“For the first time in our history, every Canadian will hold a direct stake in what’s built,” he said April 27 in launching the fund, which will be known as the Canada Strong Fund. “We will make it easy for individual Canadians to invest in the fund and therefore own a small piece of nation-building projects and share in their returns.”

The idea of a sovereign wealth fund to invest public funds for the public interest is not new, even in Canada. The Heritage Savings Trust Fund operates on this basis in Alberta. The Caisse de dépôt – a public pension fund manager – operates with an economic development mandate in Quebec. Around the world, many governments have established national wealth funds, sometimes investing enormous surplus revenues from their oil and gas assets.

The distinguishing feature of the new Canadian fund is its individual investment mandate. The government is promising to create a retail product to support the fund, which it says will be widely available to average investors.

Green investors beware

On paper, the product sounds like it could be a hit, harkening back to the Canada Savings Bonds that were enormously popular with individual Canadians in the 1960s and 1970s as a way of earning decent returns while supporting the national interest.

The government said projects will be selected from the government’s Major Projects Office and other national-interest projects. The list will likely include port expansions, electric grid improvements, clean-energy facilities and public transit projects, which will have broad support. But the list could also include a whole host of controversial fossil fuel ventures, including liquefied natural gas terminals, pipelines and carbon capture projects, limiting the fund’s appeal.

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Tim Nash, president of Good Investing, a consulting firm that works with individual investors to create sustainable investment plans, says there won’t be much demand for the fund from green investors, who will be put off by its fossil fuel investments. But it could be very popular among investors who are concerned about Canada’s independence and want to support the country’s long-term development and economic security.

“The exciting thing for me is that Mark Carney talked explicitly about a retail offering, which to me is phenomenal,” Nash says. “I think this is targeted at a wider swath of Canadians who are really interested in Canadian sovereignty.”

A door to more?

According to the government’s spring economic statement released yesterday, the product will be easy to purchase, hold and transact, and will provide investors with protection for their initial capital. The fund will be an independent Crown corporation, professionally managed and operating on an arm’s-length basis from the federal government, investing in national projects on a fully commercial basis.

This is good politics, this is good economics. Across the board, we need a retail offering. I think there’s going to be a lot of energy around this.

– Tim Nash, president, Good Investing

Initial seed capital for the fund will come from a three-year, $25-billion commitment from the federal government. Carney said he expects the fund to grow over time as investments are sold and capital is reinvested.

Nash says he hopes the fund will inspire other retail investment products with government support. An investment product based on the Canada Growth Fund – similar to the Canada Strong Fund but with a clearer cleantech focus – would be very attractive to green and conventional investors, he says. Similarly, he says a Canada green bond widely available to individual investors would have strong demand.

Many questions remain

The background materials provided by the government are light on details, and a consultation is now proposed to iron out the many remaining questions. It’s not clear how the investment product will be structured, or whether it will be available through bank branches, financial advisors or directly from the government. It’s also not known how the principal investment guarantee will work or how much access investors will have to their funds given the long-term nature of the underlying investments.

Nash also says a top question is whether the fund will be eligible for tax-advantaged accounts, such as registered retirement savings plans. He calls this an absolute necessity to avoid the modest returns from the fund being depleted by income taxes.

If the government can get the basics right, however, Nash says, it could be very popular and replicated across other government programs to help bolster private investment. He says investment offerings in public programs could help to create popular support for them by giving people a direct stake in their success.

“This is good politics, this is good economics,” he says. “Across the board, we need a retail offering. I think there’s going to be a lot of energy around this.”

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

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But in the small Bavarian town of Geretsried, near Munich, a new geothermal plant is quietly signalling a paradigm shift for the industry, as recent technological advances have opened up new territories, enabling the production of clean, baseload power.

Calgary-based Eavor Technologies, a pioneer in what’s being called “next-generation” or “advanced” geothermal, is part of a small pool of start-ups that is borrowing technical expertise gleaned from the oil and gas industry to drill for heat far below the earth’s surface and send it back up as a source of low-carbon energy.

“It has one of the smallest footprints for power generation of any technology,” says Steve Grasby, president of Geothermal Canada, a non-profit that supports research and development of geothermal projects. “It’s also highly reliable; the power is always there. And it’s easy to ramp up and down as needed, unlike nuclear, which needs to run all the time.”

Eavor’s latest milestone was achieved on December 4, 2025, when it became the first geothermal company to deliver electricity to a commercial power grid at its Geretsried facility, demonstrating that its “closed loop” system is capable of supplying emission-free power at scale. For this project representing the culmination of a decade’s worth of research and development, Eavor bored sealed pipes nearly 4.5 kilometres into the earth, connecting more than 300 kilometres of boreholes underground. Now completed, the eight-megawatt electric and 64-megawatt thermal project produces enough electricity for 8,000 homes and enough heat for 120,000 homes. Another Eavor project is in the works in the Netherlands.

