One place to watch is Nova Scotia, which has big plans to kick-start its offshore wind industry in order to meet electricity demand at home and beyond. Initially, the province is aiming for some 5,000 megawatts of offshore wind capacity.

“There is a lot of interest among developers,” says Elisa Obermann, executive director of Marine Renewables Canada, in an interview. “They’re looking for a country that has a stable regulatory environment and very predictable processes for their auctions and procurement.”

In January, the Canada-Nova Scotia Offshore Energy Regulator concluded a pre-qualification process for companies interested in participating in an upcoming call for bids. So far, Q Energy France, a division of South Korea’s Hanwha Group, has confirmed its interest and has publicly committed to investing in the province’s offshore workforce.

While total energy-transition investment rose in the U.S. last year, changes in U.S. climate policy are contributing to market uncertainty, and market uncertainty makes it difficult for companies and investors to plan ahead. The result is energy-transition investors start to consider putting their money elsewhere, outside of the U.S.

– Joanna Klimczak, Northern Light Capital Partners

But the federal and provincial governments will need to coordinate their efforts to ensure that heightened interest translates into tangible investment. Nova Scotia has a small domestic power market and is looking for federal support to build transmission to other provinces – and, possibly, the United States – in order to persuade offshore wind developers there will be a market for their power.

A nation-scale opportunity

On February 26, Canada’s energy minister, Timothy Hodgson, travelled to Nova Scotia to announce a $5-million federal support for a feasibility study into a proposed transmission project dubbed Wind West, which would deliver offshore wind power to markets beyond the province.

Nova Scotia “has an exceptional wind resource,” Hodgson told reporters. “The main constraint on [Wind West] is not the wind; the wind is there and it blows a lot,” he said. “The constraint would be where is the power going to go and how are we going to move it, so that’s what this is about today.”

The Nova Scotia effort is just one example of Canada’s surging interest in the energy transition. Across the country, federal, provincial and territorial governments are promoting investment in the sector to support the electrification of the economy and construction of new data centres. That includes renewable power, battery and long-duration storage, energy efficiency and electric vehicle infrastructure. Ontario is also pursuing nuclear, including the country’s first small modular reactor.

“There is no shortage of attractive opportunities for Canada to seize the moment,” says Joanna Klimczak, Montreal-based chief executive at Northern Light Capital Partners. “While total energy-transition investment rose in the U.S. last year, changes in U.S. climate policy are contributing to market uncertainty, and market uncertainty makes it difficult for companies and investors to plan ahead,” she says. “The result is energy-transition investors start to consider putting their money elsewhere, outside of the U.S.”

A front door for investment

Klimczak is a finance veteran who works with global asset owners on strategies to capitalize the energy transition. She recently co-convened a meeting between Energy Minister Hodgson and industry CEOs and executives. To secure foreign investment in clean-energy projects, Canada should have a “central front door” where global asset managers can go to track and access the investment opportunities across the country, she says. “Governments at all levels should consider to work together to centralize an entry point and market it highly, because the more investment capital Canada has to choose from and work with, the stronger our economy will be for all Canadians.”

In the United States, the Trump administration has rejected the scientific evidence of a mounting climate crisis and doubled down on fossil energy production while attacking the renewable sector. After record instalments in the third quarter of last year, the U.S. industry is anticipating a slowdown in the United States in 2026, the American Clean Power Association said in an end-of-year report: “Projects are facing heightened regulatory burdens and policy uncertainty, putting the future trajectory of clean power project deployments at risk.”

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All told, cancellations of clean-energy projects in the U.S. – including renewable power, storage and electric vehicle manufacturing – far outpaced new investment announcements in the U.S., according to the business coalition Environmental Entrepreneurs (E2), in a report released February 13. E2 recorded US$35 billion worth of investments abandoned last year, compared to US$12 billion of new investments that were announced. In 2024, the United States saw US$16 billion in clean-energy investments announced and only US$2.5 billion abandoned.

Canada’s renewable sector has seen setbacks, too, but the outlook remains bullish. The country’s wind, solar and electricity storage capacity grew by 56% over the past five years to 25 gigawatts, according to the Canadian Renewable Energy Association (CanREA). That’s equivalent to the capacity of 25 1,000-megawatt nuclear reactors.

Virtually every province or territory has some renewable-energy procurement underway. Over the next decade, CanREA forecasts that investment in new wind, solar and storage will be some $200 billion. CanRea doesn’t include nuclear or large-scale hydro in its forecast, but there, too, provinces are investing in new non-GHG-emitting power projects.

The missing piece: private suppliers

The growth rates would be even greater if provincial governments would unleash private-sector suppliers to meet surging demand without having to sell through government-controlled utilities. Alberta is the sole province with a market in which electricity producers can sell directly to industrial customers through power-purchase agreements. However, Premier Danielle Smith slammed the door on that option when her government ordered a moratorium on new renewable power projects.

Canada can quickly unlock much more corporate investment in renewables

In 2024, companies signed deals for more than 1,000 megawatts of renewable power, virtually all in Alberta, according to figures from the Business Renewables Centre (BRC) Canada, which advises companies on renewable power procurement. That market has since dried up except for some small activity through a Nova Scotia program.

BRC Canada director Jorden Dye says Canada could attract far more investment from multinational corporations that remain committed to meeting climate targets if provinces would relax their exclusive grip on power markets. The centre’s advisory council includes some of the world’s largest companies, including Amazon, Starbucks and Marriott International. “When you start seeing policy churn and policy uncertainty, companies start looking at whether there are opportunities to decarbonize other aspects of the business in other jurisdictions,” Dye says. “And Canada has definitely come up as a factor for that.”

