From Energy Now

By Ron Wallace

Welcome to the Age of Ottawa’s centrally planned green economy.

On November 13, 2025, the Carney government announced yet another round of projects to be referred to the newly created Major Projects Office (MPO) established under the authority of the Building Canada Act (2025). That Office, designed to coordinate and streamline federal approvals for infrastructure projects deemed by Cabinet to be in the “national interest”. The announcement made scant reference to the fact that most of the referred projects had already received the regulatory permits required for construction or are, in several cases, already well under way.

Meanwhile, the aspirations of Alberta’s Premier Danielle Smith were not realized with a “Memorandum of Understanding” (MoU) signed with the Carney government before the 112^th Grey Cup in Winnipeg.  It remains to be seen if Canada and Alberta can in fact “create the circumstances whereby the oil and gas emissions cap would no longer be required” and if these negotiations will result in a “grand bargain” with the federal government.  For its part, Alberta has signaled a willingness to change its industrial carbon tax program to encourage corporations to invest in emissions reduction projects  while Alberta’s major energy producers have signalled that they are willing to consider carbon capture and methane reduction within an agreed industrial carbon pricing scheme.  Notwithstanding concerns about its financial and technical viability, the Pathways Alliance Project appears to have become a cornerstone of Alberta’s negotiations with the federal government.

In early 2025 Premier Smith issued a list of nine demands accompanied by a six month ultimatum demanding the federal government roll back key elements of its climate policy.  Designed to re-assert Alberta’s autonomy over natural resources, Smith’s core issues centered on the repeal of Bill C-69 (the “no new pipelines act) and Bill C-48 (the Oil Tanker Moratorium Act) scrapping the proposed Clean Electricity Regulations and abandonment of the net-zero automobile mandate.  In face of a possible refusal by Ottawa to deal with these outstanding issues, Premier Smith launched a “Next Steps” panel as a province-wide consultation to “strengthen provincial sovereignty within Canada” – a process that could possibly lead to a referendum on Alberta’s future within Confederation.

Subsequently, in early October, Premier Smith also announced that her government, in collaboration with three pipeline industry partners, would advance an application to the Major Projects Office for a new oil pipeline from Alberta to a marine terminal on the northwest coast of British Columbia.  The intent of the application is to have this new pipeline designated as a ‘project in the national interest’ to receive an accelerated review and approval timeline. Alberta is planning to submit that application in May 2026 to address the five criteria set by Ottawa for national interest determinations. Notably, the removal of what Premier Smith has termed ‘bad laws’ would be a prerequisite to construction of this proposed project.

As the Carney government continues its complex dance around these issues it remains to be seen how, or if, Smith’s demands for Canada to roll back federal legislation will be met. While Premier Smith staunchly advocated for the removal of what she termed to be the ‘bad laws’ standing in the way of the “ultimate approval” of a pipeline to the B.C. coast it remains to be seen if the Carney government will to accede to most, or even any, of these demands in ways that could clear the way for a new oil export pipeline from Alberta. At a time when the Carney government appears to be doubling down on its priority to reduce Canadian emissions it remains to be seen if Alberta can in fact increase oil production without increasing emissions.

Liberal MP Corey Hogan, who serves as parliamentary secretary to the Minister of Energy and Natural Resources the Honourable Tim Hodgson, noted that: “So as long as we can get to common understandings of what all of those mean, there’s not really a need for an emissions cap.”  This ‘common understanding’ may signal a willingness by Ottawa to set aside the Trudeau government’s signature proposed oil and gas emissions cap in exchange for major carbon capture and storage projects in Alberta that would be combined with strong carbon pricing and methane regulations.

While this ‘common understanding’ may yet lead to a ‘grand bargain’ it would nevertheless effectively create two different classes of oil in Canada, each operating under different sets of regulations and different cost structures.  Western Canada’s crude oil producers would be forced to shoulder costly and technically challenging decarbonization requirements in face of a federal veto over any new oil projects that weren’t ‘decarbonized.’  Canadian-produced oil would be faced with entering international export markets at a significant, if not ruinous, competitive disadvantage risking not only profitability but market share.  Meanwhile, this hypocritical policy would allow eastern Canadian oil refiners to import ‘carbonized’ oil from countries with significantly looser environmental standards.

