By Mitchell Beer

An updated industrial carbon pricing system must deliver outcomes as well as optics, the Canadian Climate Institute (CCI) concludes this week, based on a review of 57 possible future scenarios for how Alberta’s emission pricing system can deliver on a target price of $130 per tonne of carbon dioxide emissions by 2030.

The $130 target under Alberta’s Technology Innovation and Emissions Reduction (TIER) regulation is built into last November’s controversial memorandum of understanding (MOU) between the Canadian and Alberta governments. But the climate institute warns there’s a difference between the advertised price per tonne in a carbon regulation and the effective marginal credit price (EMCP)—the real-world price a carbon polluter actually has to pay, and therefore the strength of the incentive they receive to reduce their emissions.

The institute released its analysis [pdf] this week as Environment and Climate Change Canada (ECCC) looks into whether the federal government’s current benchmarks for industrial carbon pricing “can distinguish systems that merely function from those that deliver outcomes of equivalent stringency,” the CCI paper states. Most of the 57 scenarios could meet the 2030 benchmark on paper, “yet fail[ed] to deliver stringency equivalent to $130-per-tonne EMCP.”

The analysis by CCI Chief Economist Dave Sawyer and Executive Vice President Dale Beugin found that:

• 84% of the scenarios met the federal government’s design criteria for a provincial pricing system;

• But of those apparently successful design options, 77%  failed to deliver the equivalent of a $130-per-tonne EMCP by 2030, meaning that only 11 of the original 57 succeeded.

A High-Stakes Review

The stakes for the ECCC review are high, the paper states, since this year’s decisions on system design and stringency will shape Canada’s industrial carbon pricing market into the 2030s.

The review is also taking place in a deeply politicized atmosphere, with Canada facing a serious sovereignty threat from south of the border and a separation referendum likely to take place in Alberta this year. “Against this backdrop, the federal government has launched a process to modernize large-emitter trading systems,” CCI writes. “The first track is regulatory and technical,” while “the second track is political and bilateral, centred on negotiations between Canada and Alberta.” The paper says the Canada-Alberta MOU sets the $130-per-tonne benchmark, but contains no plan or deadline to meet the stringency target.

The weaknesses in the current system have been accumulating for some time, the institute says. Existing large-emitter trading systems (LETS) “are opaque, rely on outdated design choices, and have been systematically weakened by provinces over time.” The federal government, meanwhile, has been inconsistent in its oversight and “reluctant to impose the backstop where provincial systems fall short, most notably as Saskatchewan zeroed out its industrial carbon price in 2025.”

But improving the system wouldn’t just make it easier to link provincial carbon trading systems and reduce disparities between polluters operating in different jurisdictions: “It would also help shield Canadian exports from rising border carbon tariffs, including the EU Carbon Border Adjustment Mechanism.”

Asked what it would take for the federal government to adopt a more consistent, evidence-based pricing strategy, Beugin replied that “grounding the benchmark in concrete, transparent metrics of stringency is the best way to shift the federal government’s approach to industrial carbon pricing. It’s currently too easy for provincial systems to comply with the federal benchmark without delivering robust carbon markets with strong incentives to invest in low-carbon projects.  That’s why we’ve proposed an approach that’s focused on market outcomes and ensuring a minimum effective carbon price in each system.”

In response to Trump’s annexation agenda and the separatist threat at home, the CCI’s plan would also “ensure provinces have plenty of flexibility in designing provincial carbon markets,” Beugin added in an email. “We’re suggesting that the federal benchmark makes provinces accountable for delivering an outcome (minimum effective carbon price) without being prescriptive as to how. Provinces can and should tailor their approach to their own context.”

An ‘Unresolved Tension’

However, in the consultation materials that ECCC released late last month, the climate institute said it detected an “unresolved tension” between the carbon pollution price signal the government wants to send and the tools it is proposing to assess polluters’ performance.

“By establishing minimum national stringency standards, the benchmark seeks to ensure that regulated facilities face comparable incentives to reduce emissions and invest in low-carbon technologies,” the CCI explains. But the gap is in the detailed factors ECCC is proposing to measure, including market balance, credit availability, and banking dynamics. “These considerations are necessary to ensure market operation and compliance feasibility,” the paper states, but they aren’t enough on their own to ensure that provincial pricing systems meet the federal target, and meet it on schedule.

“This distinction matters. The relevant question is not simply whether systems adopt the minimum national carbon price (MNCP) schedule, but whether the price signal delivered by the system achieves the intended outcome,” the CCI stresses. “Tests of net demand, market balance, and static banking metrics are useful for determining whether a market is operational. They are not sufficient for determining whether a system meets a given stringency requirement.”

The report identifies the size of the buffer—the extent to which a carbon pricing system adapts to keep the demand for carbon credits higher than the supply—as a key factor driving the stringency of the system. A 6% buffer, the level ECCC has proposed, is enough to keep a carbon market from failing. But carbon pricing systems only “begin to deliver stronger outcomes” with buffers of 10 to 305. They can only deliver reliable price signals, consistent with the federal targets, with buffers of more than 30%.

What Works, What Doesn’t

The CCI paper identifies tighter benchmarks over time as the single most important tool to create a scarcity of carbon credits and reduce emissions. By contrast, that stringency is severely diluted by direct investment credits that allow polluters to directly fund emission reduction projects instead and increase the number of carbon credits in the system while paying a lower carbon price.

“In the scenarios, introducing direct investment credits reduces costs by roughly two-thirds and cuts abatement by more than half,” the paper states. “The cost savings are therefore not a productivity improvement but rather a dilution of policy stringency.”

With a half-dozen policy options included in the analysis, the paper lays out a “clear hierarchy of levers,” Sawyer and Beugin write. “Benchmark tightening does the heavy lifting for equivalency attainment. Floor escalation and banking controls protect and stabilize the signal that benchmarks create. Credit and offset limits provide guardrails. Direct investment credits, by contrast, act as a dilution lever capable of neutralizing even aggressive benchmark tightening.”

The two authors recommend four steps to bolster the system:

• Strengthening the investment incentive for emission reductions—in an updated federal benchmark, and in the MOU—by basing it on what carbon polluters actually have to pay, rather than the average market price of the credits;

• Allowing Alberta and other provinces to find their own way to hit the $130 threshold “subject to a small set of non-negotiable conditions” to ensure their programs meet the test for stringency—including benchmarks that get progressively tighter, minimum and maximum prices that shift over time, and limits on compliance options that dilute the carbon price’s impact;

• Requiring data that is transparent and credible enough to verify compliance;

• Tracking performance over time.

“Taken together,” they write, “these recommendations support a benchmark framework that verifies equivalency based on outcomes rather than optics while maintaining flexibility in provincial system design and strengthening confidence that industrial carbon pricing delivers federal climate objectives.”

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By Mitchell Beer

With Prime Minister Mark Carney and Energy and Natural Resources Minister Tim Hodgson just back from their liquefied natural gas (LNG) sales trip to Germany, the nation-building projects they crave are busting out all over.

Just not in the way they seem to expect, or in the places they’re most avidly looking for them.

During their sojourn in Berlin Tuesday and Wednesday, the PM and his former Goldman Sachs and Bank of Canada colleague distinguished themselves by touting the promising market they see in Germany for a fuel that much of the world is looking to leave behind, or will be soon enough. LNG is emerging as a centrepiece of their quest for “nation-building” projects to diversify Canada’s economy and assert our sovereignty against Donald Trump’s tariff warfare and annexation threats.

“I think you’re probably talking about five to seven years,” Hodgson told Politico EU in an interview Wednesday, adding that he’d been surprised by long-term interest from German industry in LNG supplies that are typically seen as climate-unfriendly. “They believe that there will be more LNG required and for longer as a transition fuel,” he said.

Wow! The German gas and utility industry is touting strong future demand for gas? Stop the virtual presses!

In fairness, Hodgson’s department, Natural Resources Canada (NRCan), responded with good detail and substance when The Energy Mix asked where they saw reliable demand for a 15- to 20-year gas export contract. A senior media advisor cited modelling by energy analytics firm Wood Mackenzie that shows European gas demand peaking by the mid-2030s, with export opportunities beyond 2035.

But NRCan acknowledged that Canada is a long way from a firm LNG deal. “These are very much exploratory discussions at this time,” the advisor told The Mix in an email. “Commercially viable projects that have the support of the province, and affected Indigenous communities will be considered by the federal government. Regulatory approvals would follow existing processes and the decision to build lies with proponents and investors.”

