TORONTO—As an executive and central banker, Mark Carney was a leading voice urging the business world to fight against climate change. As Canada’s prime minister, he is doing everything he can to pump more oil and gas.
Since
taking office in March, Carney dismantled many green policies introduced by his predecessor,
Justin Trudeau. He scrapped an unpopular consumer carbon tax, paused a 2035 electric-vehicle mandate and enacted a law giving his cabinet authority to override environmental rules for infrastructure projects like oil pipelines.
Now, he is fast-tracking approval of the expansion of a liquefied natural-gas export facility in Kitimat, British Columbia. The expanded plant, run by a
Shell-led consortium, would become the world’s second-largest LNG exporter, shipping up to 28 million tons a year of the fossil fuel to Asia. Climate activists are dismayed, but the Canadian leader is undeterred.
“This will directly help transform our country into an energy superpower,” Carney said.
It is a refrain Canada’s leader has often used since he became prime minister. Already the world’s fourth-largest oil exporter and fifth-largest exporter of natural gas, Canada is leaning even harder into fossil fuels and reversing costly climate initiatives
to offset the economic shock from President
Trump’s tariff war.
“There’s never been a harder time to be prime minister of Canada,” said Gerald Butts, vice chairman of the Eurasia Group consulting firm, who acted as a strategic adviser to Carney during this year’s general election. “Reconciling the irreconcilable is the job at this stage in our history.”
Carney’s economic challenges are real and pressing. Canada’s economy—dependent on trade with the U.S.—
shrank in the second quarter. The unemployment rate hit its highest level since 2016, excluding the Covid-19 lockdowns. Real-estate markets in major cities like Vancouver and Toronto are suffering from plunging prices and sales.
Meanwhile, Canada is backsliding on its carbon commitments. The country will almost certainly miss a 2030 target to cut emissions by 40% from 2005 levels, said the nonprofit Canadian Climate Institute. That jeopardizes Canada’s United Nations commitment for net-zero emissions by 2050.
The prime minister’s office, in an emailed statement, said the Canadian government would soon be announcing a “climate competitiveness strategy” focused on building a low-carbon economy.
“We are in a climate crisis, and Canadians want to see meaningful climate action to build a strong and clean economy,” the statement said.
That might not be enough for climate activists. “If you really understand climate deeply, you understand that the cheapest, best financial outcome is associated with the fastest possible action on climate,” said Adam Scott, director of Shift, a Toronto advocacy group that pushes pension plans to consider climate change when making investment decisions. Carney “is demonstrating he doesn’t really understand this issue.”
Carney’s policy reversals are striking because they contradict almost a decade of his climate advocacy, Scott said.
While he was governor of the Bank of England, Carney became the face of the global fight against climate change. His 2015 speech, “The Tragedy of the Horizon,” became a landmark in pushing the financial world to account for climate risk. He chastised government and business leaders for short-term thinking, instead of planning for the long-term threat of a warming planet.
He later became a U.N. climate envoy and co-founded the Glasgow Financial Alliance for Net Zero, known as GFANZ, a coalition of banks, investors and insurers that pledged to consider carbon emissions when making lending and investing decisions. That alliance
has since largely been abandoned by the financial institutions.
Today, domestic politics are complicating Carney’s decisions. He is wrestling with a
growing secessionist movement in the oil-rich province of Alberta. The province’s leader, Danielle Smith, warns that more Albertans are pushing to leave Canada because they are fed up with what they see as Ottawa’s attempts to strangle the oil sands, a lucrative source of crude that is also regarded as being among the most environmentally unfriendly types of petroleum to extract. A referendum on secession could be held as soon as next year.
Further fueling Alberta’s frustration: Canada’s resource industries, especially oil and gas, have been the biggest drivers of Canadian economic growth. Economic activity for the mining and oil-and-gas sector grew 16.1% between 2020 and 2024, outpacing manufacturing growth of 6.3% and total gross domestic product growth of 14%.
Smith wants Ottawa to repeal or rework several of Trudeau’s climate-focused laws, including ones that limit emissions from oil and gas production, a ban on tankers off the coast of British Columbia that makes it harder for fuel to be shipped from the West Coast, and a law that imposes more rigorous environmental assessments on projects like oil pipelines.
Smith is pushing for a grand bargain with Carney, where oil-and-gas companies would invest in lowering emissions through projects like carbon capture in exchange for Canadian approval of new pipelines.
On Wednesday, Alberta said it would file an application next year for a new pipeline that would carry oil to Canada’s West Coast.
So far, provincial officials are “cautiously optimistic” about the direction of policy under Carney, said Brian Jean, Alberta’s minister of energy and minerals. He warned that his government needs to see even more movement from Carney.
“It’s about whether or not they have the will to push things through and to satisfy Alberta,” said Jean. “We for a long time have felt alienated.”