Carney’s November 2025 “Canada Strong” federal budget sets out $141.4 billion in new spending over five years with a projected $78.3 billion deficit for 2025–26. As Jack Mintz points out, while that budget claims to be “spending less to invest more”, annual capital spending will double from $30 billion a year to $60 billion a year over five years:

“… as federal program spending, which excludes interest on debt, is forecast to rise by 16 per cent from $490 billion this fiscal year to $568 billion in 2029-30. During the current year alone, the spending increase is a remarkable seven per cent. Public debt charges will soar by 43 per cent from $53 billion to $76 billion due to growing indebtedness and higher interest rates. No surprise there. Deficits — $78 billion this year alone — accumulate by a whopping $320 billion over five years.”

Since 2015 Canada has experienced a flight of investment capital approaching CAD$650 billion due to lost, or deferred, resource projects – particularly in the energy sector.  While many economists recognize that Canada’s fiscal status may be worse than it appears, the Carney government is asking Canadians to ignore these figures while they implement industrial policies that, for all intents and purposes, represent a significant regression into central planning. The ‘modernization’ of the National Energy Board that began early in the Trudeau government’s mandate appears now to have been but a first step in the progressive centralization of control by the federal government. Gone are the days when an independent expert energy regulator made national interest determinations based upon cross-examined evidence presented in a public forum.  Instead, a cabinet cloaked in confidentiality that is  clearly inclined toward emissions reduction as its paramount consideration, will now determine and select projects.

This process of centralized decision-making represents a dilemma that confronts not just Premier Smith but the entire Canadian energy sector. The emerging financial debacle in the Canadian EV battery and vehicular manufacturing market is but one example of how centrally planned criteria designed to achieve a Net Zero economy will almost invariably lead to unanticipated, if not economically disastrous, results.

In short, the “green economy” is not working. The Fraser Institute noted that while Federal spending on the green economy surged from $600 million in 2014/15 to $23 billion in 2024/25, a nearly 40-fold increase, the green economy’s share of GDP rose only marginally from 3.1% in 2014 to 3.6% in 2023. Moreover, promised “green jobs” have not materialized at scale while traditional energy sectors vital to Alberta’s and the Canadian GDP have been actively constrained.

This economic reality has apparently not yet dawned in Ottawa.  As Gwyn Morgan points out, Prime Minister Carney who, in 2021 with Michael Bloomberg,  launched the Glasgow Financial Alliance for Net Zero (GFANZ), has not changed his determination to hike Canadian carbon taxes, proposing to increase the industrial levy from $80 to $170/ton by 2030.  GFANZ was created to align global financial institutions with net-zero emissions targets bringing together sector-specific alliances like the Net Zero Banking Alliance (NZBA) and the Net Zero Asset Managers (NZAM).  However, early in 2025 GFANZ faced significant challenges as major U.S. banks exited the NZBA followed by the Net-Zero Insurance Alliance (NZIA) that disbanded entirely in 2024 after a wave of member withdrawals. GFANZ was forced to undergo a strategic restructuring in January 2025 to shift from a coalition-of-alliances to a more open, standalone platform focused on mobilizing capital for the low-carbon transition through pragmatic climate financing. ‘Pragmatic’ indeed.

While Carney’s GFANZ has effectively imploded, his government ignores developing new realities in climate policy by continuing to implement the Trudeau government’s green agenda with programs like the Pan-Canadian Framework on Clean Growth and Climate Change. That program contains a plethora of ‘green economy’ measures designed to reduce carbon emissions in parallel with the 2030 Emissions Reduction Plan that commits Canada to reducing greenhouse gases (GHG) to achieve net-zero by 2050.

These policies ignore the recent change of mind by thought-leaders like Bill Gates who acknowledges that “climate change, disease, and poverty are all major problems we should deal with them in proportion to the suffering they cause.”  This aligns his thinking with that of Bjorn Lomborg who states:

“Climate change demands action, but not at the expense of poverty reduction. Rich governments should invest in long-overdue R&D for breakthrough green technologies — affordable, reliable alternatives that everyone, rich and poor alike, will adopt. That is how we can solve climate without sacrificing the vulnerable. More countries, including Canada, need to get on board with the mission of returning the World Bank to focusing on poverty. Raiding development funds for climate initiatives isn’t just misguided. It’s an affront to human suffering.”