Big Questions About Gas

No one is seriously suggesting we can shut down gas production tomorrow. But the uncertainties around global gas markets and future demand date back a decade or more, and the case is getting weaker, not stronger. Users of all kinds, from households to big data centres, are looking for affordable, hyper-reliable energy that is quick to install and keeps the lights on in a heat wave or storm. On any of those criteria, gas can’t match the performance of wind or solar with battery backup, supported by heat pumps and building retrofits to boost efficiency.

At some point, you have to wonder…if economic diversification through new trading partners is the point of the exercise, can you call it a nation-building project if you can foresee a time when no other nation will want you to build it?

In Europe, in particular, countries learned another brutal and heartbreaking lesson over the last 3½ years. After Vladimir Putin invaded Ukraine, then tried to use oil and gas dependency as a pressure point on European neighbours, energy independence became the continent’s rallying cry. The EU couldn’t turn on a dime (or a Eurocent) to dump gas completely. But faster energy efficiency improvements and wider renewable energy deployment were the quickest, best ways to prevent a dictator from using fossil fuel exports as a weapon of war. Fast forward to this year’s tariff negotiations between the EU and the Trump administration, and getting out from under fossil fuels is the way to avoid a $750-billion shakedown by another dictator.

It’s good to know that there was some actual number-crunching behind Hodgson’s very optimistic, five- to seven-year timeline. But the WoodMac modelling runs counter to a small mountain of analysis, all of it suggesting that more LNG is the last thing Germany or Europe will need.

“In the medium and long term, we’re not anticipating an increase in gas demand, certainly not in Western Europe,” Pawel Czyzak, Europe programme director at the Ember energy think tank, told The Mix in an email last week, with consumption already down 17% between 2021 and 2024 and set to shrink further through 2030 as the economy electrifies. The continent “is already heavily oversupplied towards 2030,” he added, and “that oversupply will get even more severe if the questionable fossil fuel imports from the EU-U.S. trade [and tariff deal] are implemented.”

“Cutting dependency on gas from Russia or any other country can be achieved if gas consumption reduction measures continue in place,” added Ana Maria Jaller-Makarewicz, lead energy analyst, Europe at the Institute for Energy Economics and Financial Analysis. With an affordable energy action plan in place, “the bloc could satisfy demand without additional gas infrastructure or increased imports.”

It’s Also a Climate Bomb

All of those legit, important arguments against gas are proxies for the reality that it’s also a climate bomb.

The gas industry everywhere has done a great job of spinning its product as a “clean” transition fuel and a reasonable gateway to a low-carbon future. But the main component of natural gas is methane, a climate super-pollutant with 84 times the warming potential of carbon dioxide over the crucial, 20-year span when we’ll all be scrambling to get climate change under control.

Methane leaks into the atmosphere at every step in the gas production process—from fracking, to pipeline transport, to the ships that carry LNG across oceans—and the industry has been famously inept at accurately measuring and reporting leaks. Methane controls are widely recognized as one of the quickest, cheapest paths to the deepest possible emission reductions through 2030. Yet methane regulations are always on the hit list when fossil lobbyists and their hired hands like Alberta Premier Danielle Smith insist on killing off the minimal, often ineffective government regulations they face.

Nation-Building That Builds Our Future

LNG is the dominant but not the only flavour of nation-building project on the federal government’s agenda. In Germany last week, Carney also signed a declaration of intent for critical mineral development. Regional clean power grids are on the agenda, although completing an east-west grid doesn’t seem to be a priority. And the PM has talked in general terms about energy efficiency as a goal for the emerging Build Canada Homes affordable housing program.

But that’s just one corner of the menu of nation-building projects the government could adopt to build Canada’s strength and solidarity from the ground up—while bringing us the ultimate safety and security of helping to get climate change under control.

• The first piece of this puzzle must be a good idea, because it comes directly from our readers (or as public broadcasting would have us say, from readers like you!).

After emergency physician Nicolas Chagnon submitted this well-argued case for a federal rooftop solar program, two other readers, Martin Benum and Ron Moore, chimed in with detailed comments on what it would take to make those projects work. It wasn’t that the post received dozens of replies, more that the discussion immediately got so specific and substantive. It brought home to me that, just like the push for balcony solar in Europe and the U.S. state of Utah, the obstacle to faster renewable energy deployment isn’t public demand. It’s the rules, regulations, and financing models that are holding us back.

• Quebec is going all-in on wind power with a target of 10,000 megawatts of new capacity by 2035, much or most of it developed in partnership with Indigenous communities. “In Quebec, we spend $10 billion a year on fossil fuel supplies,” said Energy Minister Christine Fréchette. “That’s crazy. So let’s take some of that money and invest it in renewable energy, which will generate benefits for Quebecers and clearly transform the Quebec economy, in addition to contributing to the well-being of the planet.”

“Prediction: this sentiment is going to catch on in other Canadian provinces and in fossil fuel import-dependent jurisdictions worldwide, as it should,” Dan Woynillowicz, principal of Polaris Strategy + Insight, commented on LinkedIn.

• Efficiency Canada is pushing hard on the arguments for energy efficiency as a nation-building project that can produce quick results, boost productivity, support Canadian businesses and technology, deliver regional fairness, and help build a “more adaptable and tariff-proofed economy”. But the Building Decarbonization Alliance warned last month that the clock is beginning to tick on a deep energy retrofit initiative that could be a “megaproject moving in slow motion” if it’s allowed to meet its full potential, but will sink without a trace if Carney’s government forgets or neglects to renew it.

Which may happen if they’re too preoccupied with their LNG adventures to pay attention to the stuff that is actually poised to deliver results.

• In new construction, modular housing companies like CABN are setting the pace with affordable, factory-built homes that are quicker to complete and, in CABN’s telling, can be net-zero or even net-negative for emissions. There are a lot of detailed claims baked into that calculation and it’s up to regulators to verify the results. But with housing already high on the federal agenda, there’s an opportunity for Ottawa to turn the affordability crisis into an essential nation-building moment—and make the net-zero performance pioneered by CABN a baseline requirement for grants and incentives when bigger players enter the prefab space.

• In agriculture, Canadian farmers were eager enough to embrace soil carbon storage, nitrogen fertilizer reductions, and other emission reduction options that the $200-million On-Farm Climate Action Fund ran out of funds ahead of schedule—making it the first but not the last Trudeau-era program that federal financial minders declared too successful to continue. Agrivoltaics are quickly emerging as a win-win for farmers, rural communities, solar developers, and even avowedly hostile regimes like the Danielle Smith government—as the Vatican is now showing with a project outside Rome. (Hat tip to another reader, Diane Beckett, for pointing us to that last link.)

• To help rural communities build stable, diversified economies that don’t begin and end with fossil fuels, we’re hearing more and more that a local solar or wind farm won’t be a big source of long-term jobs once it’s built—once the installation is done, the main job “baaa-nefit” will go to the sheep or goats brought in to clear the brush around the panels. (Yes, we went there. Again.) But the prospect of reliable, local power at 6¢ per kilowatt hour will draw the investors that will make a local economic development officer’s heart sing.

• And no nation-building effort will be complete without facing down the massive rise in youth unemployment, across Canada and particularly in Ontario. If Carney and his team want to get serious about job creation for the generation we always say we’re thinking of when we talk about climate change, a Youth Climate Corps would get the job done—but not if it’s just a token pilot project. Watch The Energy Mix for an upcoming feature interview with Climate Emergency Unit Team Lead Seth Klein, who distinguishes the YCC’s promise of meaningful work for a living wage with some of the recent calls for mandatory national service.

[Disclosure: Energy Mix community engagement staffers Mike Hager and Lella Blumer are on part-time assignment with the Climate Emergency Unit, where part of their job is to help amplify the case for the Youth Climate Corps.]

All of these initiatives are practical, affordable, and ready to scale up. And, unlike the government’s economically tenuous LNG agenda, they all bring climate solutions and PM Carney’s stated Value(s) back to the centre of the conversation.

A Plan That Meets the Moment

It’s easy enough to sort through the spin and pick apart the Carney government’s latest LNG adventure. But those facts and arguments miss the point if they don’t get at the real point of the exercise.

