MEJIA, GREEN: Carney’s energy transition plan runs against tides of history

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In these uncertain times, it’s crucial that Canadian policymakers enact sound policy in areas under their control. That includes energy policy. During his nearly 10 years as prime minister, Justin Trudeau enacted a series of sweeping climate policies meant to transition away from fossil fuels. And Prime Minister Carney plans to keep nearly all those policies and advance the energy transition, albeit more gradually.

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But after nearly three decades of climate policy, the role of fossil fuels in Canada’s energy mix has essentially remained unchanged. In 1995, when Ottawa released its first climate change plan, fossil fuels supplied 76.7% of the energy Canadians used. By 2024 (the latest year of available data), that share was still 76.3%. And as Canada’s population and economy expanded, total fossil-fuel consumption increased by 25.9% over the same period.

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Costly policies

So, despite having seemingly little effect on energy use in Canada, how much have government climate policies cost Canadians?

As climate policies grew more aggressive under the Trudeau government, it became more expensive to produce, process and transport energy in Canada. Consequently, between 2014 and 2024, oil and gas investment plummeted from $84 billion to $35.7 billion (inflation-adjusted). Less investment hurts the sector’s capacity to hire workers, build infrastructure and advance new projects. In a video posted by Carney ahead of his trip to this year’s Calgary Stampede, he said Trudeau’s energy transition plan “was not sustainable over the long term.” But again, Carney plans to keep nearly all of it — including the industrial carbon tax, EV sales requirements and other policies — and advance the energy transition more gradually.

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But if decades of government efforts to force the transition have imposed high costs while producing little change, a slower version of the same approach is unlikely to succeed. Our policymakers should understand history — new energy sources rarely replace older ones completely. Before the Industrial Revolution, humanity relied largely on muscle power, wood, charcoal and other biomass fuels for heating, cooking and work. Yet even as coal, oil and natural gas gradually became dominant energy sources — a transition that unfolded over roughly two centuries — global consumption of older fuels (charcoal, wood, etc.) continued to rise. And billions of people in the developing world still rely on charcoal, straw and dried dung to meet basic energy needs.

Traditional sources still rule

Adding new energy sources, therefore, does not necessarily eliminate the need for established sources. Some more numbers — in 2024, fossil fuels accounted for nearly 88% of all energy produced in Canada. Despite Ottawa’s massive support for a low-carbon economy — including $70.5 billion in spending and tax credits over the last decade — wind and solar accounted for just 0.8% of the total that same year. And crucially, with demand for oil and gas projected to rise in Canada and around the world, policies that make energy production more costly in Canada will simply push investment, production and jobs to countries with weaker environmental standards.

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Mandating an energy transition has been a costly effort that, as PM Carney observes, runs against the tides of history. Cleaner technologies may eventually play a much larger role, but many technologies are not yet reliable, scalable or cost-competitive enough to support this transition. By continuing to pursue largely the same mandates and subsidies, rather than allowing technologies to expand as they become viable, the Carney government risks repeating the same mistake — only in slower motion.

Julio Mejia and Kenneth Green are analysts at the Fraser Institute

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