Was the Air Canada CEO turfed for his lack of French—or for something more concerning?

As outgoing Bank of England governor, Carney was comfortable nudging industry from the outside, declaring that firms must justify investment in fossil fuels and that the financial sector was not cutting back investments in oil and gas quickly enough. Now, in his role as Canadian prime minister, rather than letting the free market operate by simply removing the regulations stifling the energy industry, which is the leading engine of growth and economic value for Canada, Carney has made the federal government the ultimate decision-maker through its Major Projects Office, while also imposing an industrial carbon tax and other conditions (like the requirement for a carbon capture facility). Prime Minister Carney has indicated that Pathways Plus, a carbon capture and storage project, is a necessary condition for future pipeline construction. “There’ll be no oil pipeline that’s brought to the Major Projects Office, unless there is a decarbonization plan like Pathways,” he said. Canadian energy companies compete globally, but are now being required by the Canadian government to allocate costly capital and be subject to carbon pricing in ways that are not applicable to their competitors. Many knowledgeable industry participants are concerned that these imposed requirements will be costly to Canadians and make significant future potential investment uneconomic. Agreements for pipelines mean nothing if there is no incentive for private companies to invest. Witness the recent pause of Canadian Natural’s $8.25 billion Jackpine expansion due to regulatory and economic uncertainty. The establishment of a Major Projects Office was touted as the catalyst to expediting private investment, yet the message to the capital markets is that the government is taking an even greater role in dictating private capital allocation, as its approval (concentrated in the hands of a few individuals) is now required to make it on the major projects list. While this brings a commitment for a two-