For better and for worse, Carney was elected with one overarching job: to protect Canada from the predatory sociopath currently occupying the White House. If in doubt, Job #2 is to refer back to Job #1. It isn’t the way we should have to spend our time and resources when we have climate change and a host of overlapping crises to address. But it’s what we’ve got, largely thanks to obscene levels of campaign financing from the U.S. fossil industry.

And now, Canada and Germany seem to have concluded that anything else they hope to achieve depends on projecting strength in terms that Donald Trump will understand. If that’s what was going on last week in Berlin—and I’ve heard no one say that out loud—it wouldn’t be the first time that Trump theatre has taken the place of real, practical policy in the international sphere.

But nations are built on real results, not theatre. So even if a desperation move to embrace LNG is seen as one way to keep our #ElbowsUp, we also have to keep our hearts, minds, and hands open to real nation-building initiatives that will bring us the country we want in a liveable, zero-carbon future.

Which isn’t anything that Carney doesn’t already know, hasn’t already told us in his own words.

“Climate policy has never been just about the environment,” writes Simon Donner, co-chair of Canada’s Net-Zero Advisory Body, last seen warning Team Carney that the “grand bargain” they want on oil and gas could get them in trouble with the new trading partners they’re trying to develop.

“The reality is that good climate policy is good economic policy,” Donner adds. “Despite headwinds south of the border, climate action and the transition to clean energy are accelerating. Emissions have decreased across the G7 over the last two decades. The global market for the six key clean energy technologies—solar cells, wind turbines, electric vehicles, batteries, electrolysers, and heat pumps—quadrupled in size over the last decade, buoyed by >90% drop in costs. The real question is whether we are willing to make the up-front policy and infrastructure investments today to build future low-carbon industries and transition to a low-carbon energy system.”

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By Lindsay Aramayo, Kimberly Peterson

Electricity demand in the PJM Interconnection and ISO New England (two regional grid operators covering the Northeast United States) reached multiyear highs on June 23 and June 24, respectively. Electricity demand increased significantly due to a heat wave that affected most of the Eastern United States this week.

PJM Interconnection
Electricity load in the PJM Interconnection, the largest wholesale electricity market in the country, peaked at 160,560 megawatts (MW) on Monday, June 23, between 5:00 p.m. and 6:00 p.m. according to data from our Hourly Electric Grid Monitor. The load on the grid surpassed PJM’s seasonal peak load forecast of 154,000 MW but remained below the record load of 165,563 MW in 2006 (PJM has expanded numerous times, and this data point is based on PJM’s current footprint). PJM’s footprint includes 13 states and the District of Columbia.

Real-time wholesale electricity prices on June 23 peaked at $1,334 per megawatthour (MWh) at 7:00 p.m. according to PJM, compared with peak prices of $52/MWh on June 16.

At peak load on June 23, 44% of PJM’s generation came from natural gas, 20% from nuclear, 19% from coal, and 6% from solar. The remaining generation came from a mix of hydro, wind, petroleum, and other generation. Petroleum generation, which is generally the most expensive form and therefore only used to meet large demand loads, was three times greater compared with the same hour the day prior.

ISO-New England (ISO-NE)

As the hot weather moved eastward, demand peaked the following day in ISO-NE—the integrated grid operating in Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, and Connecticut. Peak demand on Tuesday, June 24, between the hours of 6:00 p.m. and 7:00 p.m. eastern time was 25,898 MW, according to the data in our Hourly Electric Grid Monitor. ISO-NE reported that Tuesday’s evening peak electricity demand was the highest level seen in the region since 2013.

Real-time wholesale electricity prices on June 24 peaked at $1,110/MWh at 6:00 p.m. according to preliminary data from ISO-NE, compared with peak prices of $65/MWh the previous week on June 17.

New England’s electricity grid depended on a combination of oil-fired power plants, electricity imports from Canada, and increased natural gas power production to meet peak demand this week. At peak load on Tuesday, 47% of ISO-NE generation came from natural gas, 12% from imports, 13% from nuclear, 12% from petroleum, 1% from coal, and 4% from renewable sources including wind, batteries, and solar. The last remaining coal-fired plant in the region, the Merrimack facility in New Hampshire, supplied 280 MWh on average to the grid on Tuesday. The Merrimack facility is typically only used when demand is high.

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By Mitchell Beer

With a wave of new “nationally significant” projects on the way after the Carney government’s Building Canada Act (Bill C-5) becomes law, the world will be watching how Canada meets its climate responsibilities, said the UK’s former chief scientific advisor Sir David King.

“Every country in the world is now wondering how to handle the new president in the United States. Every country feels under threat,” King told The Energy Mix in an exclusive interview Friday.

But “climate change is the biggest challenge humanity has ever had to face up to, and because it’s a global problem, every country needs to handle the problem,” he said. “It’s not something we can just put aside for a period. This is an issue that is right up front, something we cannot abandon, and I do think Mark Carney is somebody who understand that.”

So “we over in the rest of the world are going to be watching how Canada handles that problem,” added King, who said he knew Carney well during the prime minister’s term as governor of the Bank of England.

Carbon Budget is Running Out

King was commenting after more than 60 of the world’s top climate scientists warned that humanity is on track to exceed the available carbon budget to limit average global warming to 1.5°C, in a paper published in the journal Earth System Science Data. By the beginning of this year, that budget “had shrunk to 130 billion tonnes,” the British Broadcasting Corporation reports, “largely due to continued record emissions of carbon dioxide and other planet-warming greenhouse gases like methane, but also improvements in the scientific estimates.”

If countries keep up their current pace of about 40 billion tonnes of emissions per year, “130 billion tonnes gives the world roughly three years until that carbon budget is exhausted,” BBC adds.

The remaining carbon budget for a 1.6° or 1.7° threshold could be exceeded within nine years, Phys.org says.

“Things are all moving in the wrong direction,” warned lead author Piers Forster, director of the Priestley Centre for Climate Futures at the University of Leeds. “We’re seeing some unprecedented changes and we’re also seeing the heating of the Earth and sea-level rise accelerating as well.”

Those shifts “have been predicted for some time,” he added, “and we can directly place them back to the very high level of emissions.”

“Under any course of action, there is a very high chance we will reach and even exceed 1.5°C and even higher,” added study co-author Joeri Rogelj, a professor of climate science and policy at Imperial College London. “We are currently already in crunch time for higher levels of warming.”

The news prompted an urgent call to action from King, now chair of the 18-member Climate Crisis Advisory Group.

The findings “make one thing clear—there is effectively no carbon budget remaining for either CO2 or methane emissions if humanity is to achieve a safe and manageable future,” he said in an email release. “Policy-makers must adopt a comprehensive strategy focused on deep and rapid emissions reduction and removal, whilst also developing resilience against increasing extreme weather events.”

With this year’s UN climate summit, COP30, just a few months away in Belém, Brazil, “governments, financiers, and businesses must put this in focus,” King added. “We do not have time to delay any further.”

‘Show That Canada Means Business’

Carney must approach the dual challenges of climate change and Trump’s aggression “with clarity, to demonstrate that Canada means business,” King told The Mix.

“There is a real culture in Canada that is distinct from the culture of the United States,” he said. So “protect your culture. Do what you can. But don’t do it at any cost.”

Climate change has been accelerating over the last five years, along with the loss and damage from an uptick in extreme weather events, and “the result of the election in the United States producing Trump as the president means the onus is now on all other countries to make much better commitments.” The United Kingdom has already reduced its emissions by 54% from 1990 levels, and has set a target of 81% by 2035.

King said the Canadian prime minister “understands very clearly that in the UK, we have reduced our carbon dioxide footprint from 12 tonnes per person in 1995 to something like six tonnes, whereas you guys in Canada are well over 20 tonnes per person.” So “Canada has an enormous amount of work to do to demonstrate that it understands why we’re all suffering from these extreme weather events, and why the future of humanity is now severely at stake.”

The European Union has set its sights on a 90% emissions reduction by 2040. And King rejected concerns that that target will be undercut by reliance on questionable carbon credits, or by member states that don’t deliver on their promises—largely because renewable energy is now the cheapest form of electricity in any part of the world.

“That’s the big driver for change,” he said. But “we’re seeing a terrible future unless we get action now from all progressive countries,” and while “I have always admired Canada as a major progressive country, I can’t say that on climate change,” with its reliance on oil sands production that he cited as “probably the worst way of getting oil out of the ground.”

