From the Fraser Institute

By Kenneth P. Green

Recently, without much fanfare, Senator Rosa Galvez re-pitched a piece of legislation that died on the vine when former prime minister Justin Trudeau prorogued Parliament in January. Her “Climate-Aligned Finance Act” (CAFA), which would basically bring a form of BDS (Boycott, Divestment, and Sanctions) to Canada’s oil and gas sector, would much better be left in its current legislative oblivion.

CAFA would essentially treat Canada’s oil and gas sector like an enemy of the state—a state, in Senator Galvez’ view, where all values are subordinate to greenhouse gas emission control. Think I’m kidding? Per CAFA, alignment with national climate commitments means that everyone engaged in federal investment in “emission intensive activities [read, the entire oil and gas sector] must give precedence to that duty over all other duties and obligations of office, and, for that purpose, ensuring the entity is in alignment with climate commitments is deemed to be a superseding matter of public interest.”

In plain English, CAFA would require anyone involved in federal financing (or federally-regulated financing) of the oil and gas sector to divest their Canadian federal investments in the oil and gas sector. And the government would sanction those who argue against it.

There’s another disturbing component to CAFA—in short, it stacks investment decision-making boards. CAFA requires at least one board member of every federally-regulated financial institution to have “climate expertise.” How is “climate expertise” defined? CAFA says it includes people with experience in climate science, social science, Indgineuous “ways of knowing,” and people who have “acute lived experience related to the physical or economic damages of climate change.” (Stacking advisory boards like this, by the way, is a great way to build public distrust in governmental advisory boards, which, in our post-COVID world, is probably not all that high. Might want to rethink this, senator.)

Clearly, Senator Galvez’ CAFA is draconian public policy dressed up in drab finance-speak camouflage. But here’s what it would do. By making federal investment off-limits to oil and gas companies, it would quickly put negative pressure on investment from both national and international investors, effectively starving the sector for capital. After all, if a company’s activities are anathema to its own federal regulators or investment organs, and are statutorily prohibited from even verbally defending such investments, who in their right minds would want to invest?

And that is the BDS of CAFA. In so many words, it calls on the Canadian federal government to boycott, divest from, and sanction Canada’s oil and gas sector—which powers our country, produces a huge share of our exports, and employs people from coast to coast. Senator Galvez would like to see her Climate-Aligned Finance Act (CAFA) resurrected by the Carney government, whose energy policy to-date has been less than crystal clear. But for the sake of Canadians, it should stay dead.

Kenneth P. Green

Senior Fellow, Fraser Institute

From the Fraser Institute

By Kenneth P. Green

Based on the recent throne speech (delivered by a King, no less) and subsequent periodic statements from Prime Minister Carney, the new federal government seems stuck in an ambiguous and ill-defined state of energy policy, leaving much open to question.

After meeting with the premiers earlier this month, the prime minister talked about “decarbonized barrels” of oil, which didn’t clarify matters much. We also have a stated goal of making Canada the world’s “leading energy superpower” in both clean and conventional energy. If “conventional energy” includes oil and gas (although we’re not sure), this could represent a reversal of the Trudeau government’s plan to phase-out fossil fuel use in Canada over the next few decades. Of course, if it only refers to hydro and nuclear (also forms of conventional energy) it might not.

According to the throne speech, the Carney government will work “closely with provinces, territories, and Indigenous Peoples to identify and catalyse projects of national significance. Projects that will connect Canada, that will deepen Canada’s ties with the world, and that will create high-paying jobs for generations.” That could mean more oil and gas pipelines, but then again, it might not—it might only refer to power transmission infrastructure for wind and solar power. Again, the government hasn’t been specific.

The throne speech was a bit more specific on the topic of regulatory reform and the federal impact assessment process for energy projects. Per the speech, a new “Major Federal Project Office” will ensure the time needed to approve projects will be reduced from the currently statutory limit of five years to two. Also, the government will strike cooperation agreements with interested provinces and territories within six months to establish a review standard of “one project, one review.” All of this, of course, is to take place while “upholding Canada’s world-leading environmental standards and its constitutional obligations to Indigenous Peoples.” However, what types of projects are likely to be approved is not discussed. Could be oil and gas, could be only wind and solar.

Potentially good stuff, but ill-defined, and without reference to the hard roadblocks the Trudeau government erected over the last decade that might thwart this vision.

For example, in 2019 the Trudeau government enacted Bill C-48 (a.k.a. the “Tanker Ban Bill”), which changed regulations for large oil transports coming and going from ports on British Columbia’s northern coast, effectively banning such shipments and limiting the ability of Canadian firms to export to non-U.S. markets. Scrapping C-48 would remove one obstacle from the government’s agenda.

In 2023, the Trudeau government introduced a cap on Canadian oil and gas-related greenhouse gas emissions, and in 2024, adopted major new regulations for methane emissions in the oil and gas sector, which will almost inevitably raise costs and curtail production. Removing these regulatory burdens from Canada’s energy sector would also help Canada achieve energy superpower status.

Finally, in 2024, the Trudeau government instituted new electricity regulations that will likely drive electricity rates through the roof, while ushering in an age of less-reliable electricity supply: a two-handed slap to Canadian energy consumers. Remember, the throne speech also called for building a more “affordable” Canada—eliminating these onerous regulations would help.

In summation, while the waters remain somewhat muddy, the Carney government appears to have some good ideas for Canadian energy policy. But it must act and enact some hard legislative and regulatory reforms to realize the positive promises of good policy.