If geothermal is ever going to scale, it has to be a repeatable process you can do over and over. We think we’ve got the best way to do that.

– John Redfern, CEO, Eavor Technologies

The U.S. Air Force has also shown interest in advanced geothermal energy supply. In 2023, the Air Force began planning for two prototype-level geothermal projects at Mountain Home Air Force Base in Idaho and Joint Base San Antonio in Texas, awarding the Texas base project to Eavor.

Eavor believes its technology has the potential to generate power almost anywhere, and the firm has attracted hundreds of millions of dollars in venture capital with the promise of truly ubiquitous, dispatchable renewable energy. The venture capital arms of BP and Chevron have invested some US$40 million in Eavor, and, through the Canada Growth Fund, the federal government has funnelled $90 million to the company. Eavor has used investors’ capital on research and development to continue to scale up the number and size of its projects and trim costs.

Eavor is not the only player in the hydrothermal sector that is exploring new ways to dig for heat. Texas is a hub of innovation in next-generation geothermal power. Prominent start-ups, such as Sage and Fervo Energy, are based in Houston, which shouldn’t be surprising given that energy demand is surging in Texas, where Meta, OpenAI and Microsoft are building huge data centres.

In general, geothermal is becoming a growth sector as new drilling capabilities and other advances now enable projects to be developed across a much wider range of geologic settings than ever before.

What is geothermal energy and how does it work?

For more than a century, people have been using steam generated by deep underground water reservoirs that are heated by the earth’s mantle to power generators. Iceland and New Zealand get about 20% of their electricity from geothermal thanks to their volcanic landscapes, which host shallow, highly permeable underground heat reservoirs. Only a few sites on the planet, however, contain the geological conditions to support a geothermal system at scale, and geothermal contributes only a very small share of the world’s overall supply – approximately 16 gigawatts, representing less than 1% of total capacity installed worldwide. (The only commercial geothermal power plant in Canada is in Alberta, the Swan Hills Geothermal Power Project.) By comparison, wind and solar together supplied 17.6% of global electricity in the first three quarters of 2025, pushing the total share of low-carbon energy sources to 43%.

With the rise of next-generation technologies, geothermal could significantly raise its contribution to the world’s supply of renewable power. Key to both “enhanced” geothermal and “advanced” geothermal systems is that neither requires natural underground reservoirs. All that is required is the heat of the earth, which is available nearly everywhere.

Enhanced geothermal uses the fracking techniques of the oil and gas sector to drill into hot rock and create permeability.

Eavor’s advanced geothermal system forgoes fracking in favour of a closed-loop system. Started by veterans of the oil sector, Eavor has designed a kind of underground radiator where fluid is circulated through a closed loop of vertical pipes that connect a network of horizontal pipes deep within the earth. Absorbing heat from the rock, the temperature of the working fluid rises and is then pumped up to ground level to generate heat and power.

“If geothermal is ever going to scale,” Eavor’s chief executive, John Redfern, told The New York Times in 2023, “it has to be a repeatable process you can do over and over. We think we’ve got the best way to do that.”

Low risk, high rewards

Besides the scarcity of suitable locations, geothermal has long been hampered by its high capital costs, the bulk of which are spent on drilling, which can eat as much as half the cost of a project.

Still, as greater efficiencies are realized, costs are coming down – by an impressive 22% from 2021 to 2022 alone. Some systems are even cost-competitive with gas plants and cheaper than coal. Moreover, once built, geothermal is much cheaper to operate than other dispatchable sources like coal, gas and nuclear.

While some experts believe it possible to create geothermal energy almost anywhere, Grasby does offer a caveat. “You can’t really do this just anywhere. In some places, you may have to drill much deeper to get to the heat you need. Rocks vary in thermal connectivity; some rocks have high connectivity and others are low in connectivity. You need a certain temperature to make the system work.”

In Canada, as well, permitting and regulatory regimes have yet to catch up to the latest developments in the geothermal world. According to Grasby, only three provinces currently regulate geothermal energy production: Alberta, British Columbia and Nova Scotia.

Updates to regulatory frameworks may yet emerge should the momentum behind geothermal continue, especially given that hydrothermal offers round-the-clock, on-demand power, unlike wind and solar.

New analysis from the International Energy Agency forecasts next-generation geothermal as representing up to 800 gigawatts of clean electricity capacity by 2050 – roughly 50 times the world’s current geothermal capacity of around 16 gigawatts.

Analysts at Ember, a U.K.-based energy think tank, anticipate that geothermal will quickly accelerate, reporting that by 2030, nearly 1.5 gigawatts of new capacity is expected to come online each year globally, three times the level added in 2024. By 2050, geothermal could meet up to 15% of the growth in the world’s demand for clean power.

