Game On: What the new national leadership means for the environment

Yesterday, Liberal Party MPs selected its new leader, Mark Carney, who won a strong mandate from the party base — ultimately capturing 86 per cent of the vote. He has the support of Steven Guilbeault, current federal environment minister and Catherine McKenna, former federal environment minister.

Carney, who was born in Fort Smith, N.W.T. and raised in Edmonton, Alta., doesn’t have a long political resume but his qualifications and work experience make him an attractive leader. He is a Harvard and Oxford educated economist, has held private sector senior level finance roles, and was governor of the Bank of Canada and the Bank of England. In recent years he has been chair of the board at Brookfield Asset Management and was appointed the United Nations Special Envoy for climate action and finance. Carney also worked as an adviser to Canadian Prime Minister Justin Trudeau during the COVID-19 pandemic and was made chair of the Liberal Party’s economic growth task force. He is also a hockey player, having played in net for the Harvard team, and likes to use hockey terms and analogies in his speeches and statements.

He recently pushed back against U.S. President Donald Trump for “unjustified tariffs,” saying Americans should make no mistake as Canada will win the trade war just as it wins in hockey, in reference to Canada’s success in the recent Four Nations tournament. During his victory speech Carney also called out at the president for suggesting that Canada should join the U.S. as its 51st state: “America is not Canada. And Canada never, ever, will be part of America in any way, shape, or form. We didn’t ask for this fight, but Canadians are always ready when someone else drops the gloves.”

In the coming days, Carney will be sworn in as prime minister, announce his cabinet and prepare for the coming federal election. An early election call is widely expected.

What can we expect from Carney when it comes to the environment and climate policy in Canada?

“The Consumer Carbon Tax isn’t working—it’s become too divisive. That’s why I’ll cancel it and replace it with incentives to reward people for greener choices,” said Carney.

He plans to immediately remove the consumer carbon tax and instead, create a system of incentives to reward Canadians for making greener choices, such as purchasing an energy efficient appliance, electric vehicle, or improved home insulation.

This plan will be complemented by measures to:

• invest in energy efficient buildings and electrified transportation;
• have big polluters pay Canadians to make their green choices while paying their fair share for emissions;
• help make Canadian companies more competitive so that Canada can leapfrog the United States in international markets; and,
• introduce trade measures to ensure fairness for Canadian industries in the global economy to ally with those countries engaged in the fight against climate change.

“Pierre Poilievre pretends we have to choose between fighting climate change and growing our economy. His simplistic and misleading Axe the Tax inaction won’t work and would cost families more,” said Carney about his Conservative Party counterpart. “We can make Canadian families better off, we can fight climate change together and build the strongest economy in the G7.”

Overview of Carney’s three-point plan

According to the platform content provided so far, there is a three-point plan that will be introduced. First, to create a Made-in-Canada Industrial Competitiveness Strategy that fosters a clean comparative advantage, the following actions will be taken:

• Improve and tighten the Output-Based Pricing System (OBPS) for large, industrial emitters to ensure carbon markets function properly. The current approach provides industrial emitters with price certainty for their emissions but price uncertainty for carbon abatement. We will work with provincial and territorial governments to avoid credit oversupply and increase transparency between systems. This will help provide policy certainty for companies and investors to drive investment to the lowest carbon opportunities. We will also extend the OBPS framework to 2035 to provide additional policy certainty and help foster Canada’s clean industrial competitive advantage.
• Promote fair competition and improve environmental outcomes by developing a Carbon Border Adjustment Mechanism. This will be done in collaboration with key stakeholders and international partners to ensure fairness for Canadian industries, prevent carbon leakage, and better economically integrate Canada with allies in the fight against climate change. This approach would focus on ensuring fairness for—and supporting Canadian jobs in—our most energy-intensive, trade-exposed sectors, such as steel, chemicals, cement, and aluminum.
• Explore strengthening existing commitments, such as the oil and gas methane regulations, by working with provincial and territorial governments.
• Implement an efficiency mandate for low-temperature industrial heat.
• Enact federal permitting reform and cut red tape to speed up approvals of clean energy projects, including new electricity developments across generation, transmission, distribution, and storage. Current permitting processes are too complex and slow, driving up costs for consumers and delaying essential projects.

