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Economy

The Guilbeault – Trudeau Fallout: Canada’s Oil and Gas Emissions Cap is Under Fire from Experts and Business Leaders – Resource Works

Published

2 years ago

12 minute read

Steven Guilbeault, Canada’s environment and climate minister, at the COP28. Photo by AP.

By Resource Works

More News and Views From Resource Works Here

Prime Minister Justin Trudeau and his eco-extremist Minister of the Environment and Climate Change Steven Guilbeault are risking hundreds of billions of dollars of investments in Alberta’s and Canada’s economies and core social programs

The federal government’s proposed cap on emissions from oil and gas has now been outlined in a draft.

While Ottawa insists that it is not a cap on the production of oil and gas, experts fail to see how the emissions cap is not also a de facto production cap, given the details of the policy.

The industry fears that, in effect, that is just what it is — with negative impacts on western provinces that produce oil and gas for domestic use and for export.

The federal government proposes to limit emissions for oil and gas at 35% to 38% below the 2019 level. At the same time, Ottawa says the new rules would allow production to increase 12% above 2019 levels.

The producers are trying to figure out the ups and downs of the policy, and there is a lot to unpack. The federal draft “framework”  is open for discussion and consultation until February 2024.

The initial reaction from the Canadian Association of Petroleum Producers was that the emissions cap could result in “significant” production cuts, and it called the government’s emissions framework unnecessary. Alberta’s oil and gas sector has been invested in decarbonization efforts and measures to reduce methane emissions, already beating a target of a 45% reduction by 2025.

Alberta Premier Danielle Smith furiously flamed that “This announced de facto production cap on Alberta’s oil and gas sector amounts to an intentional attack by the federal government on the economy of Alberta and the financial well-being of millions of Albertans and Canadians. . . .

“With their pronouncement singling out the oil and gas sector alone for punitive federal treatment, Prime Minister Justin Trudeau and his eco-extremist Minister of the Environment and Climate Change Steven Guilbeault are risking hundreds of billions of dollars of investments in Alberta’s and Canada’s economies and core social programs, are devaluing the retirement investments of millions of Canadians, and are threatening the jobs of hundreds of thousands of Albertans.”

The Business Council of Canada hammered the cap as part of a “full-on charge against the oil and gas sector,” with no other industry so targeted by Ottawa. “It all seems punitive and short-sighted.”

The sectoral specificity is alarmingly pointed.

The Indigenous Resource Network also said it was disappointed by the emissions-cap announcement — and will seek an Indigenous exemption from the cap for Indigenous communities engaged in the oil and gas sector.

And Karen Ogen, CEO of the First Nations LNG Alliance, said from the COP28 climate conference in Dubai that the federal announcement is “disheartening” because of what resource projects mean to Indigenous people. “We’re being shoved aside again.”

The emissions cap follows the unravelling of the federal carbon tax. In the fall of 2023, the Federal Government made a number of exemptions and incentives, including removing the carbon tax from home heating in Atlantic Canada only. As Premiers in the rest of Canada voice their frustration, Saskatchewan even declared it will no longer collect the federal carbon tax at all.

Then the new national chief of the Assembly of First Nations, Cindy Woodhouse, said she ‘absolutely’ supports Ontario chiefs in a push for a review of federal carbon-pricing rules. The Ontario chiefs oppose the tax because they say it is not revenue neutral, especially for those on reserves, and because electric vehicles and heat pumps are neither available nor workable in many First Nations communities.

In the face of crumbling support for its policy agenda, Trevor Tombe of the University of Calgary saw in the new approach a softening of Ottawa’s enthusiasm for carbon taxes.

“I think it’s pretty clear that government is backing away from the carbon tax as a central pillar of their climate policy. And that means if you want to hit your target, you need to adopt other policies.”

Ergo, production (emissions) caps.

Debate continues over whether Canada is overdoing its climate measures, given that it produces only 1.5% of world emissions. And that Canada is the only top ten world oil producer that proposes such an emissions cap. None of the world’s other major oil producers have an emissions cap.

And then there’s the report from Canada’s independent parliamentary budget officer: “Canada’s own emissions are not large enough to materially impact climate change.”

He went on to say: “Consequently, Canada’s primary means of limiting the economic costs of climate change are through participation in a globally coordinated emissions reduction regime.”