Prime Minister Mark Carney has vowed to make Canada a clean-energy superpower, and both he and Energy Minister Hodgson have pointed to the need for electrification to make that happen. Trump’s war on renewables could prove a boon to Canadian clean-energy ambitions, but only if governments can create the necessary conditions to drive investment.

Shawn McCarthy is an Ottawa-based writer.

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The plant is designed to use Alberta natural gas to produce hydrogen, a clean-burning fuel that is used in refining and could replace oil and gas in a range of applications, including transportation and electricity. Air Products says the plant will capture some 95% of the carbon dioxide it emits and sequester the greenhouse gases in saline aquifer formations deep underground. In short, it was touted as a model for carbon capture and storage (CCS) technology that proponents say can dramatically reduce carbon emissions in the oil and gas sector, as well as in the cement, chemicals and steel industries.

Now, CCS proponents are about to face their biggest test, as Ottawa and Alberta put their weight behind a multibillion-dollar project in the oil sands. 

Fading promise

In 2022, both governments were on board for Air Products’ Edmonton blue hydrogen plants. “We need to be bold and seize the moment, and that’s exactly why we’re investing in Air Products,” François-Philippe Champagne, then the industry minister, said in a 2022 news release. 

The federal government pitched in $300 million from its strategic innovation fund, alongside Alberta’s $161-million contribution to what was pegged to be a $1.6-billion project. The plant was slated to create 2,500 construction jobs, along with 230 “highly skilled jobs.” Above all, the initiative was billed as “another major step forward on the path to net zero,” the federal government said. 

Fast forward three years, and the sheen has faded, amid delays and cost overruns that have doubled the price tag, to US$3.3 billion.

In an investor call last summer, the company labelled the Edmonton operation an “underperforming asset” not expected to be profitable. The plant was originally due to open last summer; projections now put the ribbon-cutting into late 2027, perhaps 2028. Air Products had pinned its hopes on supplying a growing hydrogen market, which so far has failed to materialize. 

Keeping the faith

Despite that setback, CCS technology still plays an important role in Canada’s net-zero ambitions and is a key plank in the government’s climate competitiveness strategy unveiled in the November budget. Prime Minister Mark Carney and Energy Minister Tim Hodgson are counting on CCS to deliver emission reductions even as they support expansion on oil and gas infrastructure that will increase exports and production. 

On November 27, the prime minister announced an agreement in principle with Alberta Premier Danielle Smith, in which Ottawa will support a bitumen pipeline to the West Coast, in exchange for provincial agreement on a higher carbon price and industry investment in CCS.

Carney has focused on CCS as a key to reducing emissions in the oil and gas sector. The Pathways project will be “the largest carbon capture utilization and storage project in the world,” he said in a speech to the Calgary Chamber of Commerce. “It will make Alberta oil amongst the lowest carbon intensity in the world, and it has the potential to create an entirely new industry in Canada.”

At the same time, proponents are touting CCS as a key means of cutting emissions in industrial sectors like cement and steel.

Despite the ongoing enthusiasm in Ottawa, the Air Products failure serves as a warning to the Liberal government and other would-be investors. Scaling up CCS will require huge subsidies. Just how much investment risk corporations will take on it remains up in the air. And in Canada, the tension between climate policy and a powerful petroleum sector is on full display, adding another layer of uncertainty.

Environmental groups argue that CCS is being used as a panacea to justify continued production and use of oil and gas, which will make it harder and more costly to deal with climate change in the coming decades. The majority of emissions from a barrel of oil, after all, come from its combustion in cars, planes, ships and other end uses.

“The narrative around so-called decarbonizing oil is nothing but a myth to justify expansion of oil production,” says Aly Hyder Ali, oil and gas manager at the Canadian advocacy group Environmental Defence. 

An expensive proposition

Canada is not alone in pursuing CCS. It remains an important component in decarbonization strategies produced by groups like the International Energy Agency and the United Nations’ Intergovernmental Panel on Climate Change. To date, there are 77 commercial projects in operation globally capturing up to 64 million tonnes of carbon dioxide per year, with 47 more under construction. However, few of those target oil production facilities like Canada’s oil sands. Norway’s Sleipner project, for example, is the world’s first commercial CCS facility and is located in an offshore natural gas field.

Norway-based consulting firm DNV Group anticipates the world will spend some US$80 billion on CCS projects between now and 2030. Much of that investment will be focused on natural gas processing and cement and steel producers, DNV said in a report released last summer.

But there remain huge hurdles to investment. In addition to prohibitive capital costs, CCS drives up operating costs at existing plants and can be energy intensive.

In search of profitability

Canada’s cement industry has focused on CCS as part of its plan to be net-zero by 2050. To date, however, no company has made an investment in a CCS facility. “The only way to make this work is if there is a path to profitability,” says Sarah Petrevan, vice president for industrial decarbonization at the Cement Association of Canada. “And there is no path to profitability.” 

To help make CCS financially viable, Carney’s first budget seeks to increase the industrial carbon tax and make it apply to a greater percentage of a company’s emissions. The levy applies to a portion of emissions from the country’s largest polluters. It now costs $95 per tonne of carbon dioxide and is due to rise. 

A more costly carbon tax is intended to incentivize businesses to invest in multibillion-dollar emission-reduction projects, like CCS. Ottawa is also providing companies with a type of insurance, known as contracts for differences, which compensates investors if carbon prices fall below project costs.

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The industrial carbon price “plays a big role in determining the economic viability of various low-carbon projects,” Dale Beugin, research director for the Canadian Climate Institute, wrote in an explainer. “But the risk of future governments moving away from that carbon pricing pathway dilutes the policy certainty – and the incentive to invest in clean growth projects.” 

However, the levy won’t work to drive investment unless it has greater stringency and applies to a greater percentage of a plant’s emissions, Beugin argues.