But judging by Carney’s record with the Bank of England, where he took “a very strong line” against banks investing in fossil fuel projects destined to become stranded assets, “he understands the risks of climate change. He doesn’t need a lecture on this issue. So you are very fortunate to have Mark Carney in place….For any economy that is now based on oil, gas, or coal, there has to be a shift away from that, and Carney is frankly the right person to lead it.”

King said he saw no need to connect trade and climate policy. But Carney has been musing about replacing carbon pricing with a carbon border adjustment mechanism (CBAM) with other “like-minded” countries, and the Liberal Party platform in the recent federal election said a Carney government would “promote fair competition with our trading partners” through a CBAM.

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By Arthur Zhang

Heat pumps play a critical role reducing emissions in the residential building sector because they run on electricity and can be up to three times more efficient than a standard gas furnace. This means that not only will they help shift Canada’s dependence away from fossil combustion, but they will also reduce the demand for electricity relative to other technologies, such as electric baseboards which are only 15 per cent more efficient than gas furnaces. That’s important in a sector that makes up approximately 13 per cent of Canada’s national emissions.

Getting households to switch to heat pumps is expected to be the most cost effective way to meet Canada’s climate goals. In Institute analysis of the most cost effective pathways to net zero, heat pumps are projected to represent over 10 per cent of total home heating in Canada by 2030, increasing up to 99 per cent by 2050.

But tracking the rate of adoption in real time is often a challenge, since publicly available data for heat pump uptake can lag by as much as three years. To fill this gap, 440 Megatonnes examined data on the shipments of heating systems, which can be an early indicator of the progress that Canada is making toward electrifying heating and cooling in buildings.

Heat pump shipments are closing the gap to furnace shipments

Shipment data track how many heat pumps are flowing into the country. However, it’s not a perfect indicator: it doesn’t show when heat pumps were purchased or actually installed, whether they are moved across jurisdictions within Canada before their sale, or whether they serve as a building’s primary or secondary heating source. Nevertheless, shipment data is useful because it can give an early indication of increased uptake, as more Canadians eventually buy heat pumps from distributors and install them in their homes.

Using data from the Heating, Refrigeration and Air-Cooling Institute of Canada (HRAI), we analyzed the shipments of fossil fuel furnaces compared to different heat pump systems—including single package, split system, and ductless mini-splits—over the past five years.

Calculating the average annual growth rate in shipments in Figure 1, positive trends emerge for the heat pump transition. Since 2020, heat pump shipments have increased by an average of five per cent annually while furnace shipments have declined by 3.4 per cent on average annually. In turn, the gap between heat pump and furnace shipments has closed significantly,  jumping up to 0.84 heat pumps for every furnace shipped, compared to 0.57 in 2020.

Quebec and Atlantic Canada are leading the way in heat pump shipments

Looking at shipments by province, while Quebec currently leads in absolute heat pump shipment volume, followed by Ontario, British Columbia, and then Atlantic Canada, the Prairie provinces actually saw the highest rates of average annual growth. Notably, Alberta led in heat pump shipment growth, up an annual average of 32.9 per cent over the past five years.

Furnace shipments also fell on average 3.4 per cent annually across Canada, decreasing by over 50,000 units over the past five years, and Quebec and the Atlantic provinces saw the largest drops in furnace shipments. In terms of the ratio of heat pumps to furnace shipments, Quebec and the Atlantic provinces are far above the rest of the country, each with more than 50 heat pumps per furnace shipment. While it is important to note that unlike furnaces, some homes may install multiple (usually two or three) heat pumps throughout their homes. Still, even after accounting for this potential discrepancy, the number of heat pumps in these two regions still surpasses the number of furnace shipments.

Historically, the Atlantic provinces have had a few drivers that helped support heat pump adoption, including relatively moderate winters compared to the rest of Canada, volatile heating oil prices which have hurt household wallets, and strong financial incentives such as grants and rebates. In Quebec, on top of their own rebates, adoption has been driven by the fact that Quebec has the cheapest electricity prices in all of Canada. In the Prairie provinces, heat pumps have been less cost competitive due to cheaper natural gas prices relative to electricity. In recent years as the demand for cooling has increased, more households have made the switch to heat pumps instead of air conditioning units.

To summarize the trends above: first, heat pump shipments throughout Canada have remained robust over the past five years as furnace shipments have been declining, resulting in the gap between heat pumps and furnaces being closer than ever before. Second, looking at provincial breakdowns, Quebec and Atlantic provinces still remain leaders bringing in more heat pumps than furnaces, while growth is also starting to pick up in historically lower uptake jurisdictions, like Alberta.

Heat pump adoption in Canada is growing, but needs to accelerate

It can be helpful to compare the above shipment data with existing but lagging data on how many Canadian homes have adopted heat pumps to get a sense of the potential trends.

Overall, the Comprehensive Energy Use Database’s heating stock data also shows similar trends for heat pump adoption. The share of Canadian households that had heat pump systems in 2022 increased to 6.1 per cent, up from 4.8 per cent four years prior, putting Canada closer to alignment with the 10 per cent share in 2030 projected in the Institute’s research (Figure 2). To get on track to this target, heat pump sales will need to accelerate.

As was the case with the shipments data, these data for heat pump adoption show Atlantic Canada and Quebec leading the country. Atlantic provinces have broken well over double digit heat pump adoption, and Quebec has followed second. Adoption from the rest of Canada remains relatively low, with the outlier being B.C. where adoption is starting to pick up. However, the shipment data for these other jurisdictions shows growth in recent years, so we may expect to see adoption following suit in the near future.

Policy support will still likely be necessary to promote adoption for colder climates where colder climate heat pumps are less cost competitive compared to gas, and to address equity barriers like upfront costs for low-income households. Some examples of existing policy programs include Ontario’s new Home Renovation Savings Program that will offer up to $7,500 in rebates for cold climate heat pumps, and CleanBC’s Energy Savings Program, which was recently expanded to provide additional support for low-income households and renters.

Boosting public knowledge and skilled workforce capabilities for heat pumps will also be important to prevent bottlenecks due to labor shortages. Investing in these processes can ensure that homeowners know the full capabilities of their heat pumps, and that the heat pumps are ultimately installed properly across Canadian homes.

Heat pump shipments are starting to take off in parts of Canada—the next step is to get the rest of Canada on board too.

Arthur Zhang is a Senior Research Associate at the Canadian Climate Institute.

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By Mitchell Beer

Prime Minister Mark Carney and his new cabinet took office Tuesday with some tough, momentous questions on their agenda, most of them still pointing back to the rogue regime waging economic war on Canada from the White House.

But as The Weekender first argued in March, after Carney won the Liberal Party leadership, there’s one fairly easy calculation the Cabinet can make that will set them on track to addressing that challenge. Not least by tackling the domestic vulnerabilities that were driving us apart until Donald Trump’s latest round of rolling outrages pulled us back together.

What’s the cheapest, quickest way to deliver the reliable, affordable energy Canadians need, while boosting domestic manufacturing, driving down climate pollution, and restoring public confidence that our governments can actually deliver on their promises?

If our political leaders answer that question seriously and follow the evidence where it leads, it will bring them directly to a low-carbon energy path that begins with:

• Drastically increasing the energy efficiency of everything;

• Replacing fuels with electricity across a large swath of the economy while decarbonizing the electricity system;

• Seizing the urgent opportunity to rapidly drive down methane emissions, whether or not fossil companies are serious about getting with the program;

• Pairing the rise of renewables and energy efficiency with a managed phaseout of oil, gas, and coal.

A least-cost energy strategy that factored in the fully-loaded cost of climate change would give us a lens for assessing every new pitch for Canada’s energy future—whether it’s a deep energy retrofit program, a local battery storage system, a solar or wind farm, a $100-billion nuclear megaproject, or the ridiculous demands for new pipelines in all directions, hatched by the fossil fuel industry and voiced by the former industry lobbyist they’ve since installed as Alberta’s premier.

Pretty much without exception, an honest answer to this one, crucial question points back to low-carbon options that are practical, affordable, and ready to scale up. They don’t depend on carbon capture and storage technologies that their biggest boosters admit are a decade away from prime time, or expensive direct air capture (DAC) adventures that still emit more carbon than they reduce. They won’t either fry the planet when used as directed or saddle us with eons’ worth of dangerous nuclear waste.

