The Carney government is not the first to grapple with serious challenges associated with Canadian energy and resource policies. However, its proposed solution is to continue to centralize regulatory powers in Ottawa with policies that represent a final repudiation of the lessons derived from the Great Pipeline Debate of 1956. Today, framed as a response to developing economic threats such as US trade policies, Bill C-5 (the One Canadian Economy Act) returns the process of regulatory decision-making full cycle back to the 1950s whereby the federal cabinet will deem projects to be in the national interest – decisions that could allow the federal government to over-ride its own laws. There are also questions about how Carney, previously a high-profile committed international climate advocate, intends to work with a Cabinet and Senate largely composed of members apparently committed to achieving net zero in Canada.
Since returning to office in 2025, the Trump administration has dramatically chosen to advance economic policies that run directly contrary to the principles of the 2016 Paris Climate Accord having signed executive orders to withdraw from the Accord on the first day of the administration. Compare those actions with a July 2025 landmark advisory position from the International Court of Justice (ICJ). The IJC Advisory Opinion could significantly reshape international climate laws and has been paralleled by pronouncements from the U.N., that call for a ‘Just Transition’ in Climate Policy. Asserting the fossil fuel era to be nearing an end, UN Secretary-General Guterres said that the global economy has “passed the point of no return” on a shift to renewable energy and has implored governments to file sweeping new climate plans before November’s COP30 climate summit in Brazil.
These contradictory, if not tumultuous, events place Canada squarely on the horns of a material economic and policy dilemma: Will the Carney minority government be able to revitalize the Canadian economy by fast-tracking major infrastructure projects and simultaneously maintain the previous governments’ legislative commitments for net zero? Meanwhile, Premiers from Alberta, Ontario, and Saskatchewan have signed a memorandum calling for a repeal or overhaul of the Clean Electricity Regulations, the Greenhouse Gas Pollution Pricing Act, the Impact Assessment Act, the Oil and Gas Emissions Cap, the Net-Zero Vehicle Mandate and the west coast Oil Tanker Ban.
Resolving these challenges will not be an inconsiderable task. Indeed, some consider that their resolution may require a complete re-thinking of Confederation. The Carney minority government’s proposed solution to many of these challenges is Bill C-5 – an unprecedented, sweeping attempt to designate and fast-track Canadian “nation building” infrastructure projects crafted to overcome the legislative legacy inherited from the Trudeau years. But will it work?
Following the landmark June 2025 First Ministers meeting in Saskatoon, a session that discussed the federal government’s plan to remove trade barriers and advance major projects of national interest, Ministers agreed to “work together to accelerate major projects in support of building a strong, resilient, and united Canada.” Significantly, the Prime Minister highlighted opportunities for Canada to build new export oil pipelines to tidewater – with the provisos that those projects would originate from the private sector and be accompanied by parallel investments for carbon capture – stating somewhat controversially, and with little economic clarity, that it’s “absolutely in our interest” to de-carbonize Canada’s oil for export. Is it really?
In response, Alberta Premier Danielle Smith welcomed this “grand bargain” with the Prime Minister as a bold trade-off: An alluring promise of rapid approvals for a new oil pipeline from Alberta to tidewater in exchange for major investments in carbon capture technologies. The Carney-Smith “grand bargain” envisions a new “decarbonized” pipeline to transport 1 million barrels per day of Alberta heavy crude oil to the west coast. Smith, using what would appear to be back-of-the-envelope calculations, reckons that this project would yield annual revenues of CAD$20 billion, revenues that she proposes to use to offset the massive estimated $16.5 billion cost of projects such as the Pathways Alliance carbon-capture project. However, are these assumptions accurate and what are the other policy implications for Canadian energy exports and imports? The current optimism among some Premiers that Bill C-5 will accelerate regulatory progress for complex linear energy projects, such as new pipelines, should be tempered by a careful examination of Canadian regulatory history.
In 2025, 39 CEOs from a coalition of major energy companies issued an open letter to the Prime Minister that urged the federal government to prioritize energy development, as a cornerstone of economic sovereignty and resilience, and overhaul the IAA and Bill C-49 (the west coast tanker ban). This letter followed a call by Alberta Premier Danielle Smith who had issued a detailed list of regulatory demands with the warning that failure to address them could lead to an “unprecedented national unity crisis”. Those conditions, which include amendments to the IAA, abolishing restrictions for oil exports from the west coast of B.C. and dropping proposed Clean Electricity Regulations, reflect long-standing disagreements on energy policies between Alberta and the federal government.
Enbridge CEO Greg Ebel recently outlined conditions that his company and other investors would need from the Carney government before supporting the revival of new export pipelines proposed by provincial premiers – projects like the cancelled Northern Gateway project. Ebel foresees a need for “legal guarantees” and the removal of “various environmental policies:”
“For us to be willing to seriously consider reinvesting in a project like that, whether it’s east or west or just west, we need to see real change on numerous fronts.”
However, such “real change” would require broader federal and provincial legislative reforms that would extend beyond Bill C-5, “reforms” that would affect policies like emissions caps, carbon taxes, and environmental assessment rules, and tanker bans. As Ebel noted:
“A lot of co-ordinated federal and pan-provincial legislative and regulatory action would be required before we think investors, management teams, or customers would be able to green light such projects.”
And then there is the challenge of dealing with what Black has termed the “incomprehensible references” to carbon-neutral pipelines. Will Bill C-5 be sufficient to overcome existing Acts and legislation that embody fundamentally irreconcilable principles of governance? McConaghy has argued that Alberta is, in fact, on a collision course with the federal Liberal government.
Will Bill C-5 reduce regulatory uncertainty for proponents and incentivise investors? Instead, perhaps it is high-time to address long-standing problems, issues that will require hard choices, most of which probably cannot be addressed by a handful of cabinet-selected nation building projects. In short: Canada needs to thoughtfully reconsider not just its regulatory framework but its entire climate agenda.
Recall that the Carney government has, at least initially, defined “national interest” as projects that “enhance energy security, clean growth and economic competitiveness.” This definition provides little comfort, or predictability, to project developers or investors. Albertans may wish to carefully reconsider assumptions that this unprecedented “grand bargain.” Will trading billions of dollars worth of carbon capture infrastructure result in federal pipeline approvals? Indeed, some suggest that Alberta should unequivocally reject the concept of “decarbonized oil” as a condition of future hydrocarbon export growth and infrastructure development. Not the least of concerns are monumental hurdles presented by undetermined technical challenges and the material capital costs for the proposed facilities. It should be recalled that estimates for this proposed $16.5 billion project indicate that it would, at best, capture less than 2% of Canada’s annual emissions.
While the Carney government clings to the previous government’s policies for net zero that encourage pension funds, banks and corporations to direct investments away from non-renewable energy, Bill C-5 now compounds uncertainty in the regulatory and investment community by providing more, not less, government as it empowers a federal cabinet to make discretionary decisions entirely veiled in cabinet secrecy. Industry and provincial governments, justifiably concerned about the consequences and delays that surely would result from a full repeal of Bill C-69, could yet be walking into another badly implemented regulatory morass crafted by well-intentioned central planners in Ottawa.