The Alberta showdown

After the budget’s release, Petrevan welcomed the government’s climate-competitiveness pledges. She hedged, however, on whether the budget measures would provide a “path to profitability” for CCS projects. “Stability and predictability of the industrial carbon price are important contributors to building a positive business case for investment.” 

However, the federal government will have to find “alignment” with the provinces, Petrevan says. (Ottawa sets benchmarks for the industrial levy, but most provinces administer their own systems.) Alberta – home to the vast oil-sands sector – froze the price at $95 earlier this year. More recently, it proposed to allow a broader range of investments to count toward a company’s compliance requirements and allowed smaller firms to opt out completely.

The changes would reduce demand for the credits that companies receive when they succeed in reducing emissions. Cheaper credits would result in lower return on investment, and therefore less spending on emission-reduction technology.

The federal–Alberta memorandum signed in November commits the two sides to working together to “design and commit to globally competitive long-term carbon effective prices.” Alberta agreed to unfreeze the price to rise to $130 over the next three years.

The carbon price still won’t be enough to drive investment in CCS, says Chris Bataille, a Vancouver-based fellow with Columbia University’s Center on Global Energy Policy. With the enforcement mechanism related to pipeline progress, “it has to become basically a regulatory outcome,” he says. “That doesn’t mean post-combustion CCS will work or that the feds will enforce the deal. But Alberta gets to push forward its pipeline.”

Oil-sands companies working together under an umbrella organization dubbed the Pathways Alliance have released their own plan for emission reductions that relies on heavily subsidized CCS and a strong carbon credit market. 

The federal–provincial memorandum endorses the industry plan, and Ottawa and Alberta pledge to work with the oil companies in advancing the plan, with construction starting by 2027.

Corporate investment in CCS is contingent on the approval, commencement and continued construction of the pipeline, while ongoing progress with the pipeline will be contingent on the Pathways plan moving ahead. The federal government also agreed to drop its proposed cap on emissions from the oil and gas sector.

Bataille argues that Ottawa needs the threat of a cap as a stick. “Without the emissions cap as leverage – get these [emissions] cuts done or we will do this – I don’t see it happening,” he says. 

A subsidized market

It’s clear that without government intervention, carbon capture will not take root. The Pathways Alliance has laid out a $16.5-billion CCS plan that would require significant tax breaks. Even with those subsidies, it’s questionable how many carbon-capture projects would be built given the long-term financial risks and technological issues.

A key problem is that government policy is by its nature uncertain, especially given that Carney presides over a minority government that has a precarious hold on power. Any promise by Ottawa to set a floor under the cost of emitting and guarantee profitability for CCS could be quickly undone by a new federal government that would share Alberta’s opposition to aggressive climate action. Conservative Leader Pierre Poilievre – who came within 25 seats of winning the March election – has shown little enthusiasm for climate policy and promised to unshackle the oil and gas industry. 

In the United States, President Donald Trump has scuttled virtually all the climate measures adopted under Joe Biden.

Given those risks, corporate CEOs will be reluctant to invest in CCS projects that are bolted onto existing production facilities and generate no revenue except through regulatory means, Bataille says. The promise of a pipeline may, however, be the carrot that drives action.

Momentum continues 

Carbon capture itself isn’t novel, but its application for large-scale underground storage remains unproven over the long term. 

The fossil fuel industry already captures carbon dioxide for natural gas processing plants and injects the gas into old wells to enhance oil production. The Pathways plan would largely sequester carbon in saline aquifers rather than sell it. Worldwide, there is much less space underground for injected carbon than previously thought: less than a fifth of what the Intergovernmental Panel on Climate Change has estimated, according to a recent study by researchers at Imperial College London.

Carbon capture also isn’t widely applicable. In upstream oil-sands production, a large percentage of emissions result from burning natural gas in boilers to produce steam needed to extract bitumen, and from burning diesel in large trucks and other machinery. CCS would not currently be viable for either of those sources.

Sean McCoy, a professor at the Schulich School of Engineering at the University of Calgary, estimates that roughly 60% of carbon emissions in the oil-sands sector “might be capturable” with CCS. Despite the challenges, CCS continues to find support from government, even as the list of cancelled projects grows longer. Just last year, Edmonton-based Capital Power pulled the plug on a proposed $2.4-billion CCS project at its Genesee gas-fired generating station. “Through our development of the project, we have confirmed that CCS is a technically viable technology,” the company said in its statement. “However, at this time, the project is not economically feasible.”

The reality gap

Among the projects that have materialized, there is also a gap between carbon-capture promise and reality. A recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) noted that claims of capture rates of 90% or more are misleading. Typically, the promise of higher capture rates applies only to concentrated streams of emissions at the specific types of plants.

In the oil and gas industry, CCS is used for natural gas processing plants that purify the fuel by removing contaminants like water, carbon dioxide, hydrogen sulphides and solids. And it includes facilities that produce hydrogen from gas for use in oil-sands upgraders and refineries.

Even at natural gas processing and hydrogen plants, carbon-capture rates rarely exceed 70% of emissions, the IEEFA report said.

Some projects, including at Air Products in Edmonton, are employing a new technology to produce hydrogen: autothermal reforming, which replaces steam methane reforming. Autothermal reforming is both more energy efficient and more capital intensive than the steam methane process. It also creates a more concentrated emission stream. 

CCS is best suited for applications that have high carbon dioxide concentrations in their flue gas and have high and stable flow emissions. In other words, facilities that burn hot and steady. 

Even in the bullish forecast by Norway’s DNV Group, CCS would capture only 6% of global emissions in 2050, a level that falls well short of what the consultancy says is needed to achieve any net-zero outcome.

“Recent turmoil, and budgetary pressure in the global economy pose risks to CCS deployment, potentially shifting priorities and removing the necessary finance,” the DNV authors wrote.