For bonus points, they connect us to a burgeoning global clean energy economy—the same one Carney has in mind when he talks about diversifying our exports beyond one risky, unreliable trading partner.

180° of Speculation

Just as important, this line of thought takes us past the disconnect between statement and action—between the “what” and the “how” of government policy on climate, affordability, and everything else that matters. That gap has cut across all the major political parties for the last deeply performative decade and quite rightly sapped public confidence that anything much will ever get done.

Now, with Carney vowing to “do things that had not been imagined or thought possible, at a speed we haven’t seen before,” his team’s early energy choices will either put his government on a path to success, or make it immeasurably harder for them to get there.

But in the first 100 hours after the Cabinet announcement (heh, he wants to move fast, so no more of this ‘first 100 days’ stuff), we were left with 180° of speculation about where this government will come down on climate change and energy.

We had Carney knowledgeably described as “the most climate-literate PM we’ve ever seen, and maybe the most climate-literate leader among industrialized countries,” while telling CTV news his government will “change things at the federal level that need to be changed in order for projects to move forward”—including the federal Impact Assessment Act and the former Trudeau government’s long-delayed cap on oil and gas emissions.

We heard that newly-minted Energy and Natural Resources Minister Tim Hodgson, former head of Ontario power utility Hydro One, board member at oil sands producer MEG Energy, and Carney colleague at Goldman Sachs, will either be the fossil industry’s voice in Cabinet, the former business heavyweight and familiar face who can talk low-carbon sense to the oilpatch, or the steady hand who can make a national renewable power grid a reality.

We saw an emphasis on pragmatism and short-term success from a government that seems enamoured of carbon capture technologies that are nowhere near ready for prime time and new nuclear reactor designs that look great on PowerPoints, but have never been built in the real world.

All of which is a longabouts way of saying that no one can say for sure which lane Team Carney will choose, and you have to wonder whether they’ve decided yet. The next big milestones will be the template language in the PM’s mandate letters to ministers and the Throne Speech that King Charles is scheduled to deliver May 27.

That is, unless we hear anything sooner from Carney or his Cabinet about the climate imperatives he’s known and understood for a decade or more, and the clean energy choices that give him his only chance at tackling any of the other big-picture crises he’s taken on.

The Projects We Want to Speed Up

We’ve known for decades, not years, that there’s a smart, systematic way to run an energy transition. The fine details have shifted over time, but the basic prescription has not.

Start by drastically increasing the energy efficiency of everything.

Electrify key end uses like cars and other vehicles, home heating and cooling, and many industrial processes, now with the added reliability of affordable energy storage, while decarbonizing the electricity system.

Make it an absolute, top priority to phase out emissions of methane—the main component of natural gas, a climate-busting super-pollutant with 84 times the impact of carbon dioxide over a 20-year span, and our single best chance to achieve major climate gains by 2030.

Pay careful attention to the relatively few, more complicated energy uses—like air travel and some heavy industries—that aren’t so simple to decarbonize.

And, crucially, cut with both arms of the scissors by pairing the rise of renewables and energy efficiency with a managed phaseout of the oil, gas, and coal industries whose products are frying the planet when used as directed, while devastating local ecosystems and communities along the way.

With rapid emission cuts and deeper climate resilience as our top-line goals, the energy transition also delivers on the quicker business opportunities that industry has been demanding—even if those aren’t the opportunities the fossil lobby has in mind when it’s doing the demanding.

Even at relatively large scale, solar and wind farms are faster to approve and build than fossil fuel plants, pipelines, or nuclear reactors, largely because they have a far smaller physical and environmental footprint. They generally come in on time and on budget because, unlike the most mega of megaprojects, they aren’t too big to succeed.

Go behind the meter, to the realm of deep energy retrofits, home heat pumps, rooftop solar panels, solar+storage, and community microgrids, and you can afford to speed up the process even more, as long as developers know how to open real conversations with local communities and earn their support.

“The modular nature of solar and wind construction allows for faster development and more predictable construction timelines and costs at different scales,” Eyab Al-Aini, senior research associate, clean growth at the Canadian Climate Institute, told The Weekender in an email earlier this year. “Unlike gas turbines or nuclear generation, where pressure on a few suppliers can limit choice and stretch timelines, the distributed nature of solar equipment manufacturing lowers overall project execution risks.”

Al-Aini added that smaller projects can face lighter permitting requirements because they often “bypass the transmission planning process, can leverage existing onsite assets (roofs, permits),” while benefitting from fewer technical reviews and bypassing long waits to connect to the grid. And behind-the-meter solar and wind, “especially when combined with storage, can both reduce overall site energy use from the grid and also be a source of power during peak demand.”

Note that every megawatt of peak power demand a community can save through energy efficiency or generate behind the meter is a megawatt that needn’t be supplied by methane-intensive gas plants that provincial premiers like Doug Ford are so intent on building in places like Ontario.

The Road Not Taken

Smaller-scale energy isn’t quite as simple as I’m making it sound, and decades ago, a decision on which kind of complexity to embrace was instrumental in bringing us the oil sands industry as we know it today.

When I worked at the late, lamented Canadian Renewable Energy News, like any other early 1980s news outlet in a world before PDFs, we received our share of news leaks in hard copy, delivered in (literal or metaphorical) plain brown envelopes. One draft memo, printed on the recycled map paper that signposted its origins in the then Department of Energy, Mines and Resources, compared the costs and benefits of subsidizing a heavy oil upgrader in Alberta against an equivalent investment in a national home insulation program.

Its conclusions were stunning: The insulation plan would save more energy than the upgrader would produce, creating more jobs that were more evenly distributed across the country. But federal bureaucrats were said to be petrified at the thought of staking the success of their decision on millions of individual, local choices, rather than a single, high-stakes negotiation among first ministers.

You know where that story ended. The upgrader went ahead, and to this day, Canada and especially Alberta are overly dependent on the boom-and-bust industry that received that initial infusion of government largesse, and has been steadily polluting the countryside and our national politics ever since.

New Pipelines Would Need Massive Subsidies

But now, with Trump threatening Canada’s very existence as a sovereign country, that history points to another advantage in accelerating the kind of energy projects we need and want. The ones that increase community control rather than obliterating it and reduce greenhouse gas emissions rather than driving them through the roof.

From the moment the current occupant of the White House began trumping up his baseless case for tariffs and economic annexation, his allies and paymasters in the oil and gas industry knew what to do. The partly American-owned companies in the Alberta oilpatch, many of which no doubt contributed to the industry’s lavish and “breathtakingly corrupt” investment in bringing Trump back to power, immediately dusted off every pipeline megaproject they’d failed to push through over the last decade. Suddenly, industry lobbyists and elected officials were touting carbon bombs like the Energy East and Northern Gateway pipelines as the path to our economic salvation, even the key to our national identity.

When we last looked in on this topic in March, Globe and Mail columnist Adam Radwanski had a good idea of how those questions would be answered. The very obvious absence of any private investors tripping over each other to build new pipelines:

…suggests enormous subsidies would be required to attract the capital, if not outright government ownership. The rationale would have to be that given the security dangers posed by Mr. Trump, Canada can no longer rely on oil from the U.S., or flowing through the U.S., to supply eastern provinces.

But as then-energy and natural resources minister Jonathan Wilkinson pointed out at the time,

there is no way a pipeline would be completed in less than five years. That wouldn’t make it much help with the threat posed this decade by Mr. Trump. And by then, the shift toward electric vehicles—which Mr. Trump may slow, but won’t stop outright as those vehicles get cheaper—could mean less oil is needed.

Even if subsequent events have blunted the International Energy Agency’s projection that oil demand will peak this decade, Radwanski added, “placing a huge bet against it happening next decade isn’t wildly appealing.” Carney’s Quebec lieutenant, former environment and climate minister Steven Guilbeault, made much the same point on Wednesday, the day after the PM’s CTV interview.

“I think before we start talking about building an entire new pipeline, maybe we should maximize the use of existing infrastructure,” Guilbeault told media, noting that the $34.2-billion taxpayer liability known as the Trans Mountain pipeline expansion is still operating below capacity. “And, the Canadian Energy Regulator, as well as the International Energy Agency, are telling us that probably by 2028-2029, demand for oil will peak globally, and it will also peak in Canada.”