As a net-zero economy looks increasingly precarious, the latest geothermal breakthroughs offer a solution to the supply of firm, low-emission energy thanks in large part to the tools and expertise that originated in the oil field.

Victoria Foote is a writer and editor who specializes in clean energy and climate.

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Green hydrogen skeptics correctly observe that the sector has shifted, but they misread what that shift represents. Green hydrogen is moving from early-stage hype to disciplined execution, as capital markets and policymakers concentrate on projects with bankable fundamentals and credible buyers. That winnowing process is not evidence of collapse; it is how clean-energy sectors mature.

Pointing to the cancellation or redesign of a single wind-to-hydrogen project as proof the sector was a fad misses how large infrastructure markets evolve. Projects routinely shift as financing conditions, regulation and demand signals mature, while other proponents continue advancing through permitting, engineering and offtake negotiations. It also overlooks the policy architecture Canada and its trading partners have built to integrate renewable hydrogen into industrial decarbonization, heavy transport and export value chains.

As the sector moves from headlines to creditworthy grid-integrated projects, simplistic narratives risk misleading communities and investors.

Momentum across Canada

Across Atlantic Canada, green hydrogen projects are progressing in a more measured, credible way than early hype suggested. These initiatives are grounded in strong wind resources, proximity to export markets, and provincial strategies that explicitly tie hydrogen to industrial decarbonization and rural economic development.​

Nova Scotia’s Department of Environment and Climate Change has already approved two large‑scale green hydrogen and ammonia projects along the Strait of Canso, designed to use onshore wind power for exports to Europe.​ EverWind and Membertou are also advancing Nova Scotia’s largest wind buildout (more than 650 megawatts) and a multibillion‑dollar export complex, supported by Germany’s interest in Atlantic Canadian green ammonia. These developments signal that serious international buyers still see this region as strategically important.​

Newfoundland and Labrador has selected multiple proponents – including EverWind, Abraxas Power, Toqlukuti’k Wind and Hydrogen, and North Atlantic Refining Limited (NARL) – for multi‑phase green hydrogen and ammonia export projects, underpinned by a dedicated Hydrogen Development Action Plan that positions the province as a “clean energy centre of excellence.”​

Most recently, EverWind secured a major strategic investment of $240 million to advance its Nova Scotia wind portfolio and green fuels platform, reinforcing that capital is still flowing to credible Atlantic Canadian projects.

Quebec alone has mobilized nearly $10 billion in public and private investment over the coming decade, with major projects including TES Canada’s multibillion-dollar green hydrogen facility, Air Liquide’s 20-megawatt PEM (proton exchange membrane) electrolyzer in Bécancour, StormFisher’s Varennes e-methanol plant, and Enbridge’s 20-megawatt Gatineau project injecting hydrogen into the gas grid. The province’s hydrogen road map and “Vallée de la transition énergétique” are anchoring multiple industrial deployments in existing clean-power assets.

Elsewhere, Ontario’s Niagara Hydrogen Centre (Atura Power) will link a 20-megawatt electrolyzer to the Sir Adam Beck hydro station, while federally supported projects – such as Air Products’ net-zero hydrogen energy complex in Edmonton and AVL Fuel Cell Canada’s research and development facility in Burnaby – underscore that hydrogen development is advancing across multiple provinces under coordinated strategies.

International market signals

Globally, the sector’s trajectory is clear: low-carbon hydrogen production is up roughly 60% since 2021, installed electrolyzer capacity has grown ninefold, and investment in electrolyzers and carbon capture has expanded from about $500 million in 2021 to nearly $8 billion in 2025.

At the same time, the European Hydrogen Bank is translating policy into real demand: its first auction awarded roughly €720 million in production-linked support to projects in Spain, Portugal, Finland and Norway, while its second round was four times oversubscribed – 61 bids seeking €4.8 billion against a €1.2 billion budget – supporting plans for 6.3 gigawatts of electrolyzers and 7.3 million tonnes of renewable hydrogen over 10 years.

Moreover, in January 2026, the European Commission approved €200 million in German state aid for Canadian-produced renewable hydrogen exports to the EU: a clear demand signal for Canadian green hydrogen.

Together, these successes make clear that global hydrogen markets are not retreating; they are institutionalizing long-term demand through scaled capital deployment and binding policy frameworks, creating tangible export opportunities for credible Canadian projects.

What serious hydrogen development looks like

Yes, interest in green hydrogen has cooled since the early-2020s hype, and some capital has pulled back. But policy frameworks, climate mandates and declining technology costs continue to underpin long-term demand growth toward 2030 and beyond. To be clear: Canada’s approach is built on that multi-decade horizon – not a short boom cycle.