While some CCS will be viable, overly optimistic reliance on CCS is a trap if it is used to support delays in other emission-reduction strategies. The more we delay the transition away from fossil fuels, the more we will have to rely on hugely expensive carbon-capture strategies.

Shawn McCarthy is an Ottawa-based writer and senior counsel with Sussex Strategy Group.

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Prime Minister Mark Carney and Ontario Premier Doug Ford have made common cause in promoting nuclear energy. Indeed, the prime minister has indicated that the federal climate strategy relies on construction of low-carbon power for a national electrification effort, and nuclear is central to that vision.

This fall, Carney and Ford together announced $3 billion in funding for Ontario’s purchase of four BWRX-300 SMR reactors from Hitachi GE Vernova, a joint Japanese and U.S. company. Ottawa will shoulder $2 billion of that amount through the Canada Growth Fund. In a news release, the two leaders boasted that Canada will become the first Group of Seven country to build an SMR reactor. The prime minister said the federal investment “will extend Canada’s world leadership in clean energy.” Ontario is also pursuing plans to build large-scale reactors.

However, critics argue that the industry’s cost estimates are unreliable. They point to overruns and delays at other “first of a kind” nuclear installations. At the same time, Ontario will rely on a U.S.-based supplier of enriched uranium to fuel the SMRs, unlike its current fleet of Candu reactors that run on non-enriched Canadian sources.

“They’re taking a flyer off Mount SMR and the world is sitting back to see how much of a splat there is,” says Mark Winfield, a professor of environmental studies at York University. The reliance on a U.S. fuel supplier “makes absolutely no sense given our quest for energy independence and security,” he adds.

Pitting nuclear against renewables

Provincially owned Ontario Power Generation (OPG) plans to purchase four Hitachi GE reactors for $20.9 billion, although it has committed to only one at a price of $7.7 billion, including $1.1 billion for infrastructure that would serve all four units.

In addition to the direct support, OPG will benefit from federal investment tax credits of 15% that support investment in clean electricity. The tax credits will be paid out in cash to provincial and municipally owned utilities that are not taxable.

OPG received a construction licence for the SMRs last April from the Canadian Nuclear Safety Commission. It is now preparing the ground at its Darlington site, which currently hosts four larger Candu reactors that have been refurbished in a decade-long, $12.8-billion project that was completed on time and on budget.

OPG cites work by the province’s Independent Electricity System Operator (IESO) to back its bet on SMRs as a cheaper alternative to hybrid options of wind, solar and batteries to supply an additional 2,200 megawatts of low-carbon, baseload power. An IESO paper released in August concluded that it would cost up to $34 billion to meet additional baseload demand with SMRs, while a hybrid renewable system would cost $47 billion. Wind and solar would also entail more transmission and land development costs, the IESO said.

Nuclear facilities operate at far higher capacity factors and, unlike wind and solar, the electricity is constantly generated. IESO assumes that nuclear plants operate at 93% capacity, while that figure for wind is only 38% and for solar, 24%.

OPG also defends the nuclear option by pointing to the large supply chain and workforce in the province that is currently focused on refurbishments at its Pickering site and at Bruce Nuclear and will benefit from further investment in reactors. However, critics argue that cost estimates for nuclear are notoriously unreliable, especially for first-of-a-kind projects like OPG’s deal for the BWRX-300. There have been SMRs of different designs built in the world: two in Russia, one in China and one in Argentina. In every case, there were delays and higher-than-promised costs.

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The Crown utility – and ultimately Ontario ratepayers and taxpayers – will be responsible for any cost escalation in the SMR deal.

A report prepared for the Ontario Clean Air Alliance compared the levelled cost of power – that is, the average cost of electricity generation over the plant’s lifetime. It concluded that, in 2030, electricity from SMRs would cost up to US$174 per megawatt/hour, while wind would be $93 and solar would be $41. Those costs do not include transmission or land development, nor do they account for capacity factors.

Ralph Torrie, research director for Corporate Knights, weighed capital costs for the nuclear options against alternatives in his Climate Dollars project, which provides a decarbonization analysis for each province. The report concludes that the upfront investment for reactors would far exceed the cost of renewables plus efficiency and other demand-management strategies.

“Public investment in new nuclear plants has a double-barrelled negative effect on addressing greenhouse gas emissions,” Torrie says in an email. “It diverts capital from efficiency and renewables that would increase the supply of emission-free electricity faster than nuclear at a lower cost and with less risk.”

“The government subsidies for nuclear expansion are driving electricity price increases in Ontario,” he adds, “and that slows down the switch to electricity that we need in buildings and vehicles to give our children and grandchildren a fighting chance against climate change.”

Shawn McCarthy is an Ottawa-based writer and senior counsel with Sussex Strategy Group.

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Canada Nickel Company expects to reach a final investment decision early in 2026 on a sprawling, low-emissions nickel mine and refinery near Timmins, Ontario, subject to permit approval and some government financial support.

The nickel is found in ultramafic rock, which can absorb carbon dioxide through a chemical process that stores it in carbonate form. The Canada Nickel refinery would create a concentrated stream of the carbon dioxide that would be more efficiently captured by the rocks. It can also use biochar – a by-product of forestry material – to replace coke or coal and reduce emissions in the processing.

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As the United States reverses course on climate-change-related energy policies, Canada has a unique opportunity to take the lead on the transition to cleaner energy in North America. But realizing that potential will require much faster action to implement the clean-economy tax credits that were introduced by the previous Liberal government.

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At the same time, the Trump administration is pursuing major cuts to U.S. government programs, including incentives meant to drive the country’s transition to clean energy. All of this turmoil has roiled financial markets, threatened higher inflation and slower growth, and made investors leery of risking their money.

For tech companies in Canada, the combination of trade war and Trump’s opposition to action on climate change can be deadly.