It All Comes Back to Community

Even or especially as we face down an existential external threat, we have to be honest about a legacy of resource extraction projects—from fossil fuels and pipelines to mining and forestry—that have too often left communities behind and their land base indelibly altered. Changing the channel on that history begins with not repeating the same old, bad old practices of bulldozing projects through local objections, or accelerating approvals and permitting so fast that communities can barely catch their breath, much less assess the impacts and have their say.

If we’re joining together to protect Canada as a nation that is different and distinct, that cannot and must not mean deregulating ourselves out of the values—social and spiritual, economic and physical—that we’ve set out to protect.

Politicians across the spectrum have been tapping into a powerful vein of community pride and purpose. It’s playing out at the national level in response to an international threat. But it traces back to the people, places, and things we know and love—and so much of what we’re all scrambling to defend is local.

That means we don’t want an ExxonMobil subsidiary polluting Indigenous lands and withholding the information from communities for months, or an Australian coal magnate winning regulatory approval for a widely-hated megaproject in the Rocky Mountain foothills, any more than we support Elon Musk’s U.S. gigafactory dumping waste in the Nevada desert and harassing whistleblowers who try to tell the story.

It means holding clean energy projects to those same standards, even knowing that they start out delivering more benefits and fewer impacts than the fossil fuel developments they replace. And setting the expectation that renewable energy developers will consult pro-actively, listen attentively, and look at community input as an opportunity to maximize benefits, minimize impacts, and dodge major flaws in a project design before it’s too late—not just an exercise in box-checking.

We didn’t need Donald Trump to remind us that the energy transition is meant to be about building something better, not just replacing one set of crappy, corrupt industrial practices with another one. Now, Mark Carney and his Cabinet get to prove it, in a moment and on a scale where failure is not an option.

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By Lindsay Aramayo

We expect U.S. hydropower generation will increase by 7.5 per cent in 2025 but will remain 2.4 per cent below the 10-year average in our May Short-Term Energy Outlook (STEO). Hydropower generation in 2024 fell to 241 billion kilowatthours (BkWh), the lowest since at least 2010; in 2025, we expect generation will be 259.1 BkWh. This amount of generation would represent 6 per cent of the electricity generation in the country.

About half of the hydropower generating capacity in the country is in the western states of Washington, Oregon, and California, so we closely monitor precipitation patterns in this region to inform our hydropower outlook.

Precipitation conditions have been mixed across the western United States since October. According to the WestWide Drought Tracker, more precipitation than normal has fallen in northern California, Oregon, and the eastern half of Washington state. Some areas in southeastern Oregon received record precipitation between October 2024 and April 2025. In contrast, precipitation was below normal in parts of Washington, Montana, Idaho, and Southern California.

Accumulation from winter precipitation tends to peak by April 1. The snowpack accumulation at higher elevations serves as a natural reservoir that melts gradually as temperatures rise in the late spring and early summer, leading to increased waterflow through dams.

Northwest and Rockies
We expect hydropower generation in the Northwest and Rockies region to be 125.1 BkWh, which is a 17 per cent increase compared with 2024 and 4 per cent less than the 10-year average. Our hydropower forecast is informed by the water supply outlook from the National Oceanic and Atmospheric Administration’s Northwest River Forecast Center (NWRFC).

On May 1, NWRFC released its latest April–September water supply forecast for the Pacific Northwest, part of the larger Northwest and Rockies region as modelled in the STEO. The NWRFC forecasts the region will have a below-normal water supply compared with the past 30 years in the northern portion of the basin, which includes the Upper Columbia River Basin, and above- to near-normal water supply in the southern portion, which includes the Snake River Basin. Water supply conditions at The Dalles Dam, located near the mouth of the Columbia River on the border between Washington and Oregon, reflect those of the upstream Columbia River system. The forecast at The Dalles Dam as of May 1 was 85 per cent of normal for the same period.

California
We forecast hydropower generation in California to be 28.5 BkWh in our May STEO, which is 6 per cent less than last year’s generation. This total would be 15 per cent more than the 10-year average.

As of April 1, reservoir levels in most major reservoirs in California were above the historical average for this time of year. The two largest reservoirs in the state, Shasta and Oroville, were at 113 per cent and 121 per cent of the historical average, respectively. According to the California Department of Water Resources, snowpack conditions as of April 1 were at 118 per cent of normal for the Northern Sierra Nevada, 92 per cent for Central Sierra, and 83 per cent in Southern Sierra Nevada regions. Warmer-than-normal temperatures in April led to some early snowmelt across the state. As of the beginning of May, snowpack conditions were at 81 per cent of normal for the Northern Sierra Nevada, 73 per cent for Central Sierra, and 53 per cent for the Southern Sierra portion.

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By Kevin Hack

Colorado State University’s hurricane forecast estimates the 2025 hurricane season will exceed the 1991–2020 average, with an estimate of 17 named storms, compared with a historical average of 14 storms. Meteorologists expect 13–18 named storms, including 3–6 storms with direct impacts on the United States, during this year’s Atlantic hurricane season, according to reports from AccuWeather in April.

The potential for a stronger hurricane season suggests heightened risk for weather-related production outages in the U.S. oil industry, including potential refinery outages along the U.S. Gulf Coast. Last year, five hurricanes made landfall in the United States, shutting in some upstream crude oil and natural gas production temporarily and disrupting petroleum product supply chains in Florida.

What is hurricane season?

The National Oceanic and Atmospheric Administration’s (NOAA) National Hurricane Center defines the Atlantic hurricane season as running from June 1 through November 30. Generally, June is the month when the earliest named storms begin forming in the Atlantic Basin, and the most severe hurricanes usually form in August and early September. In the United States, hurricanes most often hit the Southeast (PADD 1C) and the U.S. Gulf Coast (PADD 3).

How do hurricanes affect petroleum refining?

The U.S. Gulf Coast accounts for 55 per cent of total U.S. refining capacity, with the Texas Gulf Coast and Louisiana Gulf Coast refining regions combined accounting for 49 per cent of total U.S. refinery capacity. These facilities risk flooding or power outages associated with major storms or hurricanes. Many refinery operators will evacuate nonessential personnel and temporarily stop production if they believe severe weather might injure employees or damage their facilities.

Refineries that sustain major damage or flooding may be taken offline for longer periods. In 2021, Phillips 66’s Alliance refinery in Belle Chase, Louisiana, permanently closed and was transitioned into a storage terminal following significant storm damage.

What determines the scale of a weather-related impact on markets?

A storm’s location is the main determining factor of its impact on petroleum markets, followed by the storm’s intensity. An intense storm that affects a region without refining capacity is unlikely to significantly affect overall U.S. refined petroleum supplies.

Hurricanes can affect local logistics, distribution, and consumption in any affected area. In regions facing an impending major hurricane or other emergency, consumer behavior can also lead to regionalized price increases, local supply shortfalls, panic-buying, and spikes in fuel demand for evacuation purposes.

Hurricanes can also disrupt supply chains for petroleum products. Fuel supplies in Florida are primarily shipped on barges from Gulf Coast refineries, such as those in Texas and Louisiana. Hurricanes and tropical storms can lead to disruptions in these transfers. Retail stations in other regions can also be affected by logistical disruptions or power outages, which occurred in 2012 during Hurricane Sandy.

How much refinery capacity is at risk from hurricanes?

The path of a single hurricane or major storm is unlikely to affect more than a single cluster of refineries along the Gulf Coast. However, because of the total volume of refining capacity in each region, more than 1.0 million barrels per day of capacity could be temporarily taken offline in anticipation of a major storm.

Hurricanes don’t often hinder refining operations in the mid-Atlantic (PADD 1B) region, although what is now the largest refinery on the East Coast—the Bayway refinery in New Jersey operated by Phillips 66—was affected by Hurricane Sandy in 2012. Similar incidents or storms that limit imports into New York Harbor also present a potential risk to U.S. petroleum supplies.

More information on energy infrastructure and potential storm risks is available in our U.S. Energy Atlas.

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By Mitchell Beer

Anxiety about new fossil fuel pipelines, optimism about clean energy infrastructure, and at least conditional confidence in Prime Minister Mark Carney’s climate credentials were all part of the reaction after Carney introduced his new Cabinet Tuesday, then appeared to endorse new pipeline development in an interview with a national television network.