Green hydrogen will not succeed everywhere, nor should it. Project cancellations are a sign of market discipline, not collapse. What’s actually happening in the green hydrogen sector is a shift from hype-driven, “anywhere, at any cost” projects toward fewer, better-sited hubs that align cheap renewables, strong grids and real customers. Countries that move early in this more disciplined phase will shape future clean-energy trade. Canada has the assets to compete – if it stays the course.

David Billedeau is president and CEO of the Canadian Hydrogen Association. Derek Estabrook is executive director of the Atlantic Hydrogen Alliance. Michèle Landry is directrice générale of Hydrogène Québec.

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I’ve never bought a Canadian flag before. But I surprised myself when the daily Trump “51st state” insults ignited a desire in me to fly our country’s colours. Given how long the flag and flagpole I wanted were out of stock at Canadian Tire, it seems that many other Canadians felt the same.

This month’s avalanche of “year in review” articles on the Trump presidency (one down, three to go!) was a reminder of just how unprecedented this past year has been. And judging by the reaction to the prime minister’s speech in Davos, much of the Western world has had similar feelings.

Twelve months ago, would any of us have guessed that the very existence of our country would be regularly belittled by our alleged closest ally – our national sovereignty threatened by a late-night social media post? Or that some of our key industries, like steel and cars, would be fighting for their survival because of crushing Trump-imposed tariffs, or that European countries – NATO members – would be moving troops to Greenland in a not-so-subtle attempt to dissuade a U.S. invasion, with Canada under pressure to join too?

In 2026, there is every indication that Trump’s unhinged behaviour will get worse, not better.

He’s already referring to the Canada-U.S.-Mexico free trade agreement (CUSMA) – the renegotiation of which kicks off this year – as “irrelevant” to the United States and has targeted the Canadian automobile industry for extinction. He seems deadly serious about undermining the independence of the U.S. Federal Reserve and using his politicized Department of Justice to silence any criticisms.

Nothing about this is “business as usual.” And it has prompted an unprecedented degree of anxiety: roughly three-quarters of Canadians now believe the United States poses an economic threat, and 53% say it poses a national security threat as well.

Climate change policy is caught right in the middle of all of this.

As he explained at length in a speech at the United Nations in September of last year, Trump believes that climate change is a “con job” and that renewable energy, such as wind and solar, is a “scam” that should be eliminated. Instead, he is focused on dramatically expanding oil and gas production and recently demonstrated he is even prepared to forcibly depose foreign leaders to achieve this.

2025 was defined by uncertainty on climate policy in Canada that needs quick resolution

Meanwhile, in the rest of the world, decarbonization is accelerating, not slowing down. We’ve seen it with electric vehicles, with renewable power, with global investment in clean technologies and with carbon border tariffs, to name just a few. And these trends are accelerating in the countries Canada needs to diversify its trade and strengthen its economic prospects.

Bottom line: things powered with fossil fuels are the technologies of the past. (And I mean this literally: sales of gasoline-powered cars peaked globally in 2018.) Things powered by electricity are the technologies of the future. Those countries that produce the building blocks of a decarbonized economy – including critical minerals, batteries, clean electricity, and electrical machines like heat pumps and EVs – will prosper. Those that don’t will be left behind.

The challenge for Canada is to escape the evil tractor beam of Trump’s bad ideas. To set a course of our own for the benefit of all Canadians.

Doing everything we can to decarbonize Canada isn’t just something we’re doing to reduce emissions. It’s a contribution to a better future for our country.

Yes, we need to deal with the clear threats posed by Trump in the short term, but at the same time we need to lay track for a decarbonized economy that is rapidly gaining momentum.

Decarbonization is an act of patriotism.

In amongst the recent “Trump year in review” media this month was a healthy dose of polling. Trump’s popularity is down. Way down. It turns out a U.S. electorate that supported him in hopes that he’d make their lives more affordable isn’t warming to his quixotic and destabilizing foreign policy interventions.

I don’t know exactly when, but sometime in the next few years – at this rate, starting with November’s U.S. midterm elections – the forces of MAGA are going to start losing. At that point, the damage from climate change will be more evident than ever, and the economic gravity of cheaper solar, batteries and EVs will be impossible to resist. Climate action will ramp up even stronger than before.

Canada needs strong climate policy to be competitive in countries beyond the U.S.

Our goal has to be to ensure that we have leapfrogged the United States by then to ensure that our economy is positioned to prosper.

We see the first inklings of what’s possible in this regard with recent news that the Trump administration’s unlawful quashing of New England offshore wind projects is increasing investment interest in Canadian projects. And the recent deal with China on EV tariffs is being positioned by our federal government as the first move in a strategy for Canada to build North American leadership in electric vehicles: smart.

In 2026, arguments for climate progress need to keep these global dynamics front and centre. The transition to a cleaner economy isn’t just the answer to the atmosphere’s chemical challenges, but to Canada’s economic ones as well.

