractive project brochure solves none of these problems.
If the distinction between a value-chain intervention and a purchased credit is still open, read CCC’s Insetting vs Offsetting guide before you set the brief.
Insetting program design begins with the purchasing relationship and works outward. You need to decide 1) where an intervention belongs, 2) what business problem it addresses, 3) who pays for it, 4) how results will be measured, and 5) what the evidence will let you say about them. This five-step playbook turns that sequence into a procurement plan.
Step 1: Insetting program design starts with supplier mapping
Start with the commodities that matter most to your Scope 3 inventory and sourcing continuity. Ask finance for spend by supplier, sustainability for the emissions baseline, and category managers for origin and volume records. Then identify which suppliers can trace material to a jurisdiction, sourcing region, producer group, or individual land-management unit.
The level of traceability affects what you can account for. Under the GHG Protocol Land Sector and Removals Standard, the spatial boundary for purchased land-based products depends on the traceability associated with each volume. Farm-specific factors or removals require physical traceability through an acceptable chain-of-custody model. A contract with a tier-one trader, by itself, does not establish a link to the farms behind its deliveries.[1]
Build a first-pass table with five columns: commodity and annual volume; supplier and origin; current traceability level; land-use and production risks; and the business owner who can change the purchasing terms. Mark missing data plainly. A blank cell is cheaper to fix before a program starts than after a claim is drafted.
If your company sets an SBTi Forest, Land and Agriculture target (FLAG), keep its land-related target boundary separate from energy and industry emissions. The current FLAG guidance also requires relevant companies to assess primary deforestation-linked commodities in their value chains.[2]
Step 2: Choose a commodity and jurisdiction for a pilot
Select one supply corridor where the sourcing connection can be established and procurement has a reason to stay. A useful pilot has repeat purchases, suppliers willing to share records, an intervention matched to a diagnosed problem, and a defined plan to measure the result. Carbon potential alone is a poor selection rule if the supplier cannot deliver the crop your business needs.
Compare candidate regions on land-use risk, supplier concentration, local rights and tenure, the availability of baseline data, and exposure to drought, erosion, or forest conversion. Check the relevant legal requirements separately. A nature project does not satisfy a due-diligence obligation merely because it has a carbon method attached.
Consider a coffee buyer sourcing from two districts. In the first, producer-group records identify the farms, while recent dry seasons have increased rejected green coffee lots. In the second, deliveries pass through several intermediaries and farm origins are unknown. Pilot shade management in the first district, with local agronomic advice and quality checks built into the plan. The buyer can trace purchases there and test the intervention against a defined sourcing problem.
Use a short decision memo to record why the selected corridor beats the alternatives, what remains uncertain, and what would stop the pilot. That memo is the first control against a project drifting toward whatever happens to photograph well.
Step 3: Design the supplier engagement and commercial model
The intervention needs an owner on each side of the contract. Decide who supplies planting material or training, who maintains the practice, who bears the cost if a harvest disappoints, and how long the buyer expects to purchase from participating suppliers. Where smallholders participate, budget cash flow and technical support for practices that offer a later return.
Put these terms in a supplier agreement or pilot addendum. It should cover eligible farms and volumes, consent to data collection, access for monitoring, any land or carbon rights that matter, benefit sharing, and what happens if the purchasing relationship ends. Ask local counsel and producer representatives to review the arrangement. The Accountability Framework is a useful reference for supply-chain work involving forests, ecosystems, and human rights.[3]
Avoid assigning an automatic carbon benefit to the buyer. The contract should say which party has the right to report each outcome, how overlapping claims will be checked, and how any issued credits will be handled. A reduction reported in a buyer’s inventory cannot simply be sold for someone else’s offset claim without an accounting review. SBTi FLAG guidance excludes purchased credits used as offsets from near-term FLAG target achievement.[2]
Set commercial measures beside environmental ones: delivered volume, rejection rate, supplier retention, and procurement cost. They tell you whether the program works as a supply-chain investment, even if carbon accounting takes longer to resolve.
Step 4: Build monitoring, reporting, and verification before rollout
Agree on the baseline and data flow before paying for a full rollout. Identify the land units or sourcing regions in scope, the practices that change, the records suppliers already keep, and the additional measurements the program requires. Decide which data can come from field visits, transaction records, or remote sensing, and who checks each source.
For carbon, separate three questions. Did the practice happen? Did emissions or removals change under an applicable method? Can the buyer attribute a defensible share to its purchased goods without double counting? The GHG Protocol’s 2026 guidance includes dedicated chapters on spatial boundaries, data and methods, evaluating actions, credited outcomes, and assurance.[1] These are distinct jobs. A photograph of a planted tree answers only part of the first.
CCC’s MRV and Additionality article explains the separate evidence questions a project reviewer will ask.
Create an evidence file for every reporting period: dated supplier and farm records, purchase volumes, methods and emission factors, uncertainty, quality checks, and changes from the baseline. Specify who can challenge the data and how corrections are recorded. If a project also seeks credit certification, keep project accounting and corporate inventory accounting separate. The GHG Protocol says its land standard focuses on entity-level inventories and does not set the rules for credit certification.[4]
Start with the minimum viable measurement design that can survive review. Add complexity when the pilot tells you which data actually changes a decision.
Step 5: Decide what can be reported and claimed
Insetting program design needs reporting rules before the marketing copy. Procurement, sustainability, finance, and legal should agree on four distinct outputs: operational performance; observed land or nature outcomes; inventory effects, if the accounting criteria are met; and any separately issued credits. One dashboard can display them, but they should not share a single unqualified headline.
SBTi FLAG guidance allows certain land-based removals within a company’s operations or supply chain to contribute to FLAG pathways, subject to criteria including permanence, traceability, data quality, and allocation. It does not allow purchased offsets to meet near-term FLAG targets.[2] Eligibility therefore depends on evidence and the applicable target rules, not on calling an activity “insetting.”
Draft a claims register. For each proposed sentence, record the period, boundary, data owner, calculation method, reviewer, and whether the result is measured, estimated, or still a goal. If the evidence supports only “we funded a pilot with 200 farms,” say that. Do not turn a funding fact into a verified emissions reduction.
What good looks like by year three
Treat year three as a review point, not a promised payback date. A mature pilot should have mapped participating supply volumes, a stable supplier agreement, a repeatable data collection process, and a comparison of commercial and environmental results against the baseline. It should also have a documented answer for outcomes that cannot be included in the buyer’s inventory.
Scale only where the pilot improves a sourcing decision and the evidence can follow the product. If neither condition holds, redesign the intervention or change the corridor. A disciplined program can conclude that a site is unsuitable. That is useful procurement intelligence.
Discuss your insetting program with CCC
Carbon Credit Capital designs nature-based supply chain investments around sourcing needs and measurable sustainability outcomes. Schedule a consultation with our carbon and sustainability experts to map your tier-one supplier network, FLAG exposure, and first pilot decision.
Sources
[1] GHG Protocol, Land Sector and Removals Standard, version 1.1, and companion Guidance, June 2026: https://ghgprotocol.org/land-sector-and-removals-standard ; https://ghgprotocol.org/land-sector-and-removals-guidance
[2] Science Based Targets initiative, Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, especially pp. 16–17, 37, and 41: https://sciencebasedtargets.org/resources/files/SBTiFLAGGuidance.pdf
[3] Accountability Framework initiative, Accountability Framework and guidance for companies: https://accountability-framework.org/
[4] GHG Protocol, Frequently Asked Questions: Land Sector and Removals Standard, questions 10 and 18: https://ghgprotocol.org/blog/frequently-asked-questions-land-sector-and-removals-lsr-standard
Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