At Rideau Hall Tuesday morning, Governor General Mary Simon presided over the swearing-in ceremony for a 28-member Cabinet plus 10 secretaries of state, including:

• Environment and Climate Minister Julie Dabrusin (Toronto—Danforth);

• Energy and Natural Resources Minister Tim Hodgson (Markham–Thornhill);

• Canadian Identity and Culture Minister Steven Guilbeault (Laurier—Sainte-Marie);

• Housing and Infrastructure Minister Gregor Robertson (Vancouver Fraserview–South Burnaby);

• Canada-U.S. Trade, Intergovernmental Affairs and One Canadian Economy Minister Dominic LeBlanc (Beauséjour);

• Industry Minister Mélanie Joly (Ahuntsic-Cartierville);

• Indigenous Services Minister Mandy Gull-Masty (Abitibi–Baie-James–Nunavik–Eeyou);

• Arctic Affairs Minister Rebecca Chartrand (Churchill–Keewatinook Aski);

• Crown-Indigenous Relations Minister Rebecca Alty (Northwest Territories);

• Emergency Management and Community Resilience Minister Eleanor Olszewski (Edmonton Centre);

• Transport and Internal Trade Minister Chrystia Freeland (University-Rosedale).

In a statement shortly after the swearing-in, the Prime Minister’s Office said the government’s “primary focus” will be on the economy, and on Donald Trump’s tariff war and annexation threats.

“Canadians elected this new government with a strong mandate to define a new economic and security relationship with the United States, to build a stronger economy, to reduce the cost of living, and to keep our communities safe,” the statement said.

“We have to address and come to a new arrangement with the Americans,” Carney told media. “But our primary focus is on the economy, and our primary focus is on the Canadian economy.”

Clean and Conventional Energies

Hours later, Carney took a different tack in an interview with CTV chief political correspondent Vassy Kapelos, emphasizing an “all of the above” energy mix with room for oil and gas, pipelines, carbon capture and storage (CCS), and nuclear development.

“When I talk about being an energy superpower, I always say in both clean and conventional energies,” he said. “Yes, it does mean oil and gas. It means using oil, our oil and gas here in Canada to displace imports wherever possible, particularly from the United States. It makes no sense to be sending that money south of the border or across the ocean, but yes, it also means more exports without question.”

Carney added: “We need to do multiple things at the same time in order to build this base so that we are creating wealth and competitiveness, better lives for Canadians for generations. So we’re going to be very ambitious across a range. That’s why we’re not asking for one nation-building project. We’re asking for nation-building projects, and we are going to move as rapidly as possible on as many of them as possible.”

That could include pipeline development, building out CCS projects to help get oil and gas to market, and specific changes to measures like the federal Impact Assessment Act and the former Trudeau government’s long-delayed cap on oil and gas emissions, Carney told Kapelos.

“We will change things at the federal level that need to be changed in order for projects to move forward,” he said. “The test is, Canadians deserve results, not rhetoric and not talking past each other.”

Carney’s Quebec lieutenant, former environment and climate minister Steven Guilbeault, put some boundaries around those statements a day later, arguing that Canada should maximize the use of existing pipelines before talking about building more, The Canadian Press reports. He pointed out that the taxpayer-owned Trans Mountain pipeline expansion, which cost years of controversy and $34.2 billion to build, is still operating below its full capacity.

“So I think before we start talking about building an entire new pipeline, maybe we should maximize the use of existing infrastructure,” Guilbeault told media. “And, the Canadian Energy Regulator, as well as the International Energy Agency, are telling us that probably by 2028-2029, demand for oil will peak globally, and it will also peak in Canada.”

“Canada’s oil and gas sector has indicated no desire to build new pipelines under the current regulatory environment,” CP notes. But “following the election, 38 Canadian oil and gas CEOs wrote to Carney calling on him to repeal the assessment law and scrap the emissions cap regulations.” During the federal election campaign, Carney said he would stand behind an “emissions cap, not a production cap,” while speeding up federal technology investments to help bring down oil and gas sector emissions.

‘Pick a Lane’

Alberta Premier Danielle Smith was quick to criticize the Cabinet announcement, homing in on veteran Toronto—Davenport MP Julie Dabrusin’s appointment to the environment and climate portfolio. “I am very concerned the Prime Minister has appointed what appears to be yet another anti-oil and gas environment minister,” Smith said in a statement Tuesday. She described Dabrusin as a “self-proclaimed architect of the designation of plastics as toxic”, a “staunch advocate against oilsands expansion, proponent of phasing out oil and gas,” and a former Parliamentary secretary to Guilbeault, as well as former environment minister Jonathan Wilkinson.

“Fire, meet gas,” agreed Smith’s chief of staff Rob Anderson.

Climate Action Network-Canada countered that Carney has some choices to make, after a campaign in which he endorsed the emissions cap while pledging to strengthen the country’s industrial carbon pricing system, introduce investment tax credits for clean energy and technology, and make Canada a “world leader” in CCS.

“We’ve heard Mr. Carney, in particular during the election campaign, adopt an ‘all of the above’ approach to energy and refusing to pick a lane between a cleaner, safer, renewable powered future and doubling down on the volatile fossil fuel status quo,” said CAN-Rac Executive Director Caroline Brouillette. “I think that in 2025 we don’t have the luxury of not picking a lane, both from an environmental side of things but also from an economic side of things.”

Adam Scott, executive director of Shift Action for Pension Wealth and Planetary Health, agreed.

“I dislike the word ‘balance’ with respect to climate, as it falsely implies equal value for the causes and solutions to the climate crisis,” he told The Energy Mix in an email. “New fossil fuel export infrastructure such as pipelines or LNG terminals are not in any way compatible with a credible climate alignment plan for Canada. Nor would government action to subsidize locking in new fossil fuel infrastructure provide a long-term benefit in improving Canada’s economic competitiveness. On the contrary, Canada’s over-reliance economically on oil and gas is a significant fiscal liability as the industry goes through certain structural decline through the energy transition.”

In a media interview Tuesday, Mark Winfield, co-chair of York University’s Sustainable Energy Initiative, called the Cabinet announcement a “potential downgrading” for climate and environment, with several climate hawks shifting from portfolios like housing and energy to the back benches. “On the whole I think we are left at best unclear on where we stand on climate, energy transitions, and decarbonization,” he told The Mix Wednesday. “The emphasis on nuclear, pipelines, and CCS was pretty clear in the [CTV] interview,” and “I think this goes back to how do we define ‘clean’ in this context. It is not clear where renewables fit at this point.”

Meeting the Moment

Claire Seaborn, a former chief of staff to Wilkinson, said the government is mainstreaming the climate and energy transition, not diminishing it.

“I do not see this Cabinet as a downgrade,” she told The Energy Mix. “In fact, I see it as meeting the moment on climate, which is all about building major projects. Back in 2015, the conversation was about whether climate change is real, and commitments. In 2019, it was about net-zero and carbon pricing. Right now, the conversation on climate change is actually about building. This government is very pro-building, and that actually makes it very strong on climate action.”

Seaborn said she saw strong climate commitments in Carney’s election platform and on the campaign trail, even if he didn’t speak the words in the CTV interview. Fernando Melo, federal director – policy and government affairs at the Canadian Renewable Energy Association, agreed that “if you look at the Liberal Party platform, there were quite a few mentions of renewable electricity and electricity storage in there—including in the proposal to make Canada an ‘energy superpower’. Not being mentioned in every media interview doesn’t worry me or CanREA’s members.”

“That said,” he added, “we will hold the government accountable for its promises to our sector and will continue to push for the speedy introduction of legislation that would finalize and improve the Clean Economy Investment Tax Credits, among other critical policies.”

It’s also “great to see a few fellow cyclists at the Cabinet table.” Melo said.

Regardless of the specific choices it makes, “you’re going to see this government recognizing that the world is moving toward low-carbon and net-zero, and that can take many forms,” Seaborn said. A pipeline can carry oil, gas, captured carbon, or green ammonia, so “when you say ‘pipeline’, that is entirely consistent with the fact that Mark Carney knows we are moving toward net-zero.”

Normand Mousseau, scientific director of the Trottier Energy Institute at Polytechnique Montréal, said he couldn’t see the sense in that approach.

“I still don’t understand what the deal is with pipelines,” he told The Mix in an email. “As far as I know, there are no private sector projects on the table, and the last pipeline the federal government constructed cost upwards of $34 billion.”