In short, decarbonization should come wrapped in a Canadian flag.

Rick Smith is president of the Canadian Climate Institute, the co-author of two bestselling books on the effects of pollution on human health, and the executive producer of Plastic People, a 2024 documentary chronicling the damage done by microplastics in the human body.

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The four plaintiffs allege that the CPPIB has breached its duties by mismanaging climate-related financial risks. Their case argues that the pension manager is dramatically underestimating its exposure to the financial risks of a warming planet. In its 2025 annual report, the investment board estimates only a 4% loss in a “hot-house world” scenario where temperatures rise by 3°C. But scientists warn that such a trajectory would bring devastating impacts to global economies, financial systems and human livelihoods. No portfolio could withstand the impacts of that much warming. Yet CPPIB has continued to commit billions to the cause of the crisis: fossil fuel expansion.

“Our case is alleging that CPP Investments is mismanaging our pension fund by failing to adequately respond to climate change,” explains Rav Singh, one of the young applicants. “CPP is supposed to be one of our most reliable sources of retirement income. We should all be concerned that our CPP benefits may not be as dependable as we’d like to think.”

This case is among the first of its kind, where beneficiaries are asking the courts to hold their pension manager accountable for mismanaging climate risks. The applicants are not seeking money; they are asking the court to direct CPPIB to identify, assess and manage climate risks appropriately and transparently, in line with its mandate to invest without “undue risk of loss” and act in the best interests of contributors and beneficiaries.

CPPIB has acknowledged that climate change is “an existential threat . . . the single biggest investment risk that we face.” In March 2025, CPPIB published an interview with climate scientist Johan Rockström, who warned, “We cannot continue allowing ourselves to destroy the stability of the climate system, and quite frankly the stability of the planet, by subsidizing unsustainable investments.”

Despite recognizing the threat, CPPIB’s climate approach tells another story. Its risk modelling assumes CPP resilience at more than 3°C of warming. According to the Intergovernmental Panel on Climate Change, 3°C of global warming could expose 3.25 billion people to lethal heat and humidity, decimate fresh water supplies and global food production, cause the extinction of plants and animals, lead to the collapse of marine ecosystems, and trigger catastrophic sea-level rise. It is imprudent to suggest that CPPIB can fulfill its mandate – or that Canadians can enjoy retirement security – under such catastrophic climate outcomes.

Meanwhile, last year CPPIB abandoned its net-zero commitment, reversing its 2022 statement that stewarding the portfolio to net-zero emissions was in “the best interests of the contributors and beneficiaries of the Canada Pension Plan.” The net-zero reversal was approved by a board on which nearly one-third of CPPIB directors held roles with fossil fuel companies, raising questions about potential conflicts of interest.

In the months following that reversal, CPPIB doubled down on fossil fuels: investing $4.1 billion in Sempra Infrastructure, which builds new gas pipelines and export terminals, and $1.4 billion in AlphaGen, owner of 23 fossil fuel power plants. These are not “transition” investments – they are bets on the continued expansion of fossil fuels.

When journalists asked CPPIB to explain how this climate litigation could be “an action against 22 million Canadians’ retirement security,” as articulated in its approach to climate risk, the fund didn’t respond. As applicant Aliya Hirji said, “I don’t want to be suing my pension. But I want to retire on a stable pension into a livable future. If taking CPP Investments to court is what’s needed to achieve that, so be it.”

The reality is that many of CPPIB’s peers are already showing what responsible, climate-aligned investing looks like. ABP, Europe’s largest pension fund, affirms that “Building good pensions together in a liveable world [is] our mission . . . A liveable world demands a sustainable economy.” La Caisse, which manages the Quebec Pension Plan, has exited coal and oil entirely and tied staff compensation to climate goals – actions it says have improved the fund’s financial position. And Ontario’s University Pension Plan directly links its fiduciary duty to climate responsibility, stating that “Climate change stands out among the significant material risks to our portfolio, demanding immediate action in line with our fiduciary responsibility.”

CPPIB is one of the world’s largest and most sophisticated investors. It has the tools, talent and resources to manage climate risk responsibly – but it must choose to actually do so. Protecting the CPP means protecting the climate that Canadians will retire into. Climate stability and pension sustainability are not opposing goals. They are inseparable.

Cheryl Randall is the campaign specialist and Patrick DeRochie is the senior manager for Shift Action for Pension Wealth and Planet Health, a charitable project that tracks the fossil fuel investments and climate policies of Canadian pension funds, and mobilizes beneficiaries to engage their pension managers on the climate crisis.

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The year started and ended with considerable uncertainty, but for different reasons. On the front end of the year, this was due to the federal election, where – depending on the outcome – a wholesale dismantling of Canada’s policy architecture was a real possibility.

