Before he was prime minister, Mark Carney explored the key role government policy should play in addressing the climate crisis and transitioning toward a more sustainable economy in his 2021 book “Value(s): Building a Better World for All.”
Carney’s book emphasized that bridging the gulf between “market value” and “human values” is critical to reshaping markets so they can better serve the needs of people and the planet.
The former Bank of Canada governor also spoke to creating the right incentives and market conditions to encourage capital to flow into areas that can support decarbonization and achieve other societal objectives.
So, how might these values shape Carney’s sustainability agenda as prime minister—and what could it mean for Canadian businesses? A lot has changed since “Value(s)” was published, and the myriad responsibilities that come with leading a minority government only add to the challenges of his mandate.
How Carney balances immediate challenges while addressing what he previously described as the “Tragedy of the Horizon”—our inability to consider long-term impacts and consequences—will have significant implications for Canada’s economy.
Carbon pricing
One of Carney’s first actions as prime minister was cancelling the consumer portion of the carbon tax, which had become deeply unpopular across the country.
The industrial portion of the carbon tax, which applies to large emitters, still exists and is expected to increase substantially from its current rate of $95 per tonne to $170 per tonne by 2030.
At this point, there is no indication the federal government is going to scrap or alter the industrial carbon tax—there’s even a chance the government may seek to strengthen it once current economic challenges subside.
Canada as an energy superpower
Carney has consistently called for Canada to become a superpower in both clean and traditional forms of energy. He also acknowledged that this may mean building more pipelines to encourage oil and gas investment.
However, these comments also regularly include the concept of “decarbonized oil and gas,” which refers to the potential to decrease the emissions intensity of oil and gas through implementation of carbon capture and storage. This appears to be part of Carney’s grand bargain with the oil and gas sector.
Strengthening incentives for green energy projects, including through further investment in sustainable hydrogen and small modular reactors, would be consistent with Carney’s vision of Canada as an energy superpower. This would also adhere to the all-of-the-above approach to addressing the climate crisis that Carney discussed in “Value(s).”
National infrastructure projects
Striking the right balance between environmental and economic considerations is at the core of the recently passed Building Canada Act and follows the tenets Carney advocated for in his book.
This legislation, part of the broader One Canadian Economy Act, provides an ability to fast-track major infrastructure projects that are deemed to be in the national interest.
The goal is to ultimately lower the risk associated with developing large-scale infrastructure projects by streamlining approvals and providing a single point of contact to attract more investment. Lengthy bureaucratic delays are widely seen as a key impediment to productivity and economic growth in Canada.
The federal government recently announced several projects that include expanding LNG infrastructure in British Columbia, copper mining projects in B.C. and Saskatchewan, the Darlington New Nuclear Project in Ontario—which would make Canada the first G7 country to have an operational small modular reactor—and the Contrecœur Terminal Container Project in Quebec.
These projects are related in one way or another to unlocking Canada’s resource wealth—but ensuring the country lowers its emissions remains a key consideration. Indeed, a wider set of projects announced that still need to be further developed includes high-speed rail, carbon capture and storage and large-scale wind projects.
The federal and provincial governments are working to emphasize the sustainability aspects of these projects. For example, Ontario Premier Doug Ford noted how the Ring of Fire can provide critical minerals to enable the green transition and development of green energy projects.
Previous federal governments have tried to thread this needle. Only time will tell whether some of these projects will see progress amid the current economic and trade crises facing Canada.
Given Carney’s bona fides—he previously served as the United Nations Special Envoy on Climate Action and Finance—his leadership could provide the credibility needed to address the economic and environmental concerns at play.
Indigenous participation
Indigenous communities are key stakeholders that Carney will need to collaborate with as part of his national project ambitions.
Successive Supreme Court rulings effectively strengthened duty-to-consult obligations over the years; failure to meaningfully consult with Indigenous communities can delay and significantly impair the viability of an infrastructure project.
To address this risk, project proponents are working to encourage Indigenous participation in major infrastructure projects. This, in turn, could lead to significant economic benefits for the involved communities and contribute positively toward Canada’s reconciliation goals.
However, the way in which previous governments engaged with Indigenous communities on past projects prompted concerns among key Indigenous leadership and stakeholders. To assuage this, Carney and the federal government could play a more active role in facilitating the establishment of impact benefit agreements and other arrangements to create the win-win relationships he described in “Value(s).”
This could be accompanied by increased investment in capacity building to support Indigenous communities in taking full advantage of these projects. The federal government could also look to accelerate the establishment of a broader resource revenue and benefit sharing arrangement, building on some existing work completed by Natural Resources Canada.
Sustainability reporting requirements
Recent developments regarding sustainability reporting will also be interesting to monitor during Carney’s tenure as prime minister.
Canada does not currently have wide-ranging sustainability reporting requirements in place that broadly apply to private and public corporations. Rules do exist for financial institutions, and Bill C-59 compels companies to release accurate information related to a company’s sustainability goals, objectives and commitments—but that is about it.
Citing international developments, the Canadian Securities Administrators (CSA) recently paused the implementation of a mandatory climate disclosure rule similar to what exists in jurisdictions like California, Britain and Australia. The CSA now appears to back a more voluntary approach to sustainability reporting, which is a notable reversal from its stance at the end of 2024.
This change seems particularly stark for Carney, who played a key role in the proliferation of this kind of reporting globally. Canada’s short-term economic challenges and a lack of consensus on this issue with provincial securities administrators could be factors contributing to the current approach.
Going forward, we don’t expect significant changes to Bill C-59, but a Carney-led government could find ways to strengthen its core mandate while addressing—and hopefully clarifying—key aspects of the bill.
Where does Canada go from here?
Canada’s long-term sustainability goals must be weighed against short-term economic challenges—of which there are plenty.
Based on some of Carney’s early moves and his previously stated positions, Canadians can expect the federal government under his leadership to promote efforts to achieve key climate objectives while also developing infrastructure projects in line with these goals. These efforts would look to address Canada’s lagging productivity while addressing broader sustainable development objectives.
An all-of-the-above approach to addressing climate change will likely be at the forefront of federal strategies. Building on existing programs will be critical to this approach, particularly with Carney’s preference for incentives over punitive measures.
While Carney’s campaign pledge to offer more carrots and use fewer sticks is notable, it’s also important to look at the statistics. Canada committed to reducing its emissions by 40 to 45 per cent below 2005 levels by 2030. As of 2023, Canada had decreased its emissions by only 8 to 9 per cent—meaning the country has a long way to go and 2030’s target may not be attainable at this point.
That said, the current federal government is expected to at least attempt to make some progress toward this goal.