Morgan Solar CEO Mike Andrade has spent his career managing supply chains in the electronics industry. He has built a diverse, global supply chain for the solar energy start-up that he believes will withstand tariffs. However, the second-order impacts of Trump’s policies – the economic uncertainty and threat of higher interest rates and slower growth – are tougher to manage for the Toronto-based company as it nears its goal of becoming fully self-sustaining so it can rely more on operating revenue than financing. 

“What uncertainty does at the very least is delay things, and at worst, stops things,” Andrade says. “For any company, this is a challenge. But for a smaller company, it could be the difference between survival or not.”

Reassessing supply chains and markets

The economic upheaval in the United States comes at a perilous time for Canada’s cleantech sector. The federal government’s flagship funder, Sustainable Development Technology Canada, has been paralyzed by a conflict-of-interest scandal over misallocation of funds, leading the innovation minister to halt funding for the arm’s-length program. At the same time, the Liberal government has been slow to finalize tax credits meant to spur investment in clean technologies. Prime Minister Mark Carney has promised to finish the job on those incentives, begun by his predecessor, but as of press time, the credits were still MIA.

Over the past few years, private-sector venture financing slumped under the twin impacts of inflation and higher interest rates. Start-ups looking to finance their commercialization from financial market investors often hit brick walls.

“The tariffs just make everything worse,” says Lynn Côté, executive director of the Canada Cleantech Alliance. “For the cleantech companies, insecurity about a whole bunch of elements has been there for a while.”

For any company, this is a challenge. But for a smaller company, it could be the difference between survival or not.

—Mike Andrade, CEO, Morgan Solar 

The Canadian cleantech sector exported some $9.8 billion worth of goods last year, with 77% of those exports going to the United States, according to Natural Resources Canada.

As of mid-April, the Canadian sector was spared the large tariffs that were levied against steel-, aluminum- and automakers, so long as they comply with the United States-Mexico-Canada Agreement. However, many smaller start-up businesses never bothered to verify their compliance with the trade agreement because they faced no tariffs until now. 

Côté says the crisis is driving companies to reassess their supply chains and their markets, but those reviews take time and money to complete, and many cleantech executives are short on both. “If you are building a quality product and you have inputs that you know work, it may not be that easy to displace them. You have to test them out, and you have to guarantee your work.”

Côté says companies in the sector must diversify their markets, but few have the capacity to do so on their own. “If not the U.S., then where?” she asks. “I think this is where the government has the opportunity to do meaningful trade missions. And I tend to favour the EU because it’s closer; we have a meaningful free trade agreement, and the regulatory environment is better.”

Diversify or die trying 

Canadian tech firms like Morgan Solar, CarbonCure Technologies of Dartmouth, N.S., and Calgary’s Sensor Inc. are marketing technologies that promise both cost savings and decarbonization opportunities for their business customers.

Morgan Solar has two lines of products: analytics that drive monitoring, diagnostics and forecasting of solar plant performance; and photovoltaic blinds that produce solar energy and deliver it into a direct current (DC) microgrid. The sensor business is mainly selling into the United States, while Morgan has been testing its blinds in a few projects in Canada and is poised for a move into the U.S. market – subject to the emergence of a more stable business environment there.

“When we are shipping our product into solar projects, that’s part of a large capital investment,” Andrade says. “If they delay the installation, that delays our revenue.”

The solar industry is heavily reliant on China for silicon chips and photovoltaic panels; there is no way to diversify that supply chain. But all solar panels have long faced tariffs into the United States, so companies like Morgan Solar have had to adjust. 

Other components – circuitry and electronics and motors – have more geographically diverse supply chains, and the key issue with those items is to design your products so you are not reliant on a single source. “The more unique componentry that you use and the more unique manufacturing processes that you use, the greater the risk is . . . If any of your components are in a singular jurisdiction, you’re pooched,” Andrade says.

Strong returns make the difference

CarbonCure produces technology that mitigates the notoriously carbon-intensive process of making concrete from cement. It reduces emissions by on average 5% by locking the captured carbon into the concrete while reducing the amount of cement needed per tonne of concrete. CarbonCure technology is currently deployed at more than 600 plants worldwide, with three-quarters of those in the United States. CEO Robert Niven expects solid results for the future, but there are dark clouds on the horizon. The company relies on buoyant construction activity to sustain the concrete industry, and economists are forecasting slower growth in the United States and around the world because of Trump’s trade wars.

At the same time, the Trump administration’s opposition to climate action is resulting in “green hushing” as companies downplay climate goals that only a few years ago they loudly proclaimed. “It doesn’t mean that good climate activity isn’t still happening,” Niven says, “but it’s not being discussed as much.” CarbonCure also trades carbon credits it earns through carbon capture at concrete plants. The political backlash against climate action in the United States could also affect the value of those credits.

There may be a silver lining for the company. The United States imports cement to make concrete – lots of it. As the price of the raw material rises because of tariffs, companies will be looking for ways to reduce costs. The CarbonCure technology saves on costs by reducing the amount of cement needed per tonne of concrete produced.

In this political and economic climate, cleantech companies need to be able to clearly demonstrate their return on investment as well as their environmental benefits, Niven says.

Few short-term solutions

Evok Innovations is a late-stage venture capital fund that aims to support start-ups that can help existing firms, especially in the oil and gas industry, reduce their carbon footprints in a cost-effective way. Evok was initially capitalized by Cenovus Energy and Suncor Energy but has since broadened its investor pool to include mining companies and utilities like Ontario Power Generation.

Many of its small client firms are struggling, says Erin Madro, a principal at Evok. The tariff wars have led many Canadian start-ups to reassess their supply chains, which tend to be heavily reliant on Chinese suppliers. “In many cases, the alternative to Chinese may not exist,” Madro says. “It will take many years for supply chains to become re-envisioned and reoriented. In the short term, it just means everything is going to become more expensive and harder to get.”