But after a come-from-behind victory by Mark Carney’s Liberals, it became clear that the question ahead was a different one: what will Canada’s climate-policy approach include and how effective will it be at reducing emissions and supporting competitiveness in an era of disruption spawned by Donald Trump?

As the year comes to a close, we have a better idea of what some of that is likely to include: stronger industrial carbon pricing, stronger methane rules for oil and gas, finalized clean-electricity tax incentives, a climate investment taxonomy, support for critical minerals and more. But a fair number of these policy wins are still marked with ongoing uncertainty, including some of the most impactful on the list such as industrial carbon pricing.

Earlier in the year, my colleagues and I at the Canadian Climate Institute outlined a handful of top priorities the government could focus on to make meaningful policy progress. This was especially important given that our research showed that Canada was not going to be able to reach its 2030 emissions target and needed a course correction. That finding was confirmed this week by the federal government’s progress report on its climate plan.

Of the six policies we originally identified to get the country on the path to progress, three remain unfinished or uncertain.

Canada needs fast action on its new climate competitiveness strategy

The government has committed to strengthening industrial carbon pricing, but the details here will make or break this policy. Getting it right is especially important in light of the recent  memorandum of understanding with Alberta, which pushes any clarity on this out to April of next year.

The MOU agreement is vague on specific outcomes: it agrees to increase the minimum carbon credit price to $130 per tonne of emissions – roughly six times the current level – but it doesn’t define a timeline. To be credible, both governments need to agree that this price should be reached by 2030.

Already we’ve seen worrying signs. The ink was barely dry on the MOU when the Alberta government went tinkering with their carbon-pricing system to further weaken it, just one week after the signing.

On a more positive note, the federal government finalized stronger methane rules for the oil and gas sector. Action on methane is a no-brainer, representing some of the lowest-cost actions available. The feds and Alberta need to agree to an effective equivalency agreement to ensure that the level of reduction committed to by the federal government – 72% by 2030 – is achieved. But this is generally good policy news.

On clean electricity, the federal government is currently implementing its long-promised investment tax credits in legislation, which should be passed early next year. And while the government appeared to reaffirm its commitment to the Clean Electricity Regulations, the MOU again undermined that with a carve-out for Alberta.

That risks copy-cat requests from other provinces and a race to the bottom in other areas of climate policy. For the moment, we’re holding out hope that the two parties can negotiate something approaching equivalency on this file.

On electric vehicles, the government has paused its Electric Vehicle Availability Standard and consumer incentives, throwing into question one of the only policies Canada has to reduce emissions in the transportation sector.

Government has said that more information about the future of that policy should be coming soon, but the uncertainty has stymied EV sales in the country, which were previously rising steadily year over year. Maintaining a strong standard will help Canadians find better, more affordable vehicle options, while creating flexibility for vehicle manufacturers.

A fork in the road for the Canadian climate change discussion

The clearest case for progress has been with the federal government’s commitment to implement sustainable investment guidelines – also known as the climate taxonomy. The government has tasked the Canadian Climate Institute, working with Business Future Pathways, to do the technical work that will underpin the guidelines in order to help drive private investment into projects that are in line with the global energy transition.

Add it all together and we’re left with a policy picture that is still muddled.

That’s particularly unsettling given the stakes here: 2025 was also marked by the second-worst wildfire season in Canadian history. That meant people were faced with evacuation orders and alerts, especially those in remote and Indigenous communities. It meant millions of Canadians saw their neighbourhoods blanketed in toxic wildfire smoke for days at a time. And B.C.’s Lower Mainland recently had its major highways cut off from the Interior of the province, and floodwater is pouring into Abbotsford after an atmospheric river drenched the coast. That’s eerily reminiscent of the 2021 atmospheric river event that devastated much of the province and left billions of dollars in economic losses in its wake.

Yet, when it comes to concrete actions to protect people and communities across Canada, much is left wanting from all orders of governments.

All this is happening as clean and electric technologies – like renewables, batteries and electric vehicles – continue their inexorable march to transform global energy markets.

That on its own holds enormous potential to dramatically reduce future damages from climate change. It also offers a massive opportunity for Canada to increase prosperity, support affordability and bolster competitiveness in a world responding to new trade relationships.

Looking to the year ahead, Canada needs to resolve the policy uncertainty that’s standing in the way of progress as soon as possible. The problems we face are urgent, but the solutions are right in front of us.

No more grandiose rhetoric please: all I want for Christmas is some concrete delivery of long-promised climate change policy by Canadian governments.

Rick Smith is president of the Canadian Climate Institute, the co-author of two bestselling books on the effects of pollution on human health, and the executive producer of Plastic People, a 2024 documentary chronicling the damage done by microplastics in the human body.

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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.

