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Fixing the Trudeau – Guilbeault Policy Mess May Take Longer Than We’d Like – Here’s Why

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From EnergyNow.ca

By Jim Warren

By spring 2024 it was pretty clear the Liberal government was headed for palliative care. A Leger poll on May 25 and an Abacus poll June 10 showed the Conservatives with a 20 point lead over the Liberals.

As the likelihood of their imminent defeat increased, the Trudeau Liberals stepped up the implementation of legislation and regulations inimical to the gas and petroleum industries. Their efforts in 2024 included legislation limiting freedom of speech for companies and individuals who publicize environmental progress in the oil and gas sector (aka Bill C-59). The speech-muzzling measure became law on June 21.

Around the same time, Environment and Climate Change Minister, Steven Guilbeault was busy shepherding two particularly ominous regulatory packages through to finalization. One set of regulations supported Canada’s Clean Electricity Regulations—intended to eliminate the use of coal and natural gas in the production of electricity with staged decommissioning deadlines between 2035 and 2050. The second package finalized the rules for the natural gas and oil industries emissions cap intended to restrict production and growth in those industries, to take effect in 2026.

The regulations weren’t finalized until the month before the House shut down for the holidays, just weeks before Justin Trudeau’s political career was put on life support.

The green policy stampede extended to the international stage. Never mind deficits and debt, the Liberals found plenty of cash to enhance their status as world class environmental luminaries.

At November’s COP29* conference at Baku, Azerbaijan, Guilbeault and Canada’s Ambassador for Climate Change (who knew we had one?), Catherine Stewart signed us on to 15 pledges to take action on fighting climate change. Around half of the promises were merely motherhood and apple pie statements, concessions to the environmentally woke who attend these sorts of international conferences.

But several of the commitments made on our behalf came with price tags. I’m still unclear on exactly which line item in a federal budget, legislative authority or policy statement authorized the spending.

Canada’s COP29 delegation launched the $2 billion GAIA project. Apparently we are cost sharing the project with Mitsubishi. The official government report on the conference doesn’t indicate how much of the $2 billion Canada is kicking in.

Canada also showcased its green bona fides by contributing to the effort to finance the green transition and climate change adaptation in poor countries—a task expected to require developed countries to collectively spend $110 billion to $300 billion per year by 2035. Our delegation announced Canada would lead by example, making a $1billion donation to the effort.

Guilbeault and Stewart gave $10 million to Conservation International’s “Limpopo Transfrontier Conservation Area” project. They “invested” another $2.5 million in the World Wildlife Fund’s “Building Resilient Communities through Marine Conservation in Madagascar” project.

Guilbeault may indeed be angling for that UN job I mentioned in my last EnergyNow column. Read it Here Canada made a $1.25 million payment directly to the office of UN Secretary General, António Guterres. The donation is supposed to assist Guterres in his efforts to encourage countries to get their “Nationally Determined Contributions” handed in on time.

In a podcast conversation with Jordan Peterson several months ago, Danielle Smith noted the accelerated pace of the Liberal government’s announcement and implementation of new environmental policies detrimental to Alberta’s oil and gas sectors and the economies of both Alberta and Canada.

Smith said one of the effects of enacting so many new environmental measures would be to make it extremely difficult for the next government to reverse them all in its first term. This probably was one of the reasons behind the rush to get so much done this past year.

Peterson added a psychological dimension to the discussion. He suggested Guilbeault and Trudeau were behaving like wounded narcissists. They were acting like egomaniacs who recognized their time in office was coming to an end and wanted to do as much as possible in the time they had left to pad their reputations as “do or die” climate warriors. They were striving to guarantee their legacies as planet-saving heroes.

They are probably both right. But Smith’s assessment speaks more directly to the practical challenges a new Conservative government will confront while trying to unwind the morass of legislation and regulations needlessly hampering the growth of environmentally responsible resource development in the west. It is an effort by the outgoing government to make their anti-oil legacy tamper proof.

Simply wading through the legislative quagmire and assessing where reform is most urgent and readily achievable will take time and effort. The wheels of parliament can turn slowly. No doubt some of the bureaucrats employed by the Liberals are true believers—frightened of the “impending climate apocalypse” and unlikely to expedite changes to environmental legislation and regulations. And, there could be multi-year contracts with consultants and other suppliers and long-term funding arrangements with companies and NGOs that will be difficult to unwind.

