With Prime Minister Mark Carney signposting “difficult choices, responsible choices” in his government’s first budget, due for release later today, Canadians will soon know the shape and direction of the climate competitiveness strategy the government is expected to publish at the same time.

In the lead-up to the budget, the PM is leaning heavily on the #ElbowsUp moment that brought him to office in late April.

“It’s our country, it’s your future, and we are going to give it back to you,” Carney declared in a 137-second video released Saturday. “For decades, Canada’s economy became more closely linked to the United States,” but “when things changed suddenly for the worse down there, it causes big problems up here, and it’s hard to control what happens next.”

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“As Prime Minister, my number one focus is to put Canadians back in control by building here at home and building new partnerships abroad, so that we’re not reliant on the United States,” Carney added. “To do that, we will have to make some difficult choices, responsible choices.”

While the video deals with the broader economic decisions Canadians will likely see in Carney’s budget, news coverage leading up to today’s release points to a collection of energy and climate priorities that will either be included in the big reveal or left on the cutting room floor.

The Story So Far

CBC recaps a series of announcements dating back to June that would likely be formalized in the budget. The list includes:

• An initial $13 billion for the new Build Canada Homes agency;

• $9 billion in military spending;

• $5 billion for a new Strategic Response Fund and $3.6 billion over three years for employment insurance supports, all in response to Donald Trump’s tariff war; 

• $2 billion for small modular nuclear reactor development in Ontario, despite their likely reliance on U.S. uranium;

• $450 million over three years for work force retraining;

• $370 million for a new biofuels incentive.

Climate Competitiveness

Based on Carney’s media statements over the last few weeks, the budget is expected to incorporate the government’s long-awaited climate competitiveness strategy. The PM has hinted repeatedly that the strategy will favour real-world outcomes over aspirational goals, but rely heavily on still-evolving carbon capture and storage (CCS) technologies to deliver those results. All signs point to a strategy that will “deprioritize Canada’s commitments to reduce domestic greenhouse gas emissions, in favour of focusing on ways to reap economic advantage from the global transition toward low-carbon energy,” Globe and Mail policy columnist Adam Radwanski wrote in mid-October.

“A subtext will be that despite the United States retreating from climate action, the energy transition is continuing apace globally, and Canada needs to embrace related economic opportunity,” he added. That will lead into a strategy of decarbonizing existing industries and bolstering the country’s ability “to compete in growing low-carbon sectors, such as the electric vehicle battery supply chain, non-emitting electricity, mass timber, and early-stage clean technologies.” Radwanski also listed industrial carbon pricing and support for clean electricity as likely pillars of the strategy, while advising the PM to connect his climate strategy to cost of living concerns at every opportunity.

The focus on emerging technologies would be a counterpoint to Hill Times columnist David Crane’s contention that Carney, with his overseas pitches for liquefied natural gas and mineral exports, “is not promoting Canada as a nation of leading technologies and innovation, but rather as a raw materials producer. This reflects the kind of economy we have built over the past several decades—one still [more] dependent on exporting raw materials than on adding value through research and development, and innovation.”

The climate competitiveness strategy “was supposed to have been released weeks ago, but it apparently wasn’t ready for the light of day,” the Globe and Mail’s Campbell Clark wrote Monday. “Now it will be tucked into a sprawling budget that will also be packed with big spending, large deficits, immigration targets, and sundry. That suggests the climate competitiveness strategy will be a slimmed-down statement,” and is “unlikely to be a plan that pleases climate activists.”

On Monday, the One Canadian Clean Economy Task Force issued a call for 30 actions to underpin a vision of climate competitiveness, including:

• Streamlined regulations, codes, and standards to break down interprovincial trade barriers, including coordinated permitting, credential recognition for greater labour mobility, and “harmonizing and leveraging building and construction codes to build green;

• Building out the clean electricity system and other critical infrastructure to better connect the country;

• Supporting clean goods and services through trade, procurement, and increased capital flows.

Carbon Capture and Storage

Radwanski’s mid-October analysis also indicated the federal strategy will lean heavily on CCS. Over the summer, Carney said the troubled technology could help Canada deliver “decarbonized” oil. That prompted the co-chair of the country’s Net-Zero Advisory Body (NZAB), Simon Fraser University climate scientist Simon Donner, to warn that the idea defied science.

