During Monday night’s Liberal leadership debate, there was a lot of talk about President Donald Trump. But whatever your views on Trump, one thing is certain — he’s revitalized his country’s energy sector. Through executive orders, Trump instructed agency heads to identify “actions that impose an undue burden on the identification, development or use of domestic energy source” and “exercise any lawful emergency authorities available” to facilitate energy production and transportation. In other words, let’s become an energy superpower.
To avoid falling further behind, Canada must swiftly end policies that unduly restrict oil and gas production and discourage investment. Change can’t come soon enough.
Before Trump’s inauguration, red tape was already hindering Canada’s oil and gas sector, which was less attractive for investment than the United States. According to a survey conducted in 2023, 68% of oil and gas investors said uncertainty about environmental regulations deterred investment in Canada’s oil and gas sector compared to 41% in the U.S. Similarly, 54% said Canada’s regulatory duplication and inconsistencies deterred investment compared to only 34% for the U.S. And 55% of respondents said that uncertainty regarding the enforcement of existing regulations in Canada deterred investment compared to only 37% of respondents for the U.S.
This negative perception of Canada’s regulatory environment is hardly surprising given Ottawa’s policies over the last decade.
For example, one year after taking office, in 2016 the Trudeau government cancelled the previously approved $7.9-billion Northern Gateway pipeline, which was designed to transport crude oil from Alberta to British Columbia’s coast, expanding Canada’s access to Asian markets.
In 2017, Prime Minister Justin Trudeau undermined the long-term confidence in the sector by vowing to “phase out” fossil fuels in Canada.
In 2019, the Trudeau government passed Bill C-69, introducing subjective criteria including the “gender implications” of energy investment into the evaluation process of major energy projects, causing massive uncertainty around the development of new projects.
Also that year, the government enacted Bill C-48, which bans large oil tankers from B.C.’s northern coast, limiting Canadian exports to Asia.
In 2023, the Trudeau government announced plans to cap greenhouse gas (GHG) emissions from the oil and gas sector at 35% below 2019 levels by 2030 — an arbitrary measure considering GHG emissions from other sectors in the economy were left untouched. According to a recent report, to comply with the cap, Canadian firms must severely curtail oil and gas production.
As one might expect, these policies come at a cost. Over the last decade, investment in Canada’s oil and gas sector has collapsed by 56%, from $84.0 billion in 2014 to $37.2 billion in 2023 (inflation-adjusted). Less investment means less funding for new energy projects, technologies and infrastructure, and fewer job opportunities and economic opportunities for Canadians nationwide.
The energy gap between the U.S. and Canada is set to grow wider during Trump’s second term. While Trump wants to attract investment to the American oil and gas industry by streamlining processes and cutting costs, Canada is driving investment away with costly and often arbitrary measures. If Ottawa continues on its current path, Canada’s leading industry — and its largest source of exports — will lose more ground to the U.S. When Parliament reconvenes, policymakers must move quickly to eliminate harmful policies hindering our energy sector.
Julio Mejia and Elmira Aliakbari are analysts at the Fraser Institute