Let’s not forget the inevitable legal challenges that will threaten to hold up the reform process. Environmental groups and other special interests can be expected to use the courts to block efforts to reverse Liberal government policy. Ideally, the new government will cut off funding support for anti-oil environmental groups. Then at least supporters of the gas and petroleum sectors won’t be sued by activists funded with our tax dollars.

Then there are all the other important things governments are required to do and a limited amount of time to do them—drafting fiscally responsible budgets and dealing with the possibility of US tariffs on our exports come to mind as things near the top of the to-do list.

The highly anticipated Poilievre government may not be able to move as far and fast in reversing the Trudeau-Guilbeault legacy as we might like. They will face immense challenges and should be given a fair bit of slack if they can’t fix everything early in their first term.

*COP stands for Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). The framework was adopted by the countries attending the UN sponsored Rio Earth Summit held at Rio de Janeiro, Brazil in 1992. The number in COP29 indicates it is the 29th annual post-Rio conference of the parties.

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Carbon tariff proposal carries risks and consequences for Canada

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A carbon tariff—a policy that would impose fees on imported goods based on their carbon emissions—is built on the idea that Canada should penalize foreign producers for not adhering to stringent climate policies. While this may sound like a strong stance on climate action, the reality is that such a policy carries major risks for Canada’s economy. As a resource-rich nation that exports carbon-intensive products like oil, natural gas, and minerals, Canada stands to lose more than it gains from this approach.

Mark Carney, who is competing for the federal Liberal leadership, has made the introduction of a carbon tariff the number two promise in his 16-point industrial competitiveness strategy.

Key problems with a carbon tariff in Canada

1. Retaliation from other countries

A carbon tariff (also known as a Carbon Border Adjustment Mechanism, or CBAM) would not go unchallenged by Canada’s trading partners. Major exporters to Canada, such as the United States and China, are unlikely to accept this policy without a response. They could retaliate by imposing tariffs on Canadian goods, making it significantly harder for Canadian businesses to compete in international markets. This could be particularly damaging for key industries like oil and gas, mining, and manufacturing, which rely heavily on exports. A trade war over carbon tariffs could weaken the Canadian economy and lead to job losses across multiple sectors.

2. Canada is an exporting nation

Canada exports far more carbon-intensive goods than it imports. By introducing a carbon tariff on foreign products, Canada is effectively inviting other countries to do the same, targeting Canadian exports with similar carbon-based tariffs. This would make Canadian goods more expensive on the global market, reducing demand for them and harming the very industries that drive Canada’s economy. The result? A weaker economy, job losses, and higher costs for businesses that depend on trade.

3. Big business paying for consumers’ emissions

The Carney plan also proposes to make large businesses bear the cost of helping individual households lower their carbon emissions. While this may sound like a fair approach, in practice, these costs will be passed down to consumers. Businesses will need to offset these additional expenses, leading to higher prices on everyday goods and services. In the end, it is Canadian families who will bear the financial burden, facing increased living costs, higher taxes, and fewer job opportunities as businesses struggle to absorb the additional costs.

CBAM in context: implications for Canada

Has this been tried elsewhere?

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is currently in effect. It entered its transitional phase on October 1, 2023, during which importers of certain carbon-intensive goods are required to report the embedded emissions of their imports without incurring financial liabilities. This phase is set to last until the end of 2025. The definitive regime, where importers will need to purchase CBAM certificates corresponding to the carbon emissions of their imported goods, is scheduled to begin in 2026.

However, Europe is not Canada’s largest trading partner—that is the United States. With Donald Trump back in the presidency, there is no chance that the U.S. will implement a CBAM of its own. If Canada were to move forward with a unilateral carbon tariff, if anyone prepared to argue that it would not face significant economic punishment from the Trump White House?

Moreover, with 91 percent of the world having no carbon tariff, other countries would impose countermeasures, leaving Canadian businesses struggling to remain competitive.

This raises the question: is the push for a carbon tariff in Canada more about political positioning than economic pragmatism? Given the unlikelihood of U.S. participation, a Canadian CBAM would amount to a unilateral economic sacrifice. While this may appeal to certain voter bases, the reality is that such a policy would carry immense risks without global coordination. Policymakers should carefully consider whether pursuing this path makes sense in a world where Canada’s largest trading partner is unlikely to follow suit.

Where do others stand?

Chrystia Freeland, the former finance minister and current Liberal leadership candidate, has not explicitly detailed her stance on carbon tariffs. However, she has emphasized the importance of defending Canadian interests against U.S. economic nationalism, particularly in response to potential tariffs from the U.S.