Philip Cross also expressed hope that 2025 may yet represent a “turning point in a return to sanity in public policy:”

“Nowhere is the change more evident than in attitudes to green energy policies, once the rallying cry for left-wing parties in North America. Support has collapsed for three pillars of green energy advocacy: building electric vehicles to eliminate our need for oil pipelines and refineries; using the financial clout of the Net-Zero Banking Alliance to force firms to eliminate carbon emissions; and legally mandating the shift from fossil fuels to green energy.”

Nonetheless, Prime Minister Carney appears resolute in the belief that Canadian policies for Net Zero are not hobbling investment in the energy sector while choosing to ignore alternative regulatory and investment tools that could make a material difference for the economy.  Carney also appears to ignore major Canadian firms like TC Energy that have re-directed investments of $8.5 billion into the U.S. as they cite significant concerns about the Canadian regulatory structure. Similarly, Enbridge has advocated for “significant energy policy changes” in Canada while  focussing attention not on new export pipelines but instead to incrementally upgrade capacity within its existing Mainline system network.

Canada’s destiny as a ‘decarbonized energy superpower’ will be largely determined by the serious economic consequences that will result from a sustained ideological push into ‘clean energy’.  That said, will this be accomplished by a chaotic, ever-more centralized process of decision making, masquerading as a coherent national energy policy?

Conclusion

As Gwyn Morgan has succinctly written, it remains to be seen if the Carney government will be willing to make a “climate climbdown” in face of the reality that net zero goals are being broadly abandoned globally or will they continue to sacrifice the Canadian economy to single-minded, unrealistic or unattainable, goals for emissions reduction?

To date none of the projects referred by the Carney government to the Major Projects Office has been designated as ‘being in the national interest’.  Moreover, the Alberta bitumen pipeline advocated by Premier Smith has not yet appeared on any list. Nonetheless, she apparently remains resolute in maintaining negotiations with Ottawa stating: “Currently, we are working on an agreement with the federal government that includes the removal, carve out or overhaul of several damaging laws chasing away private investment in our energy sector, and an agreement to work towards ultimate approval of a bitumen pipeline to Asian markets.”

As Alberta’s ultimatums and deadlines to Ottawa pass, it would be reasonable to question whether Premier Smith is, in fact, being confronted with the illusory freedom of a Hobson’s choice: Either Alberta must accept, at unprecedented cost, Ottawa’s determination to realize Net Zero or it will get nothing at all. While she may be seeking federal support to enable, or accelerate, construction of new pipelines, all Ottawa may be willing to concede is a promise to do better with an MoU that would ultimately impose massive costs for ‘decarbonization’ on Alberta while eastern Canada imports oil from other, less constrained, jurisdictions. Is this a “Grand Bargain?”

Budget 2025 has introduced a Climate Competitiveness Strategy for nuclear, hydro, wind and grid modernization that projects over CAD$1 trillion in spending over five years. It also reaffirms a commitment to increase carbon taxes by $80-$170/tonne for CO₂-equivalent emissions by 2030. Since it appears committed to maintaining, or even expanding, Trudeau-era green legislation, some might question any commitments from the Carney government to enter into an even-handed debate on Canadian energy policies that are so critical to Alberta’s energy sector?  As the Fraser Institute points out:

“The Canadian case shows an even greater mismatch between Ottawa’s COP commitments and its actual results. Despite billions spent by the federal government on the low-carbon economy (electric vehicle subsidies, tax credits to corporations, etc.), fossil fuel consumption increased 23 per cent between 1995 and 2024. Over the same period, the share of fossil fuels in Canada’s total energy consumption rose from 62.0 to 66.3 per cent.”

While the creation of the MPO may give the appearance of accelerating projects deemed to be in the national interest it nonetheless requires a circumvention of an existing legislative base. This approach further enhances a centrally-planned economy and presupposes that more, not less, bureaucracy will somehow make Canada an “energy superpower”.

Canada continues to overlook rising economic challenges while pursuing climate goals with inconsistent policies.   As such, it risks becoming an outlier in energy policy at a time when the world is beginning to recognize the immense costs and implausibility of implementing policies for Net Zero.

