Canadian policymakers should quickly rethink our energy and climate policies

In the wee hours of Nov. 6, Donald Trump provided a subtle but clear signal about the direction he will pursue as president regarding climate policies. In his victory speech he gave a nod to Robert F. Kennedy Jr.’s decision to join forces with MAGA saying, “He wants to do some things, and we’re gonna let him go to it. I just said, but Bobby, leave the oil to me. We have more liquid gold, oil and gas. We have more liquid gold than any country in the world. More than Saudi Arabia. We have more than Russia. Bobby, stay away from the liquid gold.”

People need to understand that Trump 2.0 is a different entity. He did not build his comeback movement by pandering or watering down his priorities. He reached out and either won people over to his side or sent them packing. A major example of this was Elon Musk, who during the first Trump administration resigned from the White House business advisory council to protest Trump’s withdrawal from the Paris climate treaty. Now Musk is all-in on MAGA and is set to play a lead role in a major downsizing of the administration.

When Trump secured the endorsement of Bobby Kennedy it was based on issues on which they could find agreement, including anti-corruption efforts and addressing the chronic disease burden. But Kennedy had to leave his environmentalism at the door, at least the climate activist part of it.

Trump’s remarks about energy during the campaign were unmistakeable. When he made the quip about wanting to be dictator for a day it was to close the border and “drill drill drill.” When asked how he would reduce the cost of living he said he would rapidly expand energy production with a target of cutting energy costs by at least 50 per cent. And on election night he reiterated: the United States has the oil, the liquid gold, and they’re going to use it.

U.S. climate policy will soon no longer be a thing. The Biden administration chose to focus on extravagant green energy subsidies under the Inflation Reduction Act. They were easy to bring in and will be just as easy for Trump to eliminate, especially the ones targeted at Democrat special interest groups. The incoming Trump administration will not settle simply for stalling on new climate action, it’s more likely to try to dismantle the entire climate bureaucracy.

In 2016 Trump did not understand the Washington bureaucracy and its ability to thwart a president’s plans. He learned many hard lessons merely trying to survive lawfare, resistance and open insubordination. It took three years for him to get a few people installed in senior positions in the climate area who could begin to push back against the vast regulatory machinery. But they simply did not have the time nor the capacity to get anything done.

This time should be different. Trump’s team has spent years developing legal and regulatory strategies to bring full executive authority back to the Oval Office so it can execute on plans quickly and efficiently. His top priority is hydrocarbon development and his team is in no mood for compromise. As to the climate issue, Trump recently remarked “Who the hell cares?”

That’s the reality. Now policymakers in Canada must decide what will be appropriate to ask of Canadians in terms of shouldering the costs of climate policies.

There’s one legal issue that Trump has thus far not addressed but that his administration will need to confront if it wants to drill drill drill. There has been an explosion of climate liability lawsuits in U.S. courts, where states, municipalities and activist groups sue major players in the fossil fuel industry demanding massive financial damages for alleged climate harms. There’s even a new branch of climate science called Extreme Event Attribution, which was explicitly developed to promote flimsy and arbitrary statistical analyses that support climate liability cases. Such cases are also popping up in Canada, including the Mathur case in Ontario, which the appellate court recently brought back from defeat.

Both Canada and the U.S. must act at the legislative level to extinguish climate liability in law. There is no good argument for letting this play out in the courts. The cases are prima facie preposterous: the emitters of carbon dioxide are the fuel users, not the producers, so liability—if it exists—should be attached to consumers. But then we would have an unworkable situation where everyone is liable to everyone, each person equally a victim and a tortfeasor. Climate policy belongs in the legislature not the courts and the “climate liability” movement is simply a massive waste of time and resources. It must be stopped.

Canada was already out of step with the U.S. in its mad pursuit of the federal Emission Reduction Plan. While the carbon tax is top of mind for voters, it’s but a small part of a larger and costlier regulatory onslaught, most recently supplemented by a new emissions cap on the western oil and gas sector. With the U.S. poised to sharply change direction, Canada now needs a complete rethink of our own energy and climate policies.