How transforming Canada’s electricity grid could drive decarbonization, save billions

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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The new strategy is an important moment for action to both reduce emissions in the country and support economic competitiveness in uncertain times. It follows months of speculation and some policy signals that introduced significant uncertainty about the government’s climate commitments.

The verdict? It ain’t perfect, but the strategy is a useful step forward.

Now the government needs to quickly implement it and flesh out the details it promises. That’s critical if Canada hopes to dramatically increase investments in low-carbon projects across the country and reduce uncertainty for businesses that stalls economic development. There’s never been a more urgent time: Canada’s trading partners are accelerating their energy transitions and Canada risks missing out on big economic opportunities right when they’re needed most.

So, what are some of the central pieces of the climate strategy that are encouraging – and where are some of the biggest uncertainties?

Top on the list is the commitment to strengthen industrial carbon pricing. This is one of the most important things the federal government can do to cut emissions while keeping costs low for businesses and having virtually no impact on the costs for consumers.

That last part is critical. Misinformation about this policy has ramped up recently, and it’s worth underlining that research shows that industrial carbon pricing has negligible costs for the average Canadian. The impact is around 0% on household consumption, according to Canadian Climate Institute research. There are a number of reasons for that: the carbon price applies to large emitters only; it adds very low costs on those businesses (think a Timbit per barrel of oil); moreover, these already-low costs on industrial goods are a small fraction of the final costs for finished consumer goods.

The climate competitiveness strategy commits to fixing the industrial-carbon-pricing benchmark, which defines minimum standards for provincial systems. It also commits to strengthening the backstop, which will be decisively applied in provinces that do not meet the benchmark. In addition, the government will be setting a carbon-price trajectory that is measured in decades and sets Canadian industry on the path to net-zero emissions.

Each of these commitments is positive. But the details here will matter greatly; it’s no exaggeration to say they will make or break this policy’s effectiveness, for both Canada’s emissions and its competitiveness.

Some other highlights included a commitment to finalizing methane regulations for oil and gas, which has been a long-standing promise to slash these powerful emissions by 75% over the next five years. Canada has already made big progress here, and these are lower-cost emission reductions that provide opportunities for innovative Canadian companies to lead the charge.

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The strategy also recognizes the importance of dramatically increasing investment into Canada’s electricity system: it commits to soon implementing the clean electricity investment tax credit and restates its commitment to the clean electricity regulations. It recommits to finalizing a national climate investment taxonomy for the financial sector by the end of 2026. And it dedicates $2 billion for a critical minerals sovereign fund to invest in critical mineral projects and companies using equity investments, loan guarantees and offtake agreements. These financial risk-sharing tools can unlock private-sector investment in Canadian projects to help seize a growing opportunity in the global energy transition.

There was nothing new on the fate of the Electric Vehicle Availability Standard, though we should hear more “in the coming weeks.” And the strategy is almost silent on climate adaptation. Investing in adaptation is not just a “nice to have”; upgrading infrastructure for extreme weather will be crucial to saving billions of dollars in costs from disrupted trade and other economic impacts, and should be a key component of any climate competitiveness strategy.

I’m often asked my opinion on how the new government is doing on climate change. My honest answer is “I’m hopeful but increasingly impatient.” Now that the government has declared its climate change intentions, it’s time to get a move on.

Rick Smith is president of the Canadian Climate Institute, the co-author of two bestselling books on the effects of pollution on human health, and the executive producer of Plastic People, a 2024 documentary chronicling the damage done by microplastics in the human body.

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In recent policy statements and conference appearances, officials at the Office of the Superintendent of Financial Institutions (OSFI) have sketched the outlines of a plan to unlock hundreds of billions of dollars – perhaps even as high as $1 trillion from the banking industry alone – for this mammoth undertaking.

OSFI head Peter Routledge, who holds the title of superintendent of financial institutions, says Canada’s financial system is so well capitalized that additional loan volumes or equity investments would not threaten the stability of the industry. Banks, for example, could make nearly $1 trillion in additional loans and remain above minimum regulatory capital requirements, he said last week at a financial industry summit.

“I do believe Canada’s financial system is in a strong position to help the economy adapt to our new economic environment,” he said in a speech hosted by the Global Risk Institute on September 17. Additional loans of $1 trillion would have a substantial impact on the Canadian economy, which, as Routledge pointed out, has a value of about $3 trillion in terms of gross domestic product in 2024. “Canada’s banks have ample capacity to help fund the country’s adjustment to this new era.”

Life insurance companies, which have boosted their capital over the last six years, have “ample capital buffers that can similarly be leveraged for new investments in the Canadian economy,” Routledge said.

Freeing up capital from insurers

Routledge said the Canadian economy and its financial sector are facing a level of turmoil not seen since the end of the Cold War in 1991. “The current era is no less bracing than that time. From escalating geopolitical instability and cyber threats to climate change; from domestic shifts to technological innovation; the risks and opportunities facing Canadian financial institutions are complex and consequential,” he said. OSFI “will enable Canadian financial institutions to play a central role in reinforcing Canada’s economic strength in this era of great uncertainty.”

