Federal Climate Governance in Canada: Entrenchment or Rupture?

Written by: Liad Wolch

Edited by: Louis Chenot

Senior Division

Since the 2025 Canadian federal election, energy politics has become central to Prime Minister Carney’s mandate. As part of his “elbows up” campaign to address U.S. tariffs and threats of invasion, Carney established the Major Projects Office in order to fast-track Canadian projects predominantly in the natural resources and energy sectors. Most surprising was Carney’s “landmark” memorandum of understanding (MOU) with Alberta. In it, the federal government committed to the construction of a new oil pipeline to the west coast in order to expand markets in Asia. While the government emphasized that the project would be privately-funded, it would support development by fast-tracking the regulatory process. In exchange, the Alberta provincial government agreed to increase their provincial industrial carbon tax. However, the MOU also notes that carve-outs for large emitters may be allowed.

 What kind of political structure would lead Carney, a proponent of action on climate change, to support building fossil fuel infrastructure at the federal level? Exploring this question requires an analysis of climate governance in Canada. To that end, I begin by looking at how Canadian federalism has decentralized authority over environmental regulation and natural resources, leading fossil fuel-dependent provinces, particularly Alberta, to leverage their resources in exchange for economic and political power. After establishing the framework for climate governance in Canada, I seek to understand whether the Carney government represents a continuation or a rupture in this policy area. I argue that despite leading under the same party as his predecessor Justin Trudeau, the Carney government has initiated a new phase in climate governance, one marked by framing energy as a matter of national economic importance. However, commonalities can be traced across many periods of governance. I argue that it is ultimately these commonalities rather than Carney’s particular position which are inhibiting a structural shift in federal climate change legislation.

Federalism and Canadian Climate Governance

Canada’s federal arrangement has had significant implications for the governance of resources, particularly fossil fuels. As part of its constitutional agreement with the provinces in 1867, the federal government maintained unlimited taxation authority and the authority to rule for the sake of the ‘Peace, Order and Good Government of Canada’. In exchange, provinces were afforded ‘Crown lands’. As a result, provinces own roughly 80 percent of land within their borders and maintain the authority to regulate pollution as well. The federal government only intervenes in inter-provincial goods and infrastructure, such as cars and pipelines. Furthermore, Katherine Harrison notes that “there is no federal power to implement international treaties in areas of provincial jurisdiction” (Harrison, 2023, p. 68). And while the Supreme Court of Canada affirmed in 2021 that the federal government could constitutionally regulate and price greenhouse gases under the ‘Peace, Order and Good Government of Canada’ provision, it has historically avoided climate change policies, with the exception of the Trudeau-era governments (Harrison, 2023, pp. 64-68).

Due to variation in endowed resources, individual provinces hold widely varying positions on climate change policies, such as industrial carbon taxes. Provinces with concentrated fossil fuels, namely Alberta, tend to be most opposed to more stringent climate regulations. Alberta has historically been emboldened by what Harrison describes as “executive federalism,” in which, for instance, provincial and federal environment ministers convene under the Canadian Council of Ministers of the Environment. Decisions made at these first-ministers meetings are, by convention, consensual, which has historically given all provinces an effective veto on federal legislation they oppose (Harrison, 2023, p. 69). This condition proved important in what Harrison identifies as the first two phases of climate governance. During the “joint-decision trap” era (1990-2006), consensus-based rule resulted in policy “moving to the lowest common denominator” (Copps, 2004, as cited in Harrison, 2023, p. 69). In the “leaders without followers” era (2007-2015), climate leadership lay with less-fossil-fuel-dependent provinces, while fossil-fuel-dependent ones continued to expand production: “From 2005 to 2018, British Columbia, Quebec and Ontario collectively reduced their emissions by 38 million tonnes/yr CO2e,3 but Alberta and Saskatchewan increased theirs by 49 million tonnes/yr” (Harrison, 2023, p. 72).

Federalism and Carney: Entrenchment or Rupture?

The third phase of climate governance offers a more salient comparison for the contemporary period. In the “federal unilateralism” era (2015-2024), the federal government abandoned the norm of consensus-based decision-making at the CCME in order to move forward with both consumer and industrial carbon pricing. This occurred most notably in 2018 with the Greenhouse Gas Pollution Pricing Act, under which the federal government would apply either one or both of their baseline carbon taxes for consumers and output-based price for industrial emitters depending on the stringency of each province’s existing regulations. While this move led to challenges by Alberta, Saskatchewan, and Ontario, its constitutionality was upheld by the Supreme Court of Canada in March 2021. As Harrison notes, key to the SCC’s decision was the fact that provinces are pushed into a zero-sum logic when addressing emissions: “inaction by one or more provinces can undo (and has undone) hard-won gains by others, an outcome that cannot be overcome through cooperation among provinces that have no authority over each other” (Harrison, 2023, p. 78).

Nonetheless, the Trudeau government was only able to successfully move forward on climate legislation by simultaneously committing to the economic development of conventional energy sources (Harrison, 2023, p. 75), which was realized upon the federal government’s purchase of the TMX expansion project. In short, the federal liberal approach is “climate action conditional on increased fossil fuel exports” (Harrison, 2023, p. 65).

Taken together, the federal climate legislation developments of the Trudeau era present a useful backdrop for understanding Carney’s moves on the issue, which may initially appear surprising given his historically strong stance on climate. Carney is doubling down on the approach of his predecessor, although more unabashedly. This has been implemented successfully by framing fossil fuel infrastructure and development as imperative for Canadian sovereignty and economic security. Carney has maintained a commitment to the net-zero target through emphasis on speculative technologies such as carbon capture and storage, as well as by framing the advancement of alternatives such as LNG as cleaner forms of conventional energy. However, as Riofrancos notes, increasing extraction “is not a given but a result of political and economic choices” (Riofrancos, 2023, p. 24). In the case of federal climate policy, economic growth coupled with the decentralization of resources has decidedly overridden any political motivation to press ahead on more rigorous unilateral climate action. Thus, as Carl Meyer points out, “in a way, talking about new pipelines, which are moving fossil fuels from one place to another, is accepting the status quo” (The Narwhal, 2025, at 1:12).

Federalism does not only make action on climate change more difficult; in being structurally bound up in resource politics, it has in many ways fostered the growth of fossil fuel extraction. As Jason MacLean describes, Canada functions as a “carbon democracy,” in that the fossil fuel industry “significantly shapes states’ economies and political dynamics” (MacLean, 2018, p. 53). To that end, he argues for reconceptualizing Canadian “democracy as oil – ‘as a form of politics whose mechanisms on multiple levels involve the processes of producing and using carbon energy’” (MacLean, 2018, p. 72).

Conclusion

Prime Minister Carney’s MOU with Alberta provides meaningful information on the current government’s approach to climate change governance at the federal level. In the short-term, this shift has been prompted by political and economic threats from the U.S., leading to efforts to diversify markets for Canadian fossil fuel energy in Asia. However, federal support for fossil fuel infrastructure represents a continuation of existing norms around climate change more than an aberration: as the Trudeau era exemplified well, even federal governments keen on enacting climate legislation use the frame of economic development in order to appease fossil fuel-reliant provinces and ultimately entrench “carbon democracy”. Understanding this paradigm is at the basis of the challenge “to reimagine our democracy as sustainability” (MacLean, 2018, p. 72).

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¹Amy Janzwood, an assistant professor at McGill University in the Department of Political Science and the Bieler School of Environment, has described the move as the “largest ever fossil fuel subsidy” in Canadian history (Janzwood, 2024, para. 15).

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Bibliography

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