“There is no such thing as decarbonized oil and gas,” Donner said. “Oil contains carbon. It is high school chemistry. [It emits] carbon dioxide when they’re used.” And “the government is going to embarrass itself by using such industry and marketing speak.”

But Carney doubled down on the connection, if not the marketing speak, in a mid-October interview with the Bloomberg Weekend podcast. “What makes those emissions go down will be carbon capture and storage,” he declared, while specifically name-checking the Pathways Alliance project, a $16.5-billion carbon capture hub and pipeline network that six major oil sands companies have been promoting for years, but refusing to launch without massive taxpayer support. Independent analysts have warned the project could be “scuppered” without permanent subsidies and won’t break even without efficiency gains and steadier revenue.

After multiple high-profile failures, the technology’s biggest boosters admit it won’t be ready for prime time before 2035—long after global climate agreements, and the urgency of the climate crisis itself, will dictate steep reductions in the oil sands’ massive climate footprint. In September, a peer-reviewed paper in the journal Nature concluded that global carbon storage capacity is 10 times less than previous estimates after ruling out geological formations where the gas could leak, trigger earthquakes, contaminate groundwater, or had other limitations.

Carney previously suggested a “grand bargain” in which the massive Pathways project would enable the new oil pipeline the Alberta government has been demanding, despite a “flashing red warning light” that such a project would also need massive taxpayer subsidies in an era of low oil prices.

Last week, the Globe and Mail reported that Pathways had initiated “very high-level” talks on CCS with the federal government’s new Major Projects Office. A day later, Energy and Natural Resources Minister Tim Hodgson “suggested Canada’s burgeoning carbon capture, storage and removal sector could be de-risked and scaled with government funding,” CBC reports.

On Monday, 49 environmental groups, Indigenous leaders, and health organizations urged Ottawa to stop supporting Pathways with public funds. “These oil sands companies are some of the wealthiest companies in Canada and yet are asking Canadians to take on the risk of a project that would cost billions and do little to reduce emissions,” Aly Hyder Ali, oil and gas program manager at Environmental Defence Canada, said in a release. “If Pathways really believed this project would deliver, they’d put their own money on the line. The fact they’re asking taxpayers to cover the costs shows they lack confidence in it.”

Emissions Cap vs. Industrial Carbon Pricing

The fossil industry has been lobbying hard against the federal government’s industrial carbon price, and climate analysts are warning that Canada will be reduced to rust belt status if Carney heeds that call. But last week, citing contacts at two national environmental groups, The Canadian Press reported that Carney has been giving industrial carbon pricing “a great deal of personal attention” as a centrepiece of the climate competitiveness strategy. Environment and Climate Change Minister Julie Dabrusin told the news agency her pre-budget consultations highlighted industrial carbon policy as a tool to give investors certainty while driving down emissions.

“At a high level, I can say that industrial carbon pricing is an important part of how do we fight climate change, and at the same time how do we build a future economy,” she said.

CP cited one source who said the government “is concerned about the public’s perception of industrial carbon pricing in a new climate strategy, given the lack of public support for the consumer carbon price.”

CBC says the budget will land exactly a year after the previous government released its draft regulations implementing its hard-fought, watered-down cap on oil and gas emissions, which are not meant to take effect until 2030-32. In his remarks last week, Hodgson made no mention of the cap, prompting former NZAB member Louise Comeau to conclude that the government will support carbon capture over emission controls.

“I don’t think it’s a secret that the proposed oil and gas cap will not be put into regulation in favour of investment in carbon capture and storage,” she said.

Last month, Radwanski echoed continuing signals that Carney might trade the emissions cap away in exchange for a stronger industrial carbon pricing system with enough heft to have an impact on emissions—a goal the Alberta government has been actively undercutting. Although two of his newest backbenchers avidly support the cap, Carney didn’t dispel concerns about its fate, telling the Bloomberg news agency that “a desired outcome is not a policy.”

In July, the Canadian Climate Institute cited industrial carbon pricing as “Canada’s broadest, most important climate policy tool,” slightly more effective than an emissions cap, reprising earlier research that found it delivered three times more emissions reductions than the consumer carbon price. CCI noted that either or both approaches would have to make an appreciable dent in a 143% rise in oil sands emissions between 2005 and 2023, with the industry planning for major increases in production in the years ahead.