This is not a philanthropic pursuit. This is a business strategy so that we have long-term resiliency. When you’re thinking 25 to 50 years out, you need to think about what the future economy is going to look like, and whether your investments will be there.

– Laura Zizzo, founder, Manifest Climate

In an example of the reforms to come, in July OSFI changed its life insurance capital adequacy regulations, which are the rules mandating how much capital life insurance companies must maintain as a buffer against potential losses on money they invest from policyholders and other customers. Under the new rules, life insurance companies can reduce the amount of capital set aside on investments in public infrastructure projects. The capital charge on debt investments in such projects drops to 3% from 6% and to 30% from 40% on equity investments. The aim is to free up the industry’s capital to create an incentive to invest more in infrastructure.

The life insurance industry welcomes these changes “as something we’ve long advocated for,” Blair Stransky, vice president of the Canadian Life and Health Insurance Association, said in a statement. The new rules “will help unlock significant investments, or billions of dollars, and accelerate national infrastructure projects.” The association estimates that life insurance companies held $50 billion in infrastructure investment in 2024.

The insurance company changes are only one facet of OSFI’s regulatory overhaul. OSFI has rescinded 20 guidelines to streamline regulation and paused some new capital requirements on banks as part of the federal government’s recently announced red-tape review. In remarks at another industry event in early September, Routledge also suggested OSFI may incentivize banks to increase their lending to the defence sector in keeping with the federal government’s pledge to boost military spending. More details will be announced in October, Routledge said.

Climate infrastructure is not charity

The life insurance changes will help the industry adapt to the transition to a low-carbon economy if they use this opportunity to invest in sustainable infrastructure, says Laura Zizzo, founder and chief strategy officer with Manifest Climate. Examples of sustainable infrastructure include flood-protection facilities, carbon capture projects, smart grids and renewable energy. “This is not a philanthropic pursuit. This is a business strategy so that we have long-term resiliency,” she says. “When you’re thinking 25 to 50 years out, you need to think about what the future economy is going to look like, and whether your investments will be there.”

In a joint brief with Corporate Knights to OSFI in 2021, Manifest, which uses artificial intelligence models to advise companies on climate risk, argued that losses on infrastructure investments are lower than on many market investments and capital requirements could be safely lowered, a suggestion implemented with the July changes.

In addition to relaxing the capital adequacy rules, Zizzo says, it’s reassuring that OSFI is holding firm on climate disclosure requirements for financial institutions. By holding the line on climate disclosure, OSFI is bucking the anti-climate backlash by United States and Canadian securities regulators, which shelved similar requirements for corporate stock issuers earlier this year.

Some Canadian insurance companies are recognizing the value of investments in sustainable infrastructure. Great West Life is partnering with Power Sustainable, an arm of parent company Power Corp., investing about $1 billion in sustainable food and infrastructure and renewable energy.

Sun Life has invested $4.2 billion in renewable-energy investments, about one-quarter of the company’s total infrastructure investment of $17.2 billion, according to figures cited by CEO Kevin Strain at the company’s annual meeting in May.

The OSFI reforms come at a time when the Liberal government of Mark Carney is under pressure to make good on his campaign commitment to make Canada into a conventional and clean energy superpower. The prime minister’s office did not respond to a request for comment on the OSFI reforms. However, Carney has said the government’s major projects office will play a key role in securing finance for projects on the national fast-track list.

A recent BloombergNEF report revealed that Canada’s big banks seem to be onside with the conventional-energy part of Carney’s ambition, but not so much on the clean energy side. The report shows that Canada’s major banks provided about $200 billion in fossil fuel lending and other financing in 2024, compared with about $104 billion to low-carbon energy. However, globally, in the first six months of 2025, banks and other financial institutions appear to be turning away from fossil fuels and increasing financing to renewables.

The scale of investment still not known

For now, the financial industry is non-committal on how much and what kind of investment could be financed from the OSFI reforms.

“At this point, we don’t know fully what the impacts of the OSFI changes will be on the insurance sector, but we welcome these changes and are watching with interest to understand what opportunities may exist to invest in Canada,” Stransky said.

The Canadian Bankers Association didn’t comment specifically on the OSFI reforms but in a statement said that “we can unlock growth, boost productivity and build long-term prosperity” through improvements in internal trade, infrastructure investment, financial regulation and tax policy, support for innovation, and fighting financial crime.

As the federal government’s major projects strategy names more infrastructure projects for fast-track approval, pressure will grow on Canada’s financial institutions to get on board with financing deals. It remains to be seen what mix of traditional and sustainable infrastructure and commercial deals will be made as the capital taps are loosened.

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

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