What the two main parties have planned for Canada's energy future

As Canadians head to an election on April 28, the economic stakes have rarely been higher. Until recently, Canada’s Conservative Party had benefited most from years of frustration over high inflation and unaffordable housing, drawing voters with promises of lower taxes and deregulation.

But Pierre Poilievre’s commanding majority in the polls evaporated when Donald Trump began threatening Canada’s sovereignty through trade sanctions. The Liberal Party saw a dramatic reversal of fortunes after Justin Trudeau resigned and was replaced by Mark Carney, a high-profile former investment banker who served as governor of the Bank of England during Brexit, and ran the Bank of Canada before that.

While Conservative voters see Carney as a likely continuation of what they regard as Trudeau’s profligacy, for Liberal voters the new leader represents a deft hand at the wheel and the possibility of responsible prosperity.

As a United Nations special envoy on climate action and finance, Carney was a key architect of the global framework for sustainable finance that has underpinned much of the progress in the energy transition since 2020. “Private value can be put in the service of public values,” he said at the Sustainable Finance Forum in Ottawa last November.

But times are changing fast, and even since he made those statements the situation for sustainable finance has deteriorated, with several climate-aligned financial networks – which Carney helped facilitate – unravelling in recent months. And with all the economic uncertainty and political instability, climate change has ceased to be a deciding issue for Canadians. Since the last election, the environment has slid from first to seventh place on a Vote Compass poll of top concerns for voters.

Even so, many of the key issues in the election carry major implications for Canada’s contribution to fighting climate change, as well as the country’s ability to navigate the energy transition and the impacts of a warming planet.

Comparing Liberal and Conservative energy policies

Carney acted quickly when he became prime minister to kill the consumer portion of the carbon tax and thereby remove the most contentious element of the Liberal government’s climate policy. In doing so, he undercut a key election promise by Poilievre, who campaigned long before the election call that he would “axe the tax.”

Poilievre is now taking aim at the industrial portion of the federal tax that applies to large emitters, although most provinces administered their own industrial carbon tax under federal standards. He has promised to kill the Liberal proposal to impose greenhouse gas emission caps on oil and gas facilities and to support Alberta’s plan to double crude production by building pipelines and export terminals for liquefied natural gas.

Poilievre says he would create “energy corridors” through which pipelines and transmission lines could be built quickly. He also says he would overhaul the federal Impact Assessment Act to ensure that resource projects are quickly approved. But he has offered little in terms of support for transitioning the Canadian economy away from dependence on fossil fuels to more reliance on renewable, nuclear and other low-emission sources.

Carney’s support for the oil and gas sector is tied to his belief that investing in decarbonization technologies like carbon capture is essential to reaching net-zero. “We should run towards that, because that is, in the end, where we can have the biggest impact on the climate,” he said at the Ottawa forum.

The New Democratic Party supports the industrial carbon price and would add a measure to help the competitiveness of Canadian industry: a carbon border-adjustment levy that would tax imports from countries that don’t have comparable carbon pricing.

The Green Party, for its part, says it would halt all new fossil fuel projects by 2045 and would stop government subsidies for oil and gas companies, investing instead in renewable energy.

A momentary opening for fossil fuel infrastructure

Carney came to the Liberal leadership with a strong record on climate change. As governor of the Bank of England, he led international efforts to require financial institutions to account for climate-related financial risks. He also served as an adviser on climate-related finance to the UN secretary-general in the lead-up to the Glasgow conference in 2021.

His election platform calls for Canada to become “the world’s leading energy superpower, in both clean and conventional energy.” That means more oil and gas infrastructure like pipelines and liquefied natural gas terminals, although Carney remains committed to the oil-and-gas emissions cap that would require the industry to sharply reduce emissions even as they aim to grow production.

“In a world of declining fossil fuel consumption, Canada seems more likely to be among the earliest producers to fall than among the last standing."
– Mark Winfield, professor of environmental and urban change, York University

Carney, too, would establish energy corridors, though he emphasizes the opportunity to build clean energy infrastructure, including interprovincial transmission. He would finalize clean energy tax credits and support spending on both natural carbon sinks and carbon capture projects.

Do Canadians really want more pipelines?

In a survey sent to subscribers of the Corporate Knights newsletter, respondents endorsed plans to reduce reliance on fossil fuels and speed up the transition to a clean energy economy.

In response to a question that garnered 385 responses, 52.5% said Ottawa should not offer incentives for new oil and gas pipelines or terminals because the environmental costs are too high. Only 17.7% offered unqualified support for such incentives, while 20.8% said yes if the Canadian resources would displace the use of coal overseas.

“Do not fall back on old habits,” one respondent wrote. “Pipelines are not the way to make Canadians richer.”

Respondents also supported federal efforts to drive the clean energy transition. Some 67% said the federal government should aggressively drive the adoption of green energy through regulations and incentives, “even if it means some higher consumer prices.” As well, 24% endorsed the federal role but only if it could avoid higher prices.

“Climate change is here and it’s hurting everyone and we need more than lip service paid to it,” another respondent wrote.

A wrong turn for Canada’s economic interests

Looking beyond the current crisis, some experts suggest that betting on fossil fuels is likely to backfire, not just in environmental, social and political terms, but also for the Canadian economy. “In a world of declining fossil fuel consumption, Canada – increasingly reliant on high-cost and high-carbon production like oilsands crude and fracked and liquified natural gas – seems more likely to be among the earliest producers to fall than among the last standing,” writes Mark Winfield, a professor of environmental and urban change at York University.

While the dramatic political changes in the United States seem to have created a renewed social licence for oil and gas infrastructure, many suggest that the real opportunity points in another direction: toward greater investment in renewables. “With the U.S. retreating from Biden-era climate action and Europe facing competing economic and security pressures, Canada might find an opportunity to position itself as a stable, climate-aligned investment destination,” writes Baltej Sidhu, an analyst at the National Bank of Canada and a specialist in sustainability and energy transition.

Research by the London Stock Exchange Group last summer found that, taken as a whole over the past decade, companies whose revenues come from reducing carbon emissions offered better returns than every other sector except tech.

Carney acknowledged the reality of renewable-energy dominance at the Ottawa conference in November: “Investment in clean energy is now more than twice the investment in conventional energy, but it needs to double again,” he told attendees. “In Canada, we will need to invest somewhere between $125 and $140 billion annually in this transition.”

What the two main parties are pitching for Canada’s industrial sector

Donald Trump’s erratic trade policies have also turned the election into a contest over who has the best plan to save Canada’s industries and put the country on a new international footing for trade. This spring, the U.S. president imposed 25% tariffs on Canadian steel and aluminum. Weeks later, he slapped 25% tariffs on cars, targeting an industry that supports more than 500,000 Canadian jobs.

As well as shaking up the federal election campaign, these tariffs are creating anxiety in steel-, aluminum- and auto-manufacturing communities in Ontario and Quebec. The tariffs are throwing thousands of jobs into jeopardy, while also threatening Ontario’s transition to electric vehicle production and green steel, and growth in low-CO2 aluminum in Quebec.

“Businesses have stopped their expansion plans or delayed them because of the uncertainty, because they don’t know what tomorrow looks like,” says Greg Dunnett, CEO of the Chamber of Commerce in the steel centre of Hamilton.

How Canada’s political parties are navigating a public rift on climate

Pierre Poilievre voted against the environment nearly 400 times

In response, the Liberals imposed 25% counter-tariffs on U.S. steel, aluminum and cars. Long-term, the Liberal platform includes $2 billion for the auto industry to build “a fortified Canadian supply chain,” boosting competitiveness, protecting employment and advancing job training.

Carney has also said he would continue the current industrial carbon-pricing system in cooperation with the provinces, a policy that Poilievre has vowed to revoke. This is of key importance in Hamilton, where a proposed $2-billion decarbonization project at ArcelorMittal Dofasco is on hold until after the election. Industrial carbon pricing and federal-provincial subsidies are critical in making the project viable.

Poilievre has said he would continue the counter-tariffs until U.S. tariffs are removed and use the proceeds for tax relief and worker support. Poilievre has also promised to cut the GST on new Canadian-made cars and provide loans and tax credits for affected businesses.

There have been an estimated 6,000 temporary layoffs in the auto sector since the tariffs went into effect. But Flavio Volpe, president of the Canadian Automotive Parts Manufacturers’ Association, says there could be many more layoffs if Trump follows through with a threat next month to impose tariffs on auto parts, not just fully assembled cars. “The industry is headed for major operational shutdowns, stranding workers, suppliers and automakers across the continent,” he says.

Making the most of Canada’s critical minerals

Canada’s critical minerals have never been so coveted, thanks partly to Trump. In a hot-mic moment, weeks before he stepped down as prime minister, Justin Trudeau told a Canada-U.S. business summit that Trump’s threat of making Canada the 51st state was connected to the country’s plethora of critical minerals.

Carney is promising to invest in critical minerals by creating a “First and Last Mile Fund” to directly support clean-energy and critical-minerals projects as well as accelerate exploration and extraction from recycling. The party also proposes to attract, expand and de-risk investment in critical mineral exploration and extraction with additional investments in and expansion of existing tax credits.

Carney’s platform includes a “One Project, One Review” policy, which involves setting up what it would call a Major Federal Project Office with a new mandate to issue decisions on major projects within two years instead of five, while “fully upholding environmental integrity and Indigenous rights.”

Meanwhile, Poilievre proposes a “One and Done” rule for resource projects. He says he’ll set up a so-called Rapid Resource Project Office to handle all regulatory approvals across all levels of government and says there will be one application and one environmental review per project to speed up the approval process while “ensuring efficiency without sacrificing environmental standards.”

The Conservatives are also vowing a one-year maximum wait time for project approvals, with a target of six months “giving businesses certainty, cutting delays, and getting shovels in the ground faster.”

Canada’s mining industry, which has been pleading for this kind of attention for years, stands to gain no matter which party winds up in power. Other sectors tied to the energy transition may not be so lucky.