At the same time, the venture capital market has shrunk significantly, and some Evok clients are running out of time to meet key milestones needed to raise more capital. The start-ups face unpalatable choices of diluting existing investors with expensive capital or cutting staff and overhead to stay in business.

Madro sits on the board of Calgary-based SensorUp, a start-up that offers software technology that helps oil and gas companies detect and repair methane leaks from their operations. The company has clients around the world, including supermajors from Europe and the United States. At this point, it’s unclear what impact the trade wars will have on SensorUp’s commercialization plans, Madro says. It shouldn’t be directly affected by tariffs, but its customers may be hit by higher costs for steel and other materials.

The tariffs just make everything worse. For the cleantech companies, insecurity about a whole bunch of elements has been there for a while.

— Lynn Côté, executive director of Canada Cleantech Alliance

Perhaps the bigger question is whether the oil and gas industry will invest in methane-reduction applications as pressure from the U.S. government subsides. Former president Joe Biden had set a target for the industry to reduce methane emissions by 35% from 2005 levels by 2035 and imposed a fee on emissions as an incentive for industry to cut them. In March, the Senate voted to repeal that fee, and the Trump administration has proven itself openly hostile to anything resembling climate-related constraints on the industry.

Still, Madro insists that oil and gas companies will continue to invest in technologies like those offered by SensorUp. Methane is a product in their pipelines, so there is financial interest in minimizing leaks, while companies still face pressure to reduce emissions in markets like the EU and China. “It makes good business sense to reduce methane leakage,” she says. “Companies are taking a bit of a pause to reassess and maybe delaying some initiatives” in light of economic uncertainty and slumping oil prices. “But ultimately they are still broadly committed.”

Those long-term assurances provide little consolation to the struggling cleantech start-ups that will have to hunker down and conserve cash in the short term. “Everybody is just looking for some hard ground to stand on before they action anything,” says Tyler Hamilton, senior director of climate tech at MaRS, Ontario’s cleantech incubator.

Companies with strong technology solutions and good business plans will survive to meet the needs of a transitioning economy, Hamilton says.

Shawn McCarthy is an Ottawa-based writer and senior counsel with Sussex Strategy Group.

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The federal government is planning to get back into the oil pipeline business, although executing on that goal will be extremely tough given commercial, political and constitutional realities.

The post Carney wants a pipeline. Building one will be harder than it sounds. appeared first on Corporate Knights.

In his first act as prime minister in March, Carney sent a clear signal that he wants to move past the divisive debates on energy and climate change that prevailed under Justin Trudeau. Taking office just prior to the Paris climate summit, Trudeau enacted sweeping climate policy that included a carbon tax and a raft of regulations aimed at driving a clean energy transition – over the objections of the federal opposition and Conservative-led provinces.

Trudeau stepped down in January, and after winning the Liberal leadership race to replace him, Carney immediately axed the consumer portion of the carbon tax, which reduced gasoline prices by 17 cents per litre. The consumer levy had been a key pillar in Trudeau’s climate strategy. It was also a rich target for Conservative Party Leader Pierre Poilievre, who campaigned on support for the oil and gas sector with little heed for climate change policies.

Carney’s go-to campaign phrase on energy is, in fact, borrowed from former Conservative prime minister Stephen Harper, who vowed to make Canada an “energy superpower.” Carney has broadened that ambition to include renewable and other forms of clean energy. “It’s time to build Canada into an energy superpower in both clean and conventional energy,” he said in his election victory speech. “And it’s time to build an industrial strategy that makes Canada more competitive while fighting climate change.”

Carney’s concessions might not win converts

Carney won the Liberal Party’s fourth consecutive mandate despite winning few seats in Saskatchewan or Alberta, where Trudeau’s climate policies were anathema to many voters who saw them as an attack on their economic prosperity.

He proposes to establish “energy corridors” that would speed approvals of infrastructure like transmission lines and pipelines, he vows to streamline regulatory processes to avoid lengthy delays, and he supports carbon capture and storage technology, which the oil and gas industry is relying on to cut its greenhouse gas emissions.

During a campaign stop in Alberta, he said he would support the construction of an oil pipeline to eastern Canada to “displace imported oil.” Still, his conciliatory talk is unlikely to win converts from the oil and gas sector.

During the campaign, Alberta Premier Danielle Smith published a list of nine non-negotiable demands. They include scrapping the Liberal government’s planned emission cap on producers, establishing a six-month timeline for review of all projects, repealing the ban on oil tanker traffic off British Columbia’s more northerly coastline, ending the federal backstop for the industrial carbon price, and abandoning ambitious regulations to drive adoption of electric vehicles.

These demands are unworkable for Carney given that they would take key climate and environmental protections out of federal hands, and would alienate parts of the Liberal base, especially in Quebec, where support for climate action remains high.

Carney can ill afford to anger progressive voters, given his failure to secure a majority government and the prospect of an election within two years.

While his support for the oil and gas sector is not what the Alberta premier is demanding, it worries climate activists. Carney’s references to investing in conventional energy “leave a lot of uncertainty,” Caroline Brouillette, executive director of Climate Action Network Canada, said in a statement issued during the campaign. “If that’s a euphemism for continuing the status quo approach of expanding fossil fuels, that means pipelines going across Indigenous lands, many billions [of dollars] sunk into stranded assets, and climate harm caused by increased emissions,” she said.

Climate change mitigation is still in the cards

As he supports more pipeline capacity for oil and gas producers, Carney is also promising action to increase clean energy infrastructure, particularly interprovincial transmission ties that will help decarbonize and electrify the economy. He has also pledged support for the mining of critical minerals that are needed to enable a shift to a more electric energy system.

