Energy
Next prime minister should swiftly dismantle Ottawa’s anti-energy agenda
From the Fraser Institute
Justin Trudeau’s imminent exit from office may mark the beginning of the end of a 10-year war on Canada’s energy sector, and by extension, Canada’s economy.
Canada is the world’s fourth-largest oil producer, currently supplying 6 per cent of global production. Canada is the fifth-largest producer of natural gas, supplying 5 per cent of global demand. The energy sector (oil, gas, electricity) constitutes more than 10 per cent of Canada’s total gross domestic product (GDP). In 2023, the latest year of available data, the energy sector provided, directly and indirectly, almost 700,000 jobs or 3.5 per cent of all jobs in Canada. And Canadian energy exports totalling $200 billion comprised 28 per cent of all Canadian exported goods.
But however vast and vital Canada’s energy sector is our wellbeing, Prime Minister Trudeau worked tirelessly to restrain, restrict, diminish and ultimately “phase out” Canada’s fossil fuel industries. Here are some of the highlights of his war on Canada’s energy sector.
In 2017, Trudeau introduced Bill C-48, which restricts oil tankers off Canada’s west coast and limits the ability of Canada’s oilsands sector to export product to new markets, keeping Canada’s energy resources trapped in a discount-price U.S. market. Also in 2017, much to the fury of many Albertans, Trudeau announced his intention to phase out oilsands production, the foundation of Alberta’s prosperity.
In 2018, Trudeau introduced Bill C-69, which tightened Canada’s environmental assessment process for major infrastructure projects and made the process of obtaining government permission for major energy projects more costly, time-consuming and arbitrary, thus increasing uncertainty across the energy sector. And he introduced the carbon tax despite strenuous opposition by Canada’s energy sector and energy-producing provinces.
In 2020, Trudeau launched his broadest and most intense regulatory crusade against Canada’s energy sector, introducing Bill C-12, which committed Canada to reach “net-zero” emissions of greenhouse gasses by 2050. Net-zero means Canada cannot emit more greenhouse gases via energy production and consumption than is taken out of the air by natural processes and the ecosystem. This would require vastly reduced production and consumption of fossil fuels in Canada, with consequences for the energy sector’s productivity and employment potential moving toward 2050.
In 2023, Trudeau attacked fossil fuel use in the transportation sector by mandating that all new cars sales be electric vehicles by 2035. And he released draft “clean electricity regulations” to phase out the use of fossil fuels in electricity generation by the year 2050.
During his time as prime minister, Trudeau attacked Canada’s energy sector, with eliminationist language and onerous regulations meant to essentially phaseout a major supplier of economic productivity and employment in Canada, to the great detriment of Canadians.
Hopefully, the next prime minister will reject Trudeau’s anti-energy agenda and have the will and ability to rescind the many damaging laws and regulations that that the Trudeau government has inflicted on a vital sector of the Canadian economy.
From the Fraser Institute
According to a new report from the Parliamentary Budget Officer (PBO), the federal government’s proposed oil and gas emissions cap will curtail production, cost a not-so-small fortune and kill a lot of jobs. This news will surprise absolutely no one who’s been paying attention to Ottawa’s regulatory crusade against greenhouse gases over the past few years.
To be precise, according to the PBO’s report of March 2025, under the proposed cap, production for upstream industry oil and gas subsectors must be reduced by 4.9 per cent relative to their projected baseline levels out to 2030/32. Further, required reduction in upstream oil and gas sector production levels will lower GDP (inflation-adjusted) in Canada by an estimated 0.39 per cent in 2032 and reduce nominal GDP by $20.5 billion. And achieving the legal upper bound will reduce economy-wide employment in Canada by an estimated 40,300 jobs and fulltime equivalents by 54,400 in 2032.
The federal government is contesting the PBO’s estimates, with Jonathan Wilkinson, federal minister of Energy and Natural Resources of Canada, claiming that the “PBO wasted their time and taxpayer dollars by analyzing a made up scenario.” Of course, one might observe that using “made up scenarios” is what making forecasts of regulatory costs is all about. No one, including the government, has a crystal ball that can show the future.