He added that he’s puzzled “that other infrastructure linked to decarbonizing Canada, such as interprovincial links, massive storage, etc., have not been mentioned. I think that we need a clear message from PM Carney that he intends to bring Canada on path to its 2050 climate objectives, especially because we are still far behind what is needed to reach our 2035 goal.”

The ‘Climate-Literate PM’

There’s little doubt that the new prime minister understands the stakes in the climate emergency and the broader directions to address it. It isn’t yet clear what path he’ll choose.

“Prime Minister Carney is the most climate-literate PM we’ve ever seen, and maybe the most climate-literate leader among industrialized countries,” said Aaron Freeman, principal of Toronto-based Pivot Strategic Consulting. “However, decisions on specific climate policies are going to be made within the political frame that he has placed himself in. There’s a narrative and political coalition that he’s built, and many of the issues we care about are going to be settled according to these parameters.”

Freeman suggested looking to the template language in the forthcoming ministerial mandate letters for early hints at how portfolios like sovereignty, trade, housing, and economy could become focal points for climate and energy transition strategy.

Freeman and others pointed to Dabrusin as one of the strong environmental champions in Cabinet. He added that Hodgson—who led Ontario power utility Hydro One, sat on the board of oil sands producer MEG Energy, and previously worked with Carney at the Goldman Sachs investment banking firm—brings cross-cutting expertise to the energy and natural resources portfolio.

“Taken together, these two appointments are reflective of Carney’s ‘all-in’ energy strategy,” he wrote, “a strategy that may not end up being significantly different than Trudeau’s framing on energy, except perhaps incrementally in terms of emphasis.”

One veteran observer speculated that Hodgson’s power sector experience may outweigh his oil sands exposure—making him a trusted ally that Carney can count on to sustain momentum toward a national renewable power grid while the PM focuses on issues like trade and sovereignty. Shift Action’s Scott said he would withhold judgement on the government’s clean energy commitments until he sees the mandate letters.

“I hope Tim Hodgson will draw on his considerable governance expertise in a variety of positions to see that the best long-term interest of Canadians lies in a rapid investment and buildout in the clean electrification of our energy systems,” Scott wrote. “‘All of the above’ energy policies are an abdication of leadership from both an economic and climate perspective in 2025.”

“Electricity is the pillar of the transition to net-zero,” Mousseau agreed.” So, having somebody who understands this sector is crucial, even if energy is under provincial jurisdiction.” Hodgson’s knowledge of the oil and gas sector might also “give him leverage to push for decarbonization,” Mousseau added, but only “with a clear message from PM Carney.”

Climate Across All Portfolios

While much of the early reaction on the new government’s climate priorities focused on Dabrusin, Hodgson, and Carney himself, there’s also growing recognition that a climate focus will spread right across the federal system. “Every minister in some way will have to acknowledge and respond to the reality of climate change. every minister, whether it’s in their region or their programs,” Seaborn said. “That’s just the reality of climate.”

Scott agreed that climate action “is inextricably required to address the real-world concerns and needs of Canadians on housing, affordability, economic productivity, trade, and sovereignty. Climate does not exist as a standalone priority, it must be integrated in all policy.”

Those realities make Canada’s existing climate policy mechanisms “only a small part of what is required,” he said—so that the government’s housing strategy, for example, “must integrate efficiency, adaptation, and electrification to ensure Canadians have access to affordable, comfortable, climate safe housing. It’s not optional.”

Melo agreed that “the electrification of Canada’s homes, transportation, and industry reduces the need for energy transported through the U.S. or from other countries, especially if that electricity comes from locally generated renewables. Building new energy-efficient homes with integrated solar and storage will help Canadians reduce their energy bills, which in turn supports affordability.” And “investments in productivity, industry, and innovation can help onshore the production of critical components for the energy transition.”

Connecting to needs and issues outside the climate space is also essential because “the climate crisis is frankly not top of mind for most Canadians,” Melo added. “Canadian sovereignty, the economy, and the cost of living/inflation are the issues that are keeping people up at night. Not putting these issues front and centre in messaging and actions is a great way for a new minority government to find itself losing public support quickly.”

Jackson Wyatt, founder and CEO of modular housing manufacturer CABN, said half of the Cabinet will be involved with housing strategy in one way or another. “It’s energy. It’s waste and water. It’s municipal alignment. It’s a solution for Northern communities and First Nations.” Meeting those challenges will mean “expedited deployment of funds to address the problem quickly,” rapid upskilling for trades, and “ making sure we maintain our standard of healthy living and sustainability,” all by building “Canadian homes with Canadian materials for Canadians,” he said.

Shauna Sylvester, founder and lead convenor of Vancouver-based Urban Climate Leadership, cited incoming Housing and Infrastructure Minister Gregor Robertson as one of the Cabinet members who will be “deeply committed to bringing a climate lens to their portfolios.” But “I’m holding off assessing Prime Minister Carney’s approach to climate until I’ve had a chance to hear and see more,” she told The Mix. “I think we need fewer pronouncements and more action, so I’ll be evaluating this government on their actions.”

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By Shauna Sylvester

It’s 4 AM on Sunday morning. I’m on the 6th floor of a hotel in the heart of the Latin Quarter in Paris, managing my jet lag by contemplating the role of Artificial Intelligence (AI) for cities. Around me are the sounds of sirens and partiers whose shouts and hollers sometimes shift to a rising chorus of a song I don’t recognize.

This week, Paris is hosting the AI Summit for Humanity, a gathering of world leaders focused on the responsible development and deployment of artificial intelligence. There are hundreds of side meetings and I’m here with my Saskatchewan-based colleague Mairin Loewen to learn more about AI and what it could mean for cities. We are especially interested in how AI could impact the energy needs of cities.

Part of my learning is coming to grips with AI technologies which are evolving at breakneck speed. I’m married to a computer engineer so I know a little. I use ChatGPT regularly and I’ve appreciated DeepSeek’s capacity to help me make sense of research questions.

But admittedly, when I read that Elon Musk’s coders are implementing new AI systems on U.S. Treasury computers to find efficiencies, I get extremely nervous. Suddenly 2001: A Space Odyssey’s HAL9000 comes to mind. “Open the pod bay doors, HAL.” “I’m sorry, Dave, I’m afraid I can’t do that!”

So, it is with some trepidation that I enter this world. I’m both excited about the awesome power AI can offer cities if directed wisely, and scared about the potential destruction it can cause when unchecked.

My first step in this discovery is to better understand the recent developments in AI. It’s an expanding and complex field, so admittedly I probed DeepSeek and Chat GPT to better understand its evolution. Here are the five most important recent developments these AI platforms highlighted:

1. Tools like OpenAI’s ChatGPT, the recently-released Chinese platform DeepSeek, and DALL·E have revolutionized how we interact with AI. ChatGPT and DeepSeek generate human-like text for tasks like writing and coding, while DALL·E creates images from text descriptions. These platforms are used in education, customer service, and creative industries.

2. DeepMind’s AlphaFold is a breakthrough platform for AI in health care. It predicts protein structures which can accelerate medical research and drug discoveries. Similarly, AI-powered diagnostic tools, like those from PathAI, are improving disease detection and treatment accuracy.

3. Microsoft’s Planetary Computer uses AI to analyze environmental data, helping scientists track deforestation, predict weather patterns, optimize renewable energy systems, and address climate change.

4. MidJourney and Stable Diffusion enable users to generate artwork from text prompts, and in music, OpenAI’s Jukebox creates original compositions, opening new avenues for creative expression for artists and creators.

5. While not a technology, initiatives like the EU AI Act and Google’s AI Principles are shaping how AI is developed and used. These frameworks address the ethics and application of AI and aim to align it with values of transparency and accessibility.

Which brings me back to Paris.

As much as AI might scare us and threaten our livelihoods, it is here and permeating every aspect of our lives. This is why the French government has taken a leadership role in gathering leaders from across sectors to consider AI’s impact, ethics, and governance. It is also why I find myself in a hotel in the Latin Quarter reflecting on the transformative power of AI while contemplating serious questions that cities need to consider as they adopt, implement, and govern it.

Shauna Sylvester is the Founder and Lead Convenor of Urban Climate Leadership, a project of MakeWay that works with cities to support their efforts to create healthy, safe, and resilient communities. Shauna will be sharing her learnings live from Paris, especially as they relate to AI, cities, and energy.

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