There are a number of areas where Carney can build on the work of his predecessor to advance Canada’s transition to a lower-carbon economy. He has promised to expand the charging network, drive energy efficiency in buildings and invest in the clean energy infrastructure. He could also reinvigorate a flagging effort to ensure that climate-related risks are accounted for and disclosed by corporations. As governor of the Bank of England, Carney led the international effort to develop disclosure standards, and encourage international corporations to adopt them. The standards, which are being adopted in Europe, require companies to develop strategies that are consistent with a future net-zero world.

In the past year or so, many companies, including Canada’s big banks, have retreated on commitments made at the United Nations climate summit in Glasgow in 2021.

The Canadian Securities Administrators – the umbrella group for provincial regulators – has halted their work that aimed to make climate disclosure mandatory for publicly traded companies. The U.S. Securities and Exchange Commission, which oversees the U.S. market, has also stopped work on climate disclosure, reflecting the Trump administration’s opposition to any regulatory efforts to combat climate change.

Given his pedigree as a central banker – and later adviser to the UN Secretary-General on climate finance – Carney could champion a global effort to embed the pricing of climate risks and opportunities in the international financial system.

Shawn McCarthy is an independent writer and senior counsel with Sussex Strategy Group.

The post Can Mark Carney fight climate change while supporting oil and gas? appeared first on Corporate Knights.

But Pierre Poilievre’s commanding majority in the polls evaporated when Donald Trump began threatening Canada’s sovereignty through trade sanctions. The Liberal Party saw a dramatic reversal of fortunes after Justin Trudeau resigned and was replaced by Mark Carney, a high-profile former investment banker who served as governor of the Bank of England during Brexit, and ran the Bank of Canada before that.

While Conservative voters see Carney as a likely continuation of what they regard as Trudeau’s profligacy, for Liberal voters the new leader represents a deft hand at the wheel and the possibility of responsible prosperity.

As a United Nations special envoy on climate action and finance, Carney was a key architect of the global framework for sustainable finance that has underpinned much of the progress in the energy transition since 2020. “Private value can be put in the service of public values,” he said at the Sustainable Finance Forum in Ottawa last November.

But times are changing fast, and even since he made those statements the situation for sustainable finance has deteriorated, with several climate-aligned financial networks – which Carney helped facilitate – unravelling in recent months. And with all the economic uncertainty and political instability, climate change has ceased to be a deciding issue for Canadians. Since the last election, the environment has slid from first to seventh place on a Vote Compass poll of top concerns for voters.

Even so, many of the key issues in the election carry major implications for Canada’s contribution to fighting climate change, as well as the country’s ability to navigate the energy transition and the impacts of a warming planet.

Comparing Liberal and Conservative energy policies

Carney acted quickly when he became prime minister to kill the consumer portion of the carbon tax and thereby remove the most contentious element of the Liberal government’s climate policy. In doing so, he undercut a key election promise by Poilievre, who campaigned long before the election call that he would “axe the tax.”

Poilievre is now taking aim at the industrial portion of the federal tax that applies to large emitters, although most provinces administered their own industrial carbon tax under federal standards. He has promised to kill the Liberal proposal to impose greenhouse gas emission caps on oil and gas facilities and to support Alberta’s plan to double crude production by building pipelines and export terminals for liquefied natural gas.

Poilievre says he would create “energy corridors” through which pipelines and transmission lines could be built quickly. He also says he would overhaul the federal Impact Assessment Act to ensure that resource projects are quickly approved. But he has offered little in terms of support for transitioning the Canadian economy away from dependence on fossil fuels to more reliance on renewable, nuclear and other low-emission sources.

Carney’s support for the oil and gas sector is tied to his belief that investing in decarbonization technologies like carbon capture is essential to reaching net-zero. “We should run towards that, because that is, in the end, where we can have the biggest impact on the climate,” he said at the Ottawa forum.

The New Democratic Party supports the industrial carbon price and would add a measure to help the competitiveness of Canadian industry: a carbon border-adjustment levy that would tax imports from countries that don’t have comparable carbon pricing.

The Green Party, for its part, says it would halt all new fossil fuel projects by 2045 and would stop government subsidies for oil and gas companies, investing instead in renewable energy. 

A momentary opening for fossil fuel infrastructure 

Carney came to the Liberal leadership with a strong record on climate change. As governor of the Bank of England, he led international efforts to require financial institutions to account for climate-related financial risks. He also served as an adviser on climate-related finance to the UN secretary-general in the lead-up to the Glasgow conference in 2021.

His election platform calls for Canada to become “the world’s leading energy superpower, in both clean and conventional energy.” That means more oil and gas infrastructure like pipelines and liquefied natural gas terminals, although Carney remains committed to the oil-and-gas emissions cap that would require the industry to sharply reduce emissions even as they aim to grow production.

 “In a world of declining fossil fuel consumption, Canada seems more likely to be among the earliest producers to fall than among the last standing.”

– Mark Winfield, professor of environmental and urban change, York University

Carney, too, would establish energy corridors, though he emphasizes the opportunity to build clean energy infrastructure, including interprovincial transmission. He would finalize clean energy tax credits and support spending on both natural carbon sinks and carbon capture projects.

Do Canadians really want more pipelines?

In a survey sent to subscribers of the Corporate Knights newsletter, respondents endorsed plans to reduce reliance on fossil fuels and speed up the transition to a clean energy economy.

In response to a question that garnered 385 responses, 52.5% said Ottawa should not offer incentives for new oil and gas pipelines or terminals because the environmental costs are too high. Only 17.7% offered unqualified support for such incentives, while 20.8% said yes if the Canadian resources would displace the use of coal overseas.

“Do not fall back on old habits,” one respondent wrote. “Pipelines are not the way to make Canadians richer.”