Premier Danielle Smith may yet face a pivotal moment in Alberta’s, and possibly Canadian, history.  If Ottawa’s past performance is but a prologue, predictions of a happy outcome may require a significant dose of optimism.

Ron Wallace is a former Member of the National Energy Board.

William Lacey

I view the recent announcements by the Government of Canada as window dressing, and not addressing the fundamental issue which is that projects are drowning in bureaucratic red tape and regulatory overburden. We don’t need them picking winners and losers, a fool’s errand in my opinion, but rather make it easier to do business within Canada and stop the hemorrhaging of Foreign Direct Investment from this country.

Changes are afoot—reportedly, carve-outs and tweaks to federal regulations that would help attract investment in a new oil pipeline from Alberta. But any private proponent to come out of this deal will presumably be handpicked to advance through the narrow Bill C-5 window, aided by one-off fixes and exemptions.

That approach can only move us so far. It doesn’t address the underlying problem.

Anyone in the investment world will tell you a patchwork of adjustments is nowhere near enough to unlock the large-scale energy investment this country needs. And from that investor’s perspective, the horizon stretches far beyond a single political cycle. Even if this government promises clarity today in the much-anticipated memorandum of understanding (MOU), who knows whether it will be around by the time any major proposal actually moves forward.

With all of the talk of “nation-building” projects, I have often been asked what my thoughts are about what we must see from the federal government.

The energy sector is the file the feds have to get right. It is by far the largest component of Canadian exports, with oil accounting for $147 billion in 2024 (20 percent of all exports), and energy as a whole accounting for $227 billion of exports (30 percent of all exports).

Furthermore, we are home to some of the largest resource reserves in the world, including oil (third-largest in proven reserves) and natural gas (ninth-largest). Canada needs to wholeheartedly embrace that. Natural resource exceptionalism is exactly what Canada is, and we should be proud of it.

One of the most important factors that drives investment is commodity prices. But that is set by market forces.

Beyond that, I have always said that the two most important things one considers before looking at a project are the rule of law and regulatory certainty.

The Liberal government has been obtuse when it comes to whether it will continue the West Coast tanker ban (Bill C-48) or lift it to make way for a pipeline. But nobody will propose a pipeline without the regulatory and legal certainty that they will not be seriously hindered should they propose to build one.

Meanwhile, the proposed emissions cap is something that sets an incredibly negative tone, a sentiment that is the most influential factor in ensuring funds flow. Finally, the Impact Assessment Act, often referred to as the “no more pipelines bill” (Bill C-69), has started to blur the lines between provincial and federal authority.

All three are supposedly on the table for tweaks or carve-outs. But that may not be enough.

It is interesting that Norway—a country that built its wealth on oil and natural gas—has adopted the mantra that as long as oil is a part of the global economy, it will be the last producer standing. It does so while marrying conventional energy with lower-carbon standards. We should be more like Norway.

Rather than constantly speaking down to the sector, the Canadian government should embrace the wealth that this represents and adopt a similar narrative.

The sector isn’t looking for handouts. Rather, it is looking for certainty, and a government proud of the work that they do and is willing to say so to Canada and the rest of the world. Foreign direct investment outflows have been a huge issue for Canada, and one of the bigger drags on our economy.

Almost all of the major project announcements Prime Minister Mark Carney has made to date have been about existing projects, often decades in the making, which are not really “additive” to the economy and are reflective of the regulatory overburden that industry faces en masse.

I have always said governments are about setting the rules of the game, while it is up to businesses to decide whether they wish to participate or to pick up the ball and look elsewhere.

Capital is mobile and will pursue the best risk-adjusted returns it can find. But the flow of capital from our country proves that Canada is viewed as just too risky for investors.

The government’s job is not to try to pick winners and losers. History has shown that governments are horrible at that. Rather, it should create a risk-appropriate environment with stable and capital-attractive rules in place, and then get out of the way and see where the chips fall.

Link to The Hub article: Large-scale energy investments remain a pipe dream

Formerly the head of institutional equity research at FirstEnergy Capital Corp and ATB Capital Markets. I have been involved in the energy sector in either the sell side or corporately for over 25 years