Prime Minister Mark Carney shakes hands with Alberta Premier Danielle Smith in Calgary on May 15.Jeff McIntosh/The Canadian Press
Prime Minister Mark Carney is dismissing increasing concern about his government’s environmental policies as he insists that the country’s new climate plan will withstand the test of time amid more demands for changes from the oil and gas sector.
Since winning government last year, the Prime Minister has dismantled key planks of the Trudeau-era climate plan. Mr. Carney argues that many of those policies were unworkable and therefore not effective, but the changes have made a minority in his Liberal caucus uneasy.
“We’re moving forward on climate action, we’re moving forward on making this country more affordable,” Mr. Carney said at a Monday press conference as he defended his climate credentials.
Opinion: Ottawa sacrifices climate goals for a pipeline nobody needs
On Sunday, The Globe and Mail reported that climate and energy experts are concerned by the fine print in Ottawa’s pipeline deal with Alberta, and the carbon-pricing system underpinning it. The deal creates a $1.2-billion exit ramp if a future government chooses to cancel the plan. At issue is the fact that governments often change policy and that it could again happen once a new pipeline is built.
The Prime Minister rejected that concern. “You don’t break a contract as a government, certainly not in Canada,” Mr. Carney said.
However, changing policies of past governments is common, especially around climate change and renewable energy. Premier Doug Ford cancelled Ontario’s cap-and-trade system and green-energy contracts when he won office in 2018.
More recently, Alberta’s Danielle Smith has been criticized for overhauling the policies that supported renewable-energy projects with no warning to industry when she entered government. The province was once Canada’s hotbed of renewable-energy deals. But they have almost completely collapsed since the rule changes she made in 2023.
Even after the concessions that Mr. Carney’s government has already made, the Oil Sands Alliance industry group told The Globe in a recent interview that more are needed.
The alliance said policies that encourage production growth and investment in Alberta’s oil sands are non-negotiable for industry in the new round of talks to finalize plans for a carbon capture and sequestration project, called Pathways.
“If you can’t have line of sight to growing production, then why would you build a pipeline, and why would you invest in Pathways?” said Kendall Dilling, the president of the Oil Sands Alliance.
The alliance is representing the sector in those talks with the federal and provincial governments. Its members – Canadian Natural Resources Ltd., Cenovus Energy Inc., ConocoPhillips Canada, Imperial Oil Ltd. and Suncor Energy Inc. – produce the lion’s share of oil sands-derived crude.
Such government policies could take many forms.
Mr. Dilling said that a strategy developed in the 1990s to accelerate development of the oil sands presents a useful guide for attracting private-sector investment. For example, keeping production royalties low until capital costs for projects are recouped.
He said he is optimistic that the alliance can strike a deal on the Pathways project as long as it can “crack this last piece on production” growth in the coming weeks and months.
“We remain completely committed, but we’ve only got two legs of the stool here. We need that third one,” Mr. Dilling said.
Andrew Leach, economics and law professor at the University of Alberta, said companies are cognizant that shareholders are wary of costs that would surge if each planned a new greenfield project in northeastern Alberta.
Overheated expansion in the early 2000s drove runaway inflation in labour and materials costs. In recent years, companies have prioritized debt reduction and share buybacks over major projects.
“From what I can see, the push right now is to drive costs of existing production down as much as possible, with little sense of real additions to production,” Prof. Leach said.
The political climate around environmental policies has changed dramatically since former prime minister Justin Trudeau won government while campaigning on a carbon tax. A decade later, the focus has swung decisively back to spurring economic growth and Prof. Leach said in that context, the industry is now banking on many of the Trudeau-era policies to be scrapped even with a Liberal prime minister still in power.
“I think you’re seeing an industry that is convinced that they can get pretty close to that outcome,” he said. “It’s just a push for lower costs, fewer restrictions, etc.”
Concern over what the government might do next is what is driving some of the disquiet in Mr. Carney’s caucus.
Opinion: Ottawa-Alberta deal is the best outcome climate advocates could have hoped for
Some of his MPs have formed a climate caucus to try and keep a focus on the issue, even as the government is prioritizing economic growth and trade diversification.
Last week, the CBC reported that 14 Liberal MPs sent the Prime Minister a letter expressing concern about his bargain with Alberta to build a new oil pipeline on the condition of carbon pricing and the Pathways project.
Asked about restlessness in his own ranks, Mr. Carney on Monday said: “there’s 160 other members of that caucus. We have to take decisions that are in the interests of the country.”
Yukon Liberal MP Brendan Hanley said he supports the broad direction that the government is taking but he wants to see an explanation of how Canada can still meet its climate goals at the same time as it plans to expand oil production and water down emissions-reducing policies.
“We have many pieces of the puzzle in place, we’re missing a few pieces to get to that complete picture,” Mr. Hanley said.
He declined to say whether he signed the letter to the Prime Minister.