Commentary
By Tegan Hill and Elmira Aliakbari
The Carney government has promised to make Canada the world's leading "energy superpower," but so far, the government has failed to reduce regulatory hurdles and uncertainty in energy development. It's time to reverse the damaging federal policies that have held back Canada's energy industry for more than a decade.
The long list of Trudeau-era policies includes Bill C-69 (the "no pipelines act"), which introduced subjective criteria including "gender implications" into the evaluation of major energy projects, an oil tanker ban on the west coast that limits energy exports to Asian markets, an arbitrary cap on oil and gas GHG emissions that will require production cuts while most of our international peers ramp up production, and major new regulations for methane emissions in the oil and gas sector, which will increase costs for the industry.
These policies stifle Canada's energy sector. Investment in the oil and gas sector plummeted over the last decade, from $84.0 billion in 2014 to $37.2 billion in 2023 (inflation-adjusted)---a 56 percent drop.
And that should come as no surprise. According to a 2023 survey of oil and gas investors, 68 percent of respondents said uncertainty over environmental regulations deters investment in Canada compared to only 41 percent of respondents for the United States. Moreover, 59 per cent said the cost of regulatory compliance deters investment compared to 42 per cent in the U.S., and 54 per cent said Canada's regulatory duplication and inconsistencies deter investment compared to only 34 per cent for the U.S. This divergence between Canada and the U.S. in the eyes of investors has likely widened following President Trump's re-election and his administration's massive regulatory reforms to strengthen U.S. energy development.
Perhaps it's also unsurprising, then, that business investment (measured on a per-worker basis, a key indicator of productivity) in Canada has dropped from $18,600 in 2014 to about $14,000 in 2024 (inflation-adjusted) while it's continued to increase in the U.S.
Again, these Trudeau-era policies diminish Canada's competitiveness, deter investment and ultimately hurt the economic well-being of Canadians. According to a Deloitte report commissioned by the Alberta government, the federal emissions cap alone may cost the Canadian economy more than $280 billion from 2030 to 204,0 resulting in lower wages, job losses and a decline in tax revenue.
The Carney government pledged to turn things around. But rather than reduce regulatory hurdles and uncertainty in energy development, it's introduced new legislation (which became law in June) that grants the federal cabinet the authority to prioritize and expedite projects it deems to be in the "national interest." Put differently, the government chose to grant the cabinet the power to pick winners and losers based on vague criteria and priorities rather than undoing damaging regulations that would give all businesses the chance to succeed.
It's been four months since Mark Carney and the Liberal Party won the election. With Parliament set to reconvene this month, it's time to set a new course and finally undo Trudeau's damaging energy policies.
Tegan Hill is Director, Alberta Policy at the Fraser Institute. Elmira Aliakbari is Director of the Centre for Natural Resource Studies at the Fraser Institute.
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