Carney’s grand – In the first year of Mark Carney’s premiership, Canada has moved sharply away from its earlier climate agenda, rolling back key measures and cutting a “grand bargain” with Alberta. Carney’s deal removes a proposed hard cap on oil-sector emissions while Alberta
Mark Carney’s climate pivot didn’t arrive as a slow, cautious adjustment. It came as a set of policy reversals, stacked close together—until last week, when his government sealed a deal with Alberta that puts tar sands oil back at the center of Canada’s economic plan.
For years before he became prime minister, Carney was a familiar name in climate finance. He led the clean energy investment fund for Brookfield. one of the world’s largest financial firms. and founded a global alliance of bankers and politicians who wanted to channel their resources toward green energy. When he took over from outgoing Prime Minister Justin Trudeau. many expected him to build on the ambitious Liberal climate agenda. including taxing fossil fuels and subsidizing clean technology.
Instead. in the year since Carney took office. he unveiled policies aimed at gutting Canada’s ambitious climate regulations and supporting the country’s powerful fossil fuel industry. The climax came last week with a “grand bargain” between Carney and Alberta to prop up tar sands oil and expand Canada’s power grid using natural gas.
Carney is selling the reversal as necessity. Canada, he argues, is facing the prospect of a severe economic downturn driven by President Trump’s disruptive trade agenda. At the same time, a group of conservatives in Alberta are campaigning to secede from Canada. In that framing. investment in oil and gas becomes a path to economic security—while Canada continues reducing its own carbon emissions.
“It will be an opportunity to accelerate the energy transition across Canada, and it’s also an opportunity for Canada to be a reliable supplier for partners across the globe, and to do so in a manner that makes Canada more prosperous and independent,” Carney said when announcing the strategy.
The conflict at the heart of the deal is straightforward: Ottawa needs emissions reductions and industrial climate leverage. while Alberta wants relief from what it has long seen as federal overreach. Under the Canadian constitution, provinces control natural resources. Alberta leaders have treated the industrial carbon tax as a threat to their sovereignty.
But the relationship cuts both ways. Alberta’s oil wealth is a net contributor to the federal budget. and oil makes up more than 15 percent of Canada’s export volume. The industry also faces a practical constraint: Alberta is producing more oil than it can sell. Its growth depends on building another pipeline to the Pacific Ocean—especially as the existing pipeline to the Pacific is nearing capacity. Oil producers also want new pipelines to the United States.
Last week’s “grand bargain” was designed to resolve that conflict.
In the agreement, Carney removed a proposed hard cap on carbon emissions from the oil sector. Alberta, in exchange, agreed to support a long-term increase in carbon prices. The federal government will also expedite permitting for a new Pacific Coast pipeline. Oil producers agreed to build a massive carbon capture system that would offset emissions from oil drilling.
Climate advocates say the package does not deliver the cuts it promises. They argue that it gives the oil and gas industry major concessions while leaving Canada’s emissions target weaker in practice.
They point to the carbon price itself: under the revised deal. the headline price of the industrial carbon tax would be lowered. and the rate at which it rises would be slowed by three-quarters. Advocates also say the carbon capture project has shrunk to a fraction of its original size. and the oil industry has not agreed to it yet.
“It would have been a big enough motivator to find those emissions cuts, but it wouldn’t have jeopardized the possibility of oil and gas companies making money,” said Julia Levin, associate director for national climate policy at the nonprofit Environmental Defence.
Levin drew a specific comparison to show how small the pressure may feel for producers. Under the previous framework. she said. the per-barrel cost of the carbon tax works out to the price of a Timbit. the Canadian equivalent of a Munchkin donut hole—about 50 cents. Under the new approach, Levin said companies “don’t have to do anything at all for 15 years.”.
The political costs of Carney’s pivot were immediate, too. Even early news of a potential deal triggered a revolt inside his own party. Steven Guilbeault, Carney’s climate minister, resigned, and two members of the government’s independent climate advisory panel also resigned.
But neither the industry nor critics view the deal as settled.