Author:

Ross McKitrick

Professor of Economics, University of Guelph

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Contrasting the principle of equalization with the execution

Quebec – as an example – happens to be sitting on its own significant untapped oil and gas reserves. Those potential opportunities include the Utica Shale formation, the Anticosti Island basin, and the Gaspé Peninsula (along with some offshore potential in the Gulf of St. Lawrence).

So Quebec is effectively being paid billions of dollars a year to not exploit their natural resources. That places their ostensibly principled stand against energy resource exploitation in a very different light.

You’ll need to search long and hard to find a Canadian unwilling to help those less fortunate. And, so long as we identify as members of one nation¹, that feeling stretches from coast to coast.

So the basic principle of Canada’s equalization payments – where poorer provinces receive billions of dollars in special federal payments – is easy to understand. But as you can imagine, it’s not easy to apply the principle in a way that’s fair, and the current methodology has arguably lead to a very strange set of incentives.

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According to Department of Finance Canada, eligibility for payments is determined based on your province’s fiscal capacity. Fiscal capacity is a measure of the taxes (income, business, property, and consumption) that a province could raise (based on national average rates) along with revenues from natural resources. The idea, I suppose, is that you’re creating a realistic proxy for a province’s higher personal earnings and consumption and, with greater natural resources revenues, a reduced need to increase income tax rates.

But the devil is in the details, and I think there are some questions worth asking:

Whichever way you measure fiscal capacity there’ll be both winners and losers, so who gets to decide?
Should a province that effectively funds more than its “share” get proportionately greater representation for national policy² – or at least not see its policy preferences consistently overruled by its beneficiary provinces?

The problem, of course, is that the decisions that defined equalization were – because of long-standing political conditions – dominated by the region that ended up receiving the most. Had the formula been the best one possible, there would have been little room to complain. But was it?

For example, attaching so much weight to natural resource revenues is just one of many possible approaches – and far from the most obvious. Consider how the profits from natural resources already mostly show up in higher income and corporate tax revenues (including income tax paid by provincial government workers employed by energy-related ministries)?

And who said that such calculations had to be population-based, which clearly benefits Quebec (nine million residents vs around $5 billion in resource income) over Newfoundland (545,000 people vs $1.6 billion) or Alberta (4.2 million people vs $19 billion). While Alberta’s average market income is 20 percent or so higher than Quebec’s, Quebec’s is quite a bit higher than Newfoundland’s. So why should Newfoundland receive only minimal equalization payments?

To illustrate all that, here’s the most recent payment breakdown when measured per-capita:

Equalization 2025-26 – Government of Canada

For clarification, the latest per-capita payments to poorer provinces ranged from $3,936 to PEI, $1,553 to Quebec, and $36 to Ontario. Only Saskatchewan, Alberta, and BC received nothing.

And here’s how the total equalization payments (in millions of dollars) have played out over the past decade:

Is energy wealth the right differentiating factor because it’s there through simple dumb luck, morally compelling the fortunate provinces to share their fortune? That would be a really difficult argument to make. For one thing because Quebec – as an example – happens to be sitting on its own significant untapped oil and gas reserves. Those potential opportunities include the Utica Shale formation, the Anticosti Island basin, and the Gaspé Peninsula (along with some offshore potential in the Gulf of St. Lawrence).

So Quebec is effectively being paid billions of dollars a year to not exploit their natural resources. That places their ostensibly principled stand against energy resource exploitation in a very different light. Perhaps that stand is correct or perhaps it isn’t. But it’s a stand they probably couldn’t have afforded to take had the equalization calculation been different.

Of course, no formula could possibly please everyone, but punishing the losers with ongoing attacks on the very source of their contributions is guaranteed to inspire resentment. And that could lead to very dark places.

Note: I know this post sounds like it came from a grumpy Albertan. But I assure you that I’ve never even visited the province, instead spending most of my life in Ontario.

Which has admittedly been challenging since the former primer minister infamously described us as a post-national state without an identity.

This isn’t nearly as crazy as it sounds. After all, there are already formal mechanisms through which Indigenous communities get more than a one-person-one-vote voice.