Conservative leader Pierre Poilievre is a vocal critic of carbon pricing mechanisms, including carbon taxes, and has pledged to repeal such measures if elected.

Elizabeth May, leader of the Green Party, has consistently advocated for strong environmental policies, including carbon pricing, but has not specifically addressed carbon tariffs in recent statements.

What it means to consumers

Here are some relatable examples of carbon-intensive exports and imports for the average Canadian:

Carbon-Intensive Exports from Canada

Oil & Gas – Canada is a major exporter of crude oil, natural gas, and refined petroleum products, particularly to the U.S. If a carbon tariff were applied to these products, it could make them more expensive and less competitive in global markets, affecting jobs in Alberta, Saskatchewan, and Newfoundland.

Lumber & Pulp – Canada is a leading exporter of forestry products, including lumber, paper, and pulp, which require significant energy and emissions to produce. If tariffs are imposed on Canadian wood products, the forestry sector could suffer.

Agricultural Products – Fertilizers, beef, and grain production all have significant carbon footprints. If trading partners retaliate with tariffs, Canadian farmers may struggle to compete in global markets.

Carbon-Intensive Imports into Canada

Steel & Aluminum – Canada imports a large amount of steel, primarily from China and the U.S., which is essential for industries like construction, manufacturing, and automotive production. A carbon tariff would drive up costs for these industries.

Consumer Goods from China – Many everyday products (electronics, clothing, appliances) are imported from countries with high-carbon electricity grids. A carbon tariff could increase the price of these goods for Canadian consumers.

Food Products – Imported produce, meats, and packaged foods from countries like the U.S. and Mexico often have high transportation-related emissions. A carbon tariff could increase grocery bills.

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Trump announces “fair and reciprocal” tariffs, warning days of trade abuse are “over”

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Quick Hit:

President Donald Trump on Thursday signed a memorandum directing his administration to implement a “fair and reciprocal” trade policy, ensuring that foreign nations imposing high tariffs on American goods will face identical treatment. In a statement on Truth Social, Trump declared that the days of the U.S. being economically exploited are over, vowing to retaliate against trade policies that unfairly disadvantage American businesses.

Key Details:

  • Trump wrote on Truth Social, “For purposes of fairness, I will charge a RECIPROCAL Tariff meaning, whatever Countries charge the United States of America, we will charge them—No more, no less!”

  • The policy will consider Value-Added Tax (VAT) systems—widely used in Europe—as trade barriers equivalent to tariffs, with Trump arguing they are “far more punitive” and used to harm American exports.

  • The administration will crack down on trade loopholes, including countries shipping goods through third-party nations to evade tariffs. “Sending merchandise, product, or anything by any other name through another Country, for purposes of unfairly harming America, will not be accepted,” Trump warned.

 

Diving Deeper:

Trump’s reciprocal tariff plan is designed to end decades of one-sided trade deals that he says have crippled American industries and workers. By enforcing equal tariffs on foreign nations, Trump is making it clear: If a country charges the U.S. high tariffs, they will face the same in return.

Trump specifically called out countries that manipulate Value-Added Tax (VAT) systems, arguing that these taxes function as hidden trade barriers designed to punish U.S. exports while protecting foreign industries. He declared, “For purposes of this United States Policy, we will consider Countries that use the VAT System, which is far more punitive than a Tariff, to be similar to that of a Tariff.”

Beyond traditional tariffs, Trump’s administration is also cracking down on non-monetary trade barriers, such as regulations designed to block American businesses from competing fairly overseas. He emphasized, “Provisions will be made for Nonmonetary Tariffs and Trade Barriers that some Countries charge in order to keep our product out of their domain or, if they do not even let U.S. businesses operate.”

Additionally, Trump warned against countries attempting to game the system by shipping goods through third-party nations to avoid tariffs. “Sending merchandise, product, or anything by any other name through another Country, for purposes of unfairly harming America, will not be accepted,” he stated.

Critics, including some business groups and investors, argue that tariffs could increase costs for U.S. consumers, but Trump’s supporters say securing fair trade is worth any short-term disruption. JPMorgan CEO Jamie Dimon defended the approach, stating, “If it’s a little inflationary but it’s good for national security, so be it. I mean, get over it.”

Meanwhile, Federal Reserve Chair Jerome Powell sidestepped questions about the policy but acknowledged that trade barriers could influence economic conditions, saying, “It’s not the Fed’s job to make or comment on tariff policy. That’s for elected people.”

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