Canada's Climate Policy Under Carney: A Shift Away from Ambition

Casual international observers would be forgiven for assuming Canada is in the comforting hands of a climate champ. After all, while climate policy rollbacks reign supreme in Donald Trump’s America, Canada is now led by a man who, while serving as governor of the Bank of England, delivered a celebrated 2015 speech, “Breaking the tragedy of the horizon”, warning the global investment community of the financial risks of climate change; who went on to serve as UN special envoy for climate action and finance; and whose 2022 book Value(s) had much to say about the “existential threat” of climate change. A man who recently dazzled the world with his Davos speech on how middle powers can stand up to global bullies.

Look, we get it. Next to the US president, Carney seems so debonair, thoughtful and calm – a lifeline of stability in a volatile new world.

Many within Canada were only recently of the same view. Indeed, only a little over a year ago, hundreds if not thousands of climate activists joined the Liberal party of Canada to help elect Carney as Justin Trudeau’s successor. Months later, hundreds of thousands of climate-concerned voters cast ballots in support of Carney as prime minister.

Sadly, however, a very different reality is coming into focus. As plank after plank of Canada’s climate strategy is dismantled, more and more of those climate-anxious voters are feeling a major case of buyer’s remorse, disoriented by the dissonance between who they thought they were supporting and a climate plan that is now a complete shambles.

Carney almost never talks about the climate crisis any more, contributing to the virtual disappearance of the topic from mainstream conversation, and reinforcing the sense of isolation harbored by the silent majority of climate-anxious people (a troubling dynamic about which the Guardian has previously written). But the rupture goes well beyond Carney’s radio silence.

Among his first acts as prime minister, Carney – who in his previous life was all about market-based solutions – scrapped Canada’s consumer carbon price.

Carney’s new Climate Competitiveness Strategy embraces an approach “based on driving investment, not on prohibitions”. In keeping with that orientation, his government has set about repealing or weakening virtually every climate mandate introduced by his predecessor. Methane regulations have been weakened and delayed. Canada’s clean electricity regulations (originally designed to make our grid fully fossil free by 2035) have been significantly delayed (to 2050) and have reopened the door to new gas-powered electricity plants.

A planned oil and gas emissions cap (on which the climate movement spent years consulting) has now been scrapped. Anti-greenwashing legislation has been flagged for rollback. And zero-emission vehicles (ZEV) mandates have been significantly delayed and weakened, contributing to a dramatic drop-off in EV sales in Canada.

Carney has also gone all-in on supporting new fossil fuel infrastructure. The prime minister is bent on environmental deregulation, exempting projects deemed “nation-building” from some environmental laws. Major new LNG facilities and pipeline projects have been fast-tracked and will probably be federally subsidized (LNG has already been granted new tax credits).

He has doubled down on tax credits for carbon capture and storage projects, and has now extending the subsidy for “enhanced oil recovery” – meaning, making the credit available to projects that use captured carbon to frack yet more oil. And a new federal “sovereign wealth fund” has been announced, which will probably use public money to subsidize new fossil fuel infrastructure projects (basically a mirror opposite of Norway’s successful fund).

All while steadfastly refusing to entertain a windfall profits tax on oil and gas companies that, in the wake of the Iran war, are poised to earn record profits at the expense of most of the public.

Earlier this month, all the pent-up feelings of grief and betrayal came bursting to the surface when Carney and the Alberta premier, Danielle Smith, announced a new energy agreement to further pave the way for yet another bitumen pipeline and, more pointedly, for Alberta – home to Canada’s largest source of emissions, the oil sands – to dramatically weakened its industrial carbon price. Climate Action Network Canada called the deal “a sledgehammer to one of the last remaining pillars of Canada’s climate plan”.

While Canada’s industrial carbon price was to reach $170 a tonne by 2030, under this latest capitulation, Alberta’s price will now reach only $130 by 2040, consigning this climate tool to virtual irrelevance. When Carney eliminated the consumer carbon price immediately after becoming prime minister, he promised to strengthen the industrial (and more consequential) carbon price. He’s chosen to do the opposite.

Even for the staid Canadian Climate Institute, which normally demonstrates frustratingly high patience for federal government incrementalism, this was a bridge too far, declaring that the new federal-Alberta agreement “puts Canada’s commitment to net zero emissions by 2050 firmly out of reach”.

Some remain willing to give our prime minister a pass on all this, contending as he is with a sizable separatist movement in Alberta. This Trump-backed movement remains a minority of roughly a quarter of Albertans, but they are noisy. Carney’s defenders claim all the above concessions are necessary to appease Alberta and “make the case for a united Canada”.

But the track-record of this rationale reinforces all the usual risks of appeasement. The same logic justified the previous prime minister’s decision to spend $34bn building the Trans Mountain pipeline expansion to carry more bitumen from Alberta to the Pacific coast, with no political reward to show for it.

Surely, some still hold, Carney is engaged in some deeply clever game of four-dimensional chess, confounding the oil patch and its political backers while laying the groundwork for a great transition, absent Trudeau’s performative nonsense.

But one year in, we’re letting go. There is no scenario in which these policy shifts do not increase both Canada’s domestic emissions and, even more, downstream carbon pollution elsewhere through the expansion of oil and gas exports.

Apologies to be the bearer of bad news. Shed a little tear for us. Then back to the fight. The Canadian climate movement is getting its bearings back. There is no assurance that these new fossil fuel projects in Canada will find the investors and buyers they need to proceed. Numerous Indigenous nations insist they will do everything they can to block their fruition. And while Canada may be clinging to fossil fuels, much of the world is moving on.