But the PBO’s projected costs are only the latest analysis. A 2024 report by Deloitte (and commissioned by the federal Treasury Board) found that the proposed “cap results in a significant decline in GDP in Alberta and the Rest of Canada.” The main impacts of the cap are lower oil and gas activity and output, reduced employment, reduce income, lower returns on investment and a higher price of oil.
Consequently, according to the report, by 2040 Alberta’s GDP will be lower by 4.5 per cent and Canada’s GDP will be lower by 1 per cent compared to a no-cap baseline. Cumulatively over the 2030 to 2040 timeline, Deloitte estimated that real GDP in Alberta will be $191 billion lower, and real GDP in the Rest of Canada will be $91 billion lower compared to the no-cap (business as usual) baseline (in 2017 dollars). Employment also took a hit in the Deloitte report, which found the level of employment in 2040 will be lower by 2 per cent in Alberta and 0.5 per cent in the Rest of Canada compared to a no-cap baseline. Alberta will lose an estimated 55,000 jobs on average (35,000 in the Rest of Canada) between 2030 and 2040 under the cap.
Another 2024 report by the Conference Board of Canada estimated that the “oil and gas productions cuts forecasted lead to a one-time, permanent decline in total Canadian real GDP of between 0.9 per cent (most likely outcome) to 1.6 per cent (least likely outcome) relative to the baseline in 2030. This is equivalent to a loss of $22.8 to $40.4 billion (in 2012 dollars)… In Alberta, real GDP would fall by between $16.3 and $28.5 billion—or by 3.8 per cent and 6.7 per cent, respectively.”
Finally, a report by S&P Global Commodity Insights (and commissioned by the Canadian Association of Petroleum Producers) estimated that a “production cut driven by a stringent 40% emission cap could cause $75 billion lower upstream spend and $247 billion lower GDP contribution (vs. a no cap reference case).”
All of these estimates, by respected economic analysis firms, raise serious questions about the government’s own 2024 Regulatory Impact Analysis, which suggested that the proposed regulations will only have incremental impacts on the economy—namely, $3.3 billion (plus administrative costs to industry and the government, estimated to be $219 million). According to the analysis, the “proposed Regulations are expected to result in a net decrease in labour expenditure in the oil and gas sector of about 1.6% relative to the baseline estimate of employment income over the 2030 to 2032 time frame.”
But according to the new PBO report, the costs of the government’s proposed cap on greenhouse gas emission from Canada’s oil and gas sector will be costly and destructive to the sector, it’s primary province (Alberta), and its employees in Alberta and across Canada. All this in the face of likely-resurgent U.S. oil and gas production.
Now that policymakers in Ottawa have seemingly recognized the unpopularity of the consumer carbon tax, a good next step would be to scrap the cap.
The Honest Broker 
Roger Pielke Jr.
Every year for the past 15 years, JP Morgan publishes an outstanding annual energy report by Michael Cembalest. Last week JP Morgan published its 2025 edition and today I share five important figures from the many in the report, which I highly recommend.
Cembalest’s top line:
[A]fter $9 trillion globally over the last decade spent on wind, solar, electric vehicles, energy storage, electrified heat and power grids, the renewable transition is still a linear one; the renewable share of final energy consumption is slowly advancing at 0.3%–0.6% per year.
You can see that in the figure below — my graph using data from the 2024 EI Statistical Review of World Energy — which shows the proportion of global energy consumption from all carbon-free sources. Since 2012, that proportion has increased from about 14% to a bit over 18%. Exactly as Cembaest observes — that increase has been linear. At that rate of change the world would hit 100% carbon-free sometime after 2200.
Let’s take a look at some of the figures I found most interesting in the JP Morgan Report.
Solar Reality Check
“. . . when you boil it all down, solar power accounts for ~2% of global final energy consumption, a figure we expect to reach 4.5% by 2027. Even if these solar trends continue into the 2030’s, human prosperity will be inextricably linked to affordable natural gas and other fossil fuels for many years.