Methane Regulations

Methane is a climate super-pollutant with about 84 times the global warming impact of carbon dioxide over the 20-year span when humanity will be scrambling to get climate change under control. It makes up around 13% of Canada’s total emissions, 40% of it coming from the oil and gas sector. In its latest assessment report, the Intergovernmental Panel on Climate Change identified methane controls as one of the quickest, cheapest ways to deliver the deepest reductions in greenhouse gas emissions by 2030.

But despite a commitment to methane reductions in the Liberal Party election platform, Carney has made only passing reference to the issue since taking office. His initial list of priority “nation-building” projects includes a new liquefied natural gas (LNG) terminal that will trigger additional methane emissions across its entire production chain.

Last week, the United Nations Environment Programme (UNEP)’s International Methane Observatory (IMEO) reported that governments and fossil fuel companies are largely failing to act on alerts from methane-detecting satellites that were launched to supplement the industry’s own unreliable monitoring. Over the last year, IMEO said in its annual report, the share of alerts leading to action rose from 1% to 12%.

“This is real progress, yet it also underscores the gap that remains: almost 90% of satellite-detected emission events flagged by UNEP still go unaddressed by governments and companies,” the report said.

In a study published last week in the journal Science, a research team concluded that global methane controls will pay for themselves six times over by reducing climate damages by more than US$1 trillion per year by 2050.

“The gains are especially pronounced for low- and middle-income countries, underscoring the policy’s equity-enhancing potential,” the researchers wrote. “Given that major economies also stand to gain considerably on their own, global cooperation is not strictly necessary for substantial methane action to be in their national interest.”

Youth Climate Corps

The Vancouver-based Climate Emergency Unit is putting on a last-minute push for the government to put real money behind the Youth Climate Corps, a promise of meaningful work at a living wage for any young Canadians who want to step up.

The YCC is meant to offer participants a two-year placement addressing some aspect of the climate emergency, while helping them learn skills that can provide a path to a career. “We [should] actually make it big enough that no one will be turned away,” said Emergency Unit Team Lead Seth Klein. “If you want to serve, we’ll welcome you, and we’ll pay you a living wage. And it should be voluntary.”

In a poll conducted for the Climate Emergency Unit in 2023, Abacus Data found strong support for the YCC concept: 65% of eligible youth said they would consider enrolling, and 15% said they definitely would.

“If you extrapolate 15% to the total population between 18 and 35, that’s 1.3 million young people saying, ‘I’m here, I’m super interested, where’s my invitation, sign me up,’” Klein said. Yet “we haven’t got our act together to make the most humble offering.” The Liberal Party platform in the last federal election included a $28-million pilot project that would have funded just a few hundred positions at $25 per hour.

“It would be enough to hire 500 young people for the whole damn country, which is the same population as my kid’s elementary school,” Klein said. “So let’s start with a robust, voluntary program and see what happens. Magic will happen!”

Windfall Profits Tax on Fossil Fuel Companies

There has been no pre-budget talk whatsoever about a windfall profits tax on fossil fuel companies—at least, not in Canada. But in Europe, analysts and advocates are calling for excess profits to be turned over to price relief for households struggling with high energy costs, or to addressing the damage that occurs when fossil companies’ profits are used as directed.

“During periods of international tension or shocks, the price of fossil fuels rises rapidly, despite relatively stable production costs. As a consequence, the profits of oil and gas companies can rise significantly,” Brussels-based Transport & Environment wrote in a release last week. After Russia launched its war in Ukraine, , according to an independent study T&E commissioned from PwC Belgium, “EU oil and gas companies generated over €104 billion in profits in 2022, a 45% increase from the previous year. They then fell by 21% in 2023, but remained significant at over €82 billion.”

At first, EU governments turned to tax reductions and exemptions to offset higher global energy prices. “While this did soften prices for consumers, it also kept demand for oil and gas high, which then filled the pockets of fossil fuel companies,” the organization explains.

Instead, “governments should tax fossil fuel projects and use that to help citizens switch to greener alternatives,” said T&E Senior Director Anthony Froggatt. “Taxing excess profits would ensure that money comes back to citizens to fund things like €150-a-month EV schemes and better public transport.”