Second, to provide investment incentives togreen buildings, electrify transportation, and directly reward consumers for taking action, a Carney-led government will:

• Have big polluters pay consumers to lower their carbon footprint by developing and integrating a new consumer carbon credit market with the industrial pricing system. By linking the consumer carbon market, we will improve market efficiency and maintain fiscal neutrality, while the government will ensure price certainty for consumers that supports investment.
• Introduce new consumer incentives to lower costs for families investing in our clean future, such as through home retrofits. We will enhance and recapitalize the Greener Homes Grant and improve the efficiency of the application process. These measures will be targeted to lower income households.
• Improve subsidies for heat pumps to make home heating more affordable by strengthening the current oil-to-heat pump affordability program, allowing low- and middle-income households to save more on their home energy bills.
• Increase financial incentives for energy efficient homes through alternative financing mechanisms and the Canada Mortgage and Housing Corporation. Explore offering discounts on mortgage insurance premiums for low- or middle-income households that make energy efficient renovations or purchase energy efficient homes.
• Deploy technology to speed assessments of home energy efficiency so that households can make smart choices to save money by reducing emissions.
• Phase out the use of fossil fuels in federal government buildings by 2030 to reduce government energy bills.
• Boost investment where Canada needs it most through Investment Tax Credits, Canada Growth Fund initiatives, and provisions for accelerated depreciation of private investment. For example, we will support Carbon Contracts for Difference to de-risk climate investments and we will recapitalize the ZEV subsidy program to reinstate subsidies of $5,000 to low- and middle-income households.
• Expand Canada’s electric vehicle charging station infrastructure through green bonds and public-private financing with the Canada Growth Fund and Canada Infrastructure Bank.

Third, to mobilize investments that create good Canadian jobs and economic growth through sustainable finance, a Carney-led government will:

• Move quickly to finalize and implement the Made-in-Canada Sustainable Investment Guidelines—also known as the transition taxonomy. Nearly two years ago, representatives from Canada’s financial institutions submitted a blueprint on how to mobilize capital for transition investments, yet no meaningful action has been taken. The absence of such guidelines is eroding Canadian competitiveness.
• Implement a taxonomy for every priority sector by fall 2026. As a key early priority, we will kickstart the development of clear, science-based criteria to identify those economic activities that are in “transition.” These guidelines will apply to activities in the electricity, transportation, buildings, agriculture and forestry, manufacturing, and extractives sectors.
• Mandate broad coverage of climate risk disclosure for companies across Canada. This will increase transparency for investors to better assess climate risks and opportunities and help align capital towards a sustainable economy. We will prioritize working with provincial, territorial, and international partners and ensure disclosure requirements align with international best practice.

Climate Action Network – Réseau action climat (CAN-Rac) Canada is a coalition of more than 180 organizations operating from coast to coast to coast, representing environmental groups together with trade unions, First Nations, social justice, development, health and youth organizations, faith groups and local, grassroots initiatives. CAN-Rac stated its congratulations to Carney, along with strategic recommendations.

“Climate action is important to Canadians: polling from Leger shows that seven in ten Canadians want their next federal government to do more to address climate change. Environment and Climate Change Canada, under the leadership of Minister Guilbeault, has been working hard to finalize crucial policies—notably methane regulations, the cap on oil and gas pollution, and the post-2026 international climate finance commitment. As a first order of business, we call on you to bring them over the finish line ahead of the upcoming election,” said Caroline Brouillette, executive director of CAN-Rac.

“In your victory speech, you said: ‘New threats demand new ideas, and a new plan.’ We agree. The climate crisis is expected to have even worse economic impacts than the tariffs, and must be addressed without further delay. Your government can and must implement economic policy solutions that defend Canadians from both the unjust tariffs and climate impacts.”

Featured image credits: LinkedIN and Getty Images