LNG, anyone?

Whatever the final version of the regulatory cap looks like, we can expect to lose investment and economic activity, and the producing provinces, companies and their families can expect some pain.

That seems to be a trade-off that, to some extent, the federal government wants to make. But why is it going in this direction?

While some provinces like Quebec or Manitoba have incredible hydroelectric resources, and Ontario is Canada’s nuclear power leader, some provinces, especially in Western Canada, produce and consume oil and natural gas products.

BC produces natural gas in the northeast and is close to exporting LNG overseas. It is already contributing to transporting, refining and exporting oil that is produced elsewhere in the country.

These industries contribute to emissions, they cannot easily be phased out without serious implications for every aspect of how we live our lives. We rely on fossil fuels. So it’s not as simple as saying, “Let’s just get rid of it.”

Policy leaders globally are trying to resolve right now the question of what sacrifices and compromises are we willing to make in order to address climate change in a meaningful way; What is the rate of change and transformation that our economies are willing to accept? And that consumers — and voters — are willing to accept? What can we do without limiting human development in areas of the world where it’s still desperately needed?

We already have Ottawa’s carbon pricing (carbon taxation) scheme. The provinces have been given the opportunity to structure carbon pricing as they see fit, provided that it meets the baseline set by the federal government. Of course, not every province has wanted to do that.

Ottawa is signalling that they don’t think the carbon tax model has been working to meet the emissions (and electoral) targets that they’ve set. So now Ottawa has come up with this emissions backstop, what the feds call a cap-and-trade model for the oil and gas sector.

It’s fair to say that this scheme is a little bit more convoluted. It is going to limit industries. It will add consumer costs. It will cause even more confusion around energy. And we can certainly expect it to be challenged in court.

We’ve recently seen a number of federal environmental policies get kiboshed in courts on constitutional grounds, and criticized by judges across the country. Provincial governments have a tremendous stake in what goes on with natural resource development in their jurisdictions.

We don’t expect this issue of a federal emissions cap will be easily resolved. Look for it to be a very large part of the discussion around the next federal election.

All in all, there’s a lot of concern that, if the scheme is overly convoluted, industries could start to pull back. That could have a large impact on our ability to not only keep our economy strong and serve the interests of Canadians but also on our ability to invest in technologies that actually reduce emissions, like carbon capture or hydrogen.

Our Resource Works CEO, Stewart Muir, recently returned from the COP28 climate conference in Dubai. Among other things, he raised awareness of Canada’s role as a solutions provider to the world, from coal-displacing LNG to BC’s opportunity to become a major hydrogen energy hub.

We’ve made considerable progress in reducing emissions, especially in oil and gas. We have some of the most stringent regulations, not only on carbon and methane, but more broadly on, social and governance dimensions, how you manage local environmental concerns like water and land conservation, and protecting wildlife.

Canada has made huge progress at every level, and the energy sector is building new partnerships with Indigenous communities to ensure that they’re meaningfully included in land and environmental management and also in economic opportunities, including joint or sole ownership of projects.

We are part of addressing climate change and we are part of meeting the world’s energy needs sustainably, responsibly and reliably.

These are conversations that need to continue, and they need to inform our policy agenda as a country.

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Canada’s economic performance cratered after Ottawa pivoted to the ‘green’ economy

Published on October 31, 2025

By

From the Fraser Institute

By Jason Clemens and Jake Fuss

There are ostensibly two approaches to economic growth from a government policy perspective. The first is to create the best environment possible for entrepreneurs, business owners and investors by ensuring effective government that only does what’s needed, maintains competitive taxes and reasonable regulations. It doesn’t try to pick winners and losers but rather introduces policies to create a positive environment for all businesses to succeed.

The alternative is for the government to take an active role in picking winners and losers through taxes, spending and regulations. The idea here is that a government can promote certain companies and industries (as part of a larger “industrial policy”) better than allowing the market—that is, individual entrepreneurs, businesses and investors—to make those decisions.

It’s never purely one or the other but governments tend to generally favour one approach. The Trudeau era represented a marked break from the consensus that existed for more than two decades prior. Trudeau’s Ottawa introduced a series of tax measures, spending initiatives and regulations to actively constrain the traditional energy sector while promoting what the government termed the “green” economy.