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Banks

Wall Street Clings To Green Coercion As Trump Unleashes American Energy

Published on April 6, 2025

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From the Daily Caller News Foundation

By Jason Isaac

The Trump administration’s recent move to revoke Biden-era restrictions on energy development in Alaska’s North Slope—especially in the Arctic National Wildlife Refuge (ANWR)—is a long-overdue correction that prioritizes American prosperity and energy security. This regulatory reset rightly acknowledges what Alaska’s Native communities have long known: responsible energy development offers a path to economic empowerment and self-determination.

But while Washington’s red tape may be unraveling, a more insidious blockade remains firmly in place: Wall Street.

Despite the Trump administration’s restoration of rational permitting processes, major banks and insurance companies continue to collude in starving projects of the capital and risk management services they need. The left’s “debanking” strategy—originally a tactic to pressure gun makers and disfavored industries—is now being weaponized against American energy companies operating in ANWR and similar regions.

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This quiet embargo began years ago, when JPMorgan Chase, America’s largest bank, declared in 2020 that it would no longer fund oil and gas development in the Arctic, including ANWR. Others quickly followed: Goldman Sachs, Wells Fargo, and Citigroup now all reject Arctic energy projects—effectively shutting down access to capital for an entire region.

Insurers have joined the pile-on. Swiss Re, AIG, and AXIS Capital all publicly stated they would no longer insure drilling in ANWR. In 2023, Chubb became the first U.S.-based insurer to formalize its Arctic ban.

These policies are not merely misguided—they are dangerous. They hand America’s energy future over to OPEC, China, and hostile regimes. They reduce competition, drive up prices, and kneecap the very domestic production that once made the U.S. energy independent.

This isn’t just a theoretical concern. I’ve experienced this discrimination firsthand.

In February 2025, The Hartford notified the American Energy Institute—an educational nonprofit I lead—that it would not renew our insurance policy. The reason? Not risk. Not claims. Not underwriting. The Hartford cited our Facebook page.

“The reason for nonrenewal is we have learned from your Facebook page that your operations include Trade association involved in promoting social/political causes related to energy production. This is not an acceptable exposure under The Hartford’s Small Commercial business segment’s guidelines.”

That’s a direct quote from their nonrenewal notice.

Let’s be clear: The Hartford didn’t drop us for anything we did—they dropped us for what we believe. Our unacceptable “exposure” is telling the truth about the importance of affordable and reliable energy to modern life, and standing up to ESG orthodoxy. We are being punished not for risk, but for advocacy.

This is financial discrimination, pure and simple. What we’re seeing is the private-sector enforcement of political ideology through the strategic denial of access to financial services. It’s ESG—Environmental, Social, and Governance—gone full Orwell.

Banks, insurers, and asset managers may claim these decisions are about “climate risk,” but they rarely apply the same scrutiny to regimes like Venezuela or China, where environmental and human rights abuses are rampant. The issue is not risk. The issue is control.

By shutting out projects in ANWR, Wall Street ensures that even if federal regulators step back, their ESG-aligned agenda still moves forward—through corporate pressure, shareholder resolutions, and selective financial access. This is how ideology replaces democracy.

While the Trump administration deserves praise for removing federal barriers, the fight for energy freedom continues. Policymakers must hold financial institutions accountable for ideological discrimination and protect access to banking and insurance services for all lawful businesses.

Texas has already taken steps by divesting from anti-energy financial firms. Other states should follow, enforcing anti-discrimination laws and leveraging state contracts to ensure fair treatment.

But public pressure matters too. Americans need to know what’s happening behind the curtain of ESG. The green financial complex is not just virtue-signaling—it’s a form of economic coercion designed to override public policy and undermine U.S. sovereignty.

The regulatory shackles may be coming off, but the private-sector blockade remains. As long as banks and insurers collude to deny access to capital and risk protection for projects in ANWR and beyond, America’s energy independence will remain under threat.

We need to call out this hypocrisy. We need to expose it. And we need to fight it—before we lose not just our energy freedom, but our economic prosperity.

The Honorable Jason Isaac is the Founder and CEO of the American Energy Institute. He previously served four terms in the Texas House of Representatives.