Respondents also supported federal efforts to drive the clean energy transition. Some 67% said the federal government should aggressively drive the adoption of green energy through regulations and incentives, “even if it means some higher consumer prices.” As well, 24% endorsed the federal role but only if it could avoid higher prices.

“Climate change is here and it’s hurting everyone and we need more than lip service paid to it,” another respondent wrote.

A wrong turn for Canada’s economic interests

Looking beyond the current crisis, some experts suggest that betting on fossil fuels is likely to backfire, not just in environmental, social and political terms, but also for the Canadian economy. “In a world of declining fossil fuel consumption, Canada – increasingly reliant on high-cost and high-carbon production like oilsands crude and fracked and liquified natural gas – seems more likely to be among the earliest producers to fall than among the last standing,” writes Mark Winfield, a professor of environmental and urban change at York University.

While the dramatic political changes in the United States seem to have created a renewed social licence for oil and gas infrastructure, many suggest that the real opportunity points in another direction: toward greater investment in renewables. “With the U.S. retreating from Biden-era climate action and Europe facing competing economic and security pressures, Canada might find an opportunity to position itself as a stable, climate-aligned investment destination,” writes Baltej Sidhu, an analyst at the National Bank of Canada and a specialist in sustainability and energy transition.

Research by the London Stock Exchange Group last summer found that, taken as a whole over the past decade, companies whose revenues come from reducing carbon emissions offered better returns than every other sector except tech.

Carney acknowledged the reality of renewable-energy dominance at the Ottawa conference in November: “Investment in clean energy is now more than twice the investment in conventional energy, but it needs to double again,” he told attendees. “In Canada, we will need to invest somewhere between $125 and $140 billion annually in this transition.”

What the two main parties are pitching for Canada’s industrial sector

Donald Trump’s erratic trade policies have also turned the election into a contest over who has the best plan to save Canada’s industries and put the country on a new international footing for trade. This spring, the U.S. president imposed 25% tariffs on Canadian steel and aluminum. Weeks later, he slapped 25% tariffs on cars, targeting an industry that supports more than 500,000 Canadian jobs.

As well as shaking up the federal election campaign, these tariffs are creating anxiety in steel-, aluminum- and auto-manufacturing communities in Ontario and Quebec. The tariffs are throwing thousands of jobs into jeopardy, while also threatening Ontario’s transition to electric vehicle production and green steel, and growth in low-CO2 aluminum in Quebec.

“Businesses have stopped their expansion plans or delayed them because of the uncertainty, because they don’t know what tomorrow looks like,” says Greg Dunnett, CEO of the Chamber of Commerce in the steel centre of Hamilton.

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In response, the Liberals imposed 25% counter-tariffs on U.S. steel, aluminum and cars. Long-term, the Liberal platform includes $2 billion for the auto industry to build “a fortified Canadian supply chain,” boosting competitiveness, protecting employment and advancing job training.

Carney has also said he would continue the current industrial carbon-pricing system in cooperation with the provinces, a policy that Poilievre has vowed to revoke. This is of key importance in Hamilton, where a proposed $2-billion decarbonization project at ArcelorMittal Dofasco is on hold until after the election. Industrial carbon pricing and federal-provincial subsidies are critical in making the project viable.

Poilievre has said he would continue the counter-tariffs until U.S. tariffs are removed and use the proceeds for tax relief and worker support. Poilievre has also promised to cut the GST on new Canadian-made cars and provide loans and tax credits for affected businesses.

There have been an estimated 6,000 temporary layoffs in the auto sector since the tariffs went into effect. But Flavio Volpe, president of the Canadian Automotive Parts Manufacturers’ Association, says there could be many more layoffs if Trump follows through with a threat next month to impose tariffs on auto parts, not just fully assembled cars. “The industry is headed for major operational shutdowns, stranding workers, suppliers and automakers across the continent,” he says.

Making the most of Canada’s critical minerals

Canada’s critical minerals have never been so coveted, thanks partly to Trump. In a hot-mic moment, weeks before he stepped down as prime minister, Justin Trudeau told a Canada-U.S. business summit that Trump’s threat of making Canada the 51st state was connected to the country’s plethora of critical minerals.

Carney is promising to invest in critical minerals by creating a “First and Last Mile Fund” to directly support clean-energy and critical-minerals projects as well as accelerate exploration and extraction from recycling. The party also proposes to attract, expand and de-risk investment in critical mineral exploration and extraction with additional investments in and expansion of existing tax credits.

Carney’s platform includes a “One Project, One Review” policy, which involves setting up what it would call a Major Federal Project Office with a new mandate to issue decisions on major projects within two years instead of five, while “fully upholding environmental integrity and Indigenous rights.”

Meanwhile, Poilievre proposes a “One and Done” rule for resource projects. He says he’ll set up a so-called Rapid Resource Project Office to handle all regulatory approvals across all levels of government and says there will be one application and one environmental review per project to speed up the approval process while “ensuring efficiency without sacrificing environmental standards.”

The Conservatives are also vowing a one-year maximum wait time for project approvals, with a target of six months “giving businesses certainty, cutting delays, and getting shovels in the ground faster.”

Canada’s mining industry, which has been pleading for this kind of attention for years, stands to gain no matter which party winds up in power. Other sectors tied to the energy transition may not be so lucky.

The post Climate takes a back seat, but the energy transition looms large over Canada’s election appeared first on Corporate Knights.

Canada’s national pension plan is getting poor marks for failing to pursue its commitments on climate change, even as some of the country’s top plans are taking concrete steps to meet their ambitious goals, says the watchdog group Shift Action for Pension Wealth and Planet Health in a new report.

The post Most Canadian pension funds recognize the urgency of climate change. Some don’t. appeared first on Corporate Knights.