Human prosperity, in places where it thrives, relies heavily on steel, cement, ammonia/fertilizer, plastics, glass, chemicals and other industrial products which are energy- intensive to produce. . . these products currently rely on fossil fuels for 80%-85% of their energy.
And remember, prosperity itself is energy-intensive: among the tightest relationships in economics is the connection between a country’s per capita GDP and its per capita energy consumption.”
I remain very bullish on solar, but it won’t displace much fossil fuels anytime soon.
Electrify Everything is Proceeding Slowly
“Remember this key aspect of the energy transition: until an energy use is electrified, it’s hard to decarbonize it using green grid electrons. And while grid decarbonization is continuing at a steady pace, the US has made little progress increasing the electricity share of final energy consumption for the reasons discussed in last year’s “Electravision” piece. One major obstacle: transmission line growth is stuck in a rut, way below DoE targets for 2030 and 2035. Another obstacle: shortages of transformer equipment, whose delivery times have extended from 4-6 weeks in 2019 to 2-3 years. . . “
The panel on the rgiht above indicates that the U.S. was never going to meet the emissions reduction targets of the Biden Administration — which has been clear for several years now.
“The US is not unique with respect to the slow pace of electrification, although a few countries are making faster progress. Over the last decade China made the largest advance, bringing it in line with the OECD.
Part of the challenge may simply be the long useful lives of existing industrial plants, furnaces, boilers and vehicles. In other words, electrification might accelerate as their useful lives are exhausted. But the high cost of electricity compared to natural gas (particularly in places without a carbon tax) is another impediment to electrification that is not easy to solve since this ratio reflects relative total costs of production and distribution.”
(In order to coerce users, a carbon tax is necessary)
Energy Dependence and Independence
“The US has achieved US energy independence for the first time in 40 years while Europe and China compete for global energy resources. China’s imports are similar to Europe in energy terms but half as much as a share of domestic energy consumption. Energy intensive manufacturing has shifted to the developing world since the mid 1990’s. China is negotiating with Russia and Turkmenistan regarding future gas pipeline projects. China has the benefit of time: China gas imports are projected to reach 250 bcm by 2030 vs 170 bcm in 2023, almost all of which can be met by already contracted supplies. What was Taiwan thinking by shutting down nuclear power which has fallen from 50% to 5% of generation? Taiwan is now one of the most energy dependent countries in the world, resulting in rising economic costs if China were to impose a blockade.”
The Trump administration’s trade war with Canada risks upending North America’s energy dominance. What can they be thinking?
Fossil Fuels Falling and Rising
“Fossil fuel shares of final energy are falling faster in China, Japan and Europe than in the US. Growth in fossil fuel consumption is slowing but no clear sign of a peak on a global basis. Hydraulically fractured oil and gas account for 60%+ of US primary energy consumption. Global LNG export capacity is set to expand by one third by 2030. Coal consumption is roughly flat in final energy terms as rising EM consumption offsets falling OECD consumption.”
US Secretary of Energy Chris Wright spoke at an energy conference in Houston, and his remarks have been transcribed by Robert Bryce. Here is an excerpt:
Let’s do a quick survey of energy access today. Roughly one billion people live lives remotely recognizable to us in this room. We wear fancy clothes, mostly made out of hydrocarbons. We travel in motorized transport. The extra lucky of us fly across the world to attend conferences. We heat our homes in winter, cool them in summer, store myriad foods in our freezers and refrigerators, and have light, communications and entertainment at the flip of a switch.
Pretty awesome.
This lifestyle requires an average of 13 barrels of oil per person per year. What about the other seven billion people? They want what we have. The other seven billion people, on average, consume only three barrels of oil per person per year versus our 13. Africans average less than one barrel.
We need more energy. Lots more energy. That much should be obvious.
Read Wright’s speech alongside Cembalest’s energy analysis — We are at long last in an era of energy realism.
The Honest Broker
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