The scope and cost of the policies introduced to actively pick winners and losers is hard to imagine given its breadth. Direct spending on the “green” economy by the federal government increased from $600 million the year before Trudeau took office (2014/15) to $23.0 billion last year (2024/25).

Ottawa introduced regulations to make it harder to build traditional energy projects (Bill C-69), banned tankers carrying Canadian oil from the northwest coast of British Columbia (Bill C-48), proposed an emissions cap on the oil and gas sector, cancelled pipeline developments, mandated almost all new vehicles sold in Canada to be zero-emission by 2035, imposed new homebuilding regulations for energy efficiency, changed fuel standards, and the list goes on and on.

Despite the mountain of federal spending and regulations, which were augmented by additional spending and regulations by various provincial governments, the Canadian economy has not been transformed over the last decade, but we have suffered marked economic costs.

Consider the share of the total economy in 2014 linked with the “green” sector, a term used by Statistics Canada in its measurement of economic output, was 3.1 per cent. In 2023, the green economy represented 3.6 per cent of the Canadian economy, not even a full one-percentage point increase despite the spending and regulating.

And Ottawa’s initiatives did not deliver the green jobs promised. From 2014 to 2023, only 68,000 jobs were created in the entire green sector, and the sector now represents less than 2 per cent of total employment.

Canada’s economic performance cratered in line with this new approach to economic growth. Simply put, rather than delivering the promised prosperity, it delivered economic stagnation. Consider that Canadian living standards, as measured by per-person GDP, were lower as of the second quarter of 2025 compared to six years ago. In other words, we’re poorer today than we were six years ago. In contrast, U.S. per-person GDP grew by 11.0 per cent during the same period.

Median wages (midpoint where half of individuals earn more, and half earn less) in every Canadian province are now lower than comparable median wages in every U.S. state. Read that again—our richest provinces now have lower median wages than the poorest U.S. states.

A significant part of the explanation for Canada’s poor performance is the collapse of private business investment. Simply put, businesses didn’t invest much in Canada, particularly when compared to the United States, and this was all pre-Trump tariffs. Canada’s fundamentals and the general business environment were simply not conducive to private-sector investment.

These results stand in stark contrast to the prosperity enjoyed by Canadians during the Chrétien to Harper years when the focus wasn’t on Ottawa picking winners and losers but rather trying to establish the most competitive environment possible to attract and retain entrepreneurs, businesses, investors and high-skilled professionals. The policies that dominated this period are the antithesis of those in place now: balanced budgets, smaller but more effective government spending, lower and competitive taxes, and smart regulations.

As the Carney government prepares to present its first budget to the Canadian people, many questions remain about whether there will be a genuine break from the policies of the Trudeau government or whether it will simply be the same old same old but dressed up in new language and fancy terms. History clearly tells us that when governments try to pick winners and losers, the strategy doesn’t lead to prosperity but rather stagnation. Let’s all hope our new prime minister knows his history and has learned its lessons.

Jason Clemens

Executive Vice President, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute
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Banks

Bank of Canada Cuts Rates to 2.25%, Warns of Structural Economic Damage

Published on October 29, 2025

By

The Opposition with Dan Knight

Dan Knight's avatar Dan Knight

Governor Tiff Macklem concedes the downturn runs deeper than a business cycle, citing trade wars, weak investment, and fading population growth as permanent drags on Canada’s economy.

In an extraordinary press conference on October 29th, 2025, Bank of Canada Governor Tiff Macklem stood before reporters in Ottawa and calmly described what most Canadians have already been feeling for months: the economy is unraveling. But don’t expect him to say it in plain language. The central bank’s message was buried beneath bureaucratic doublespeak, carefully manicured forecasts, and bilingual spin. Strip that all away, and here’s what’s really going on: the Canadian economy has been gutted by a combination of political mismanagement, trade dependence, and a collapsing growth model based on mass immigration. The central bank knows it. The data proves it. And yet no one dares to say the quiet part out loud.

Start with the headline: the Bank of Canada cut interest rates by 25 basis points, bringing the policy rate down to 2.25%, its second consecutive cut and part of a 100 basis point easing campaign this year. That alone should tell you something is wrong. You don’t slash rates in a healthy economy. You do it when there’s pain. And there is. Canada’s GDP contracted by 1.6% in the second quarter of 2025. Exports are collapsing, investment is weak, and the unemployment rate is stuck at 7.1%, the highest non-pandemic level since 2016.

