MEJIA, ALIAKBARI: Trump’s vow should see Canada rethink energy policy

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In three weeks, the U.S. will have a new president. And despite Donald Trump’s pledge to “unleash” the American oil and gas sector by cutting red tape and accelerating permit approvals, the Trudeau government remains committed to constraining Canada’s oil and gas industry.

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The result?

More investment to the U.S. and less to Canada. To prevent Canada from falling further behind the U.S., the government must reverse harmful policies that drive investors away.

Even before Trump’s victory, Canada’s oil and gas sector was less attractive for investment compared to the U.S. According to a 2023 survey of oil and gas investors, 68% of respondents said uncertainty about environmental regulations deters investment in Canada’s oil and gas sector compared to 41% in the U.S. And 54% said Canada’s regulatory duplication and inconsistencies deter investment compared to only 34% for the U.S.

This negative perception reflects years of policy decisions that have consistently undermined Canada’s oil and gas industry. To name a few. In 2016, just one year after taking office, the Trudeau government cancelled the Northern Gateway pipeline from Alberta to B.C.’s coast. The $7.9-billion project, previously approved by the Harper government, would have expanded market access and boosted exports to Asia.

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In 2017, the TransCanada energy company withdrew its application for the Energy East and Eastern Mainline pipelines from Alberta and Saskatchewan to the east coast, which would have expanded access to European markets.

The projects became economically unfeasible after the Trudeau government required the company to account for greenhouse gas emissions from oil production and consumption — not just transportation, a requirement that was never part of prior environmental assessments. (Incidentally, that same year Prime Minister Trudeau vowed to “phase out” fossil fuels in Canada.)

In 2019, the Trudeau government enacted Bill C-69, which introduced subjective criteria — including the “social impact” and “gender implications” of projects — into the evaluation of major energy projects, creating significant uncertainty. That same year, the government passed Bill C-48, which bans large oil tankers from B.C.’s northern coast, further limiting access to Asian markets.

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In 2023, the Trudeau government announced plans to cap oil and gas sector emissions at 35% below 2019 levels by 2030 — while leaving other sectors in the economy untouched. This will likely force energy producers to limit production.

And the government’s new methane regulations and rules, which require fuel producers to reduce emissions, have added to the sector’s costs and regulatory challenges.

Predictably, these policy decisions have taken a toll. Investment in the oil and gas sector plummeted over the last decade, from $84 billion in 2014 to $37.2 billion in 2023 (inflation adjusted) — a 56% drop. Less investment means less money to develop new energy projects, infrastructure and technologies, and consequently fewer jobs and less economic opportunity for Canadians across the country, especially in Alberta, which has been a destination for workers seeking high wages and more opportunity.

Now in 2025, Trump wants to attract investment by streamlining processes and cutting costs while Canada drives investment away with restrictive and costly regulations.

If Ottawa continues on this path, Canada’s leading industry — and largest source of exports — will lose more ground to the U.S.

To restore our competitiveness and attract investment, the federal government must rethink its approach to the energy sector and scrap the harmful policies that will hurt Canadians today and in the future.

Julio Mejia and Elmira Aliakbari are analysts at the Fraser Institute.

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