Major oil producers and conservatives in Alberta continue pressing for further concessions. On the other side, a broad spectrum of left-wing politicians and civil society groups have condemned the strategy as short-sighted—particularly because they argue the world is shifting away from fossil fuels.
Simon Donner, a climate scientist at the University of British Columbia who served as chair of the federal government’s climate policy advisory board until he resigned late last year, put the concern in blunt terms.
“The problem is we’re defaulting back to what Canada’s known how to do in the past, rather than what the world’s going to need in the future,” he said.
The wider rollback has already begun. Carney has scrapped Canada’s federal electric vehicle mandate and eliminated the country’s unpopular consumer carbon tax. a surcharge on gas stations and power bills. The one major policy he has left alone is the “industrial carbon price. ” which charges polluters a fee for every ton of carbon dioxide they emit. The biggest emitters include multinational oil and gas companies producing sticky crude from Alberta’s massive “tar sands” fields.
Oil from Alberta is central to the climate debate because of its scale. The oil sector produces about 30 percent of Canada’s emissions—more than buildings or cars.
Carney’s opponents say his new strategy leans heavily on the assumption that fossil fuels will keep Canada insulated from economic turbulence. His defenders say the market reality is that Canada needs to stay competitive while it transitions.
Cernovus, a Canadian oil company, said last week it does not think Canada should have a carbon price at all, arguing it “doesn’t incent us to decarbonize.” Other producers have said they still worry about making money even under the looser regulations.
Still, not everyone in the industry opposes the concept of paying for pollution. Richard Masson. a longtime oil sands executive who has worked for Shell and the government of Alberta. argued that companies should treat the carbon tax as the price of doing business in a country where most voters want some action on climate change.
“The producers will probably take a little bit less return, but in the world we’re in, there’s enough money to go around,” Masson said. “You’re saying, ‘I’m going to spend a premium on this to prevent having the world turn its back on me.”
Masson also tied the deal’s ultimate climate impact to whether pipeline expansion to the Pacific actually comes together. Carney has eased environmental permitting laws to make that easier, and last month he created a $25 billion development fund that could help pay for construction.
But so far, there is still no private company that has come forward to build the pipeline—and the proposal faces major resistance from Indigenous communities. A number of First Nations tribes with treaty rights on the Pacific coast have rejected the idea.
“No offer of equity or ownership will change our position, and no proponent is acceptable to us,” said Marilyn Slett, president of the Coastal First Nations, in response to the pipeline plan.
First Nations in British Columbia have “ironclad consultation rights” under British Columbia provincial law, and pipeline approval without tribal agreement, according to Slett’s statement, will be impossible.
Even as the oil strategy moved forward, Carney took another step in the same direction. At the same time as the Alberta deal. he unveiled a “national electricity strategy” aimed at doubling the size of Canada’s grid by 2050 through investments in renewable energy and a new network of transmission lines connecting provinces.
That plan, however, also calls for natural gas to play a major role in Canada’s future power grid. The country has already made major investments in zero-carbon power and gets most of its electricity from hydropower dams and nuclear reactors.
Carney’s government frames this as geopolitical resilience. The strategy claims that Canada’s economic growth and long-term competitiveness will depend on attracting and retaining investment in electricity-intensive sectors. listing artificial intelligence. liquid natural gas export facilities. mining. and critical minerals.
Underneath both the oil deal and the electricity strategy is one unifying assumption: that fossil fuels can serve as a shield against economic uncertainty. If Canada can extract and export natural resources. the government’s approach suggests. the country can keep balancing its budgets and protecting ordinary lives during periods of volatility.
Critics see it differently.
Donner, the former chair of the government’s climate advisory board, described the wager as something the country may come to regret.
“This is the sort of decision that they’re probably happy about today, and we will look back in 10 years and think, ‘what the hell were we doing?” he said.
Canada Mark Carney Alberta tar sands carbon price industrial carbon tax grand bargain pipeline Pacific Coast carbon capture national electricity strategy natural gas climate policy