The transition from Prime Minister Justin Trudeau to Mark Carney has marked a dramatic shift in Canada's approach to major energy infrastructure, but fundamental project risks remain unchanged. While the Trudeau government was often criticized for stifling development, Carney's ambitious plan to establish Canada as an "energy superpower" through federal endorsement and funding introduces a different set of challenges. The core issue, as highlighted by energy policy observers, is that government subsidies do not eliminate risk; they merely transfer it from private investors to the public treasury.
The Stark Policy Reversal Under Carney
Prime Minister Mark Carney's agenda represents a clear departure from the previous Liberal administration. Estimates suggest that under Justin Trudeau's leadership, federal decisions led to the cancellation or significant delay of nearly 30 major energy infrastructure projects. These included oil and gas developments, pipelines, LNG plants, ports, and mines, representing an aggregate value in the hundreds of billions of dollars.
In contrast, the Carney government, through its newly established Major Projects Office, is championing federal funding and expedited regulatory reviews to accelerate projects deemed to be in the national interest. However, critics warn this new "gung-ho" approach may be as imprudent as the previous government's aversion to investment, as it underestimates the complex web of inherent risks in global energy markets.
Navigating a Sea of Market and Geopolitical Uncertainty
Energy markets are fraught with volatility. Investors must constantly grapple with unpredictable factors including commodity prices, international policies, geopolitical tensions, and technological disruption. The price of oil, natural gas, and coal is dictated by the delicate balance of global supply and demand.
Despite global efforts to reduce oil consumption and greenhouse gas emissions, demand for oil and gas liquids has grown by an average of more than one million barrels per day since 2012, with production keeping pace. Currently, the world is facing an oil glut. The U.S. Energy Information Administration projects the price of North Sea Brent Crude to fall to approximately US$52 per barrel in 2026, a price point that would stress Canadian producers, reduce capital available for investment, and shrink government royalties and tax revenues.
Geopolitical developments involving major producers like Russia, Iran, and Venezuela further cloud the investment outlook, adding another layer of risk for any project, regardless of government backing.
The Added Burden of Climate Policy and Electricity Costs
Beyond market forces, Canada's own climate and energy policies impose additional risks. The Trudeau government's strategy aimed to phase out fossil fuels for electricity generation while pushing for widespread electrification of the economy. This shift would move energy production from predominantly private companies to government-owned utilities.
While the cost of generating renewable energy has fallen, the expenses associated with transmitting, distributing, and storing this power remain prohibitively high. These elevated costs are routinely passed on to consumers by utilities and their government regulators. For Canada's emissions-intensive industries—such as mining, smelting, and manufacturing—paying significantly more for electricity than international competitors, particularly those in the United States, poses a direct threat to their competitiveness.
The central argument put forth by analysts is that private firms, investing their own capital, are inherently better positioned to judiciously weigh these multifaceted risks than governments, which may be driven by political imperatives or a desperate need to demonstrate action. The lesson for taxpayers is to insist their governments exercise extreme caution before using public funds to shoulder risks that the private sector is often reluctant to bear.