Macklem admitted it: “This is more than a cyclical downturn. It’s a structural adjustment. The U.S. trade conflict has diminished Canada’s economic prospects. The structural damage caused by tariffs is reducing the productive capacity of the economy.” That’s not just spin—that’s an admission of failure. A major trading nation like Canada has built its economic engine around exports, and now, thanks to years of reckless dependence on U.S. markets and zero effort to diversify, it’s all coming apart.

And don’t miss the implications of that phrase “structural adjustment.” It means the damage is permanent. Not temporary. Not fixable with a couple of rate cuts. Permanent. In fact, the Bank’s own Monetary Policy Report says that by the end of 2026, GDP will be 1.5% lower than it was forecast back in January. Half of that hit comes from a loss in potential output. The other half is just plain weak demand. And the reason that demand is weak? Because the federal government is finally dialing back the immigration faucet it’s been using for years to artificially inflate GDP growth.

The Bank doesn’t call it “propping up” GDP. But the facts are unavoidable. In its MPR, the Bank explicitly ties the coming consumption slowdown to a sharp drop in population growth: “Population growth is a key factor behind this expected slowdown, driven by government policies designed to reduce the inflow of newcomers. Population growth is assumed to slow to average 0.5% over 2026 and 2027.” That’s down from 3.3% just a year ago. So what was driving GDP all this time? People. Not productivity. Not innovation. Not exports. People.

And now that the government has finally acknowledged the political backlash of dumping half a million new residents a year into an overstretched housing market, the so-called “growth” is vanishing. It wasn’t real. It was demographic window dressing. Macklem admitted as much during the press conference when he said: “If you’ve got fewer new consumers in the economy, you’re going to get less consumption growth.” That’s about as close as a central banker gets to saying: we were faking it.

And yet despite all of this, the Bank still clings to its bureaucratic playbook. When asked whether Canada is heading into a recession, Macklem hedged: “Our outlook has growth resuming… but we expect that growth to be very modest… We could get two negative quarters. That’s not our forecast, but we can’t rule it out.” Translation: It’s already here, but we’re not going to admit it until StatsCan confirms it six months late.

Worse still, when reporters pressed him on what could lift the economy out of the ditch, he passed the buck. “Monetary policy can’t undo the damage caused by tariffs. It can’t target the hard-hit sectors. It can’t find new markets for companies. It can’t reconfigure supply chains.” So what can it do? “Mitigate spillovers,” Macklem says. That’s central banker code for “stand back and pray.”

So where’s the recovery supposed to come from? The Bank pins its hopes on a moderate rebound in exports, a bit of resilience in household consumption, and “ongoing government spending.” There it is. More public sector lifelines. More debt. More Ottawa Band-Aids.

And looming behind all of this is the elephant in the room: U.S. trade policy. The Bank explicitly warns that the situation could worsen depending on the outcome of next year’s U.S. election. The MPR highlights that tariffs are already cutting into Canadian income, raising business costs, and eliminating entire trade-dependent sectors. Governor Macklem put it plainly: “Unless something else changes, our incomes will be lower than they otherwise would have been.”

Canadians should be furious. For years, we were told everything was fine. That our economy was “resilient.” That inflation was “transitory.” That population growth would solve all our problems. Now we’re being told the economy is structurally impaired, trade-dependent to a fault, and stuck with weak per-capita growth, high unemployment, and sticky core inflation between 2.5–3%. And the people responsible for this mess? They’ve either resigned (Trudeau), failed upward (Carney), or still refuse to admit they spent a decade selling us a fantasy.

This isn’t just bad economics. It’s political malpractice.

Canada isn’t failing because of interest rates or some mysterious global volatility. It’s failing because of deliberate choices—trade dependence, mass immigration without infrastructure, and a refusal to confront reality. The central bank sees the iceberg. They’re easing the throttle. But the ship has already taken on water. And no one at the helm seems willing to turn the wheel.

So here’s the truth: The Bank of Canada just rang the alarm bell. Quietly. Cautiously. But clearly. The illusion is over. The fake growth era is ending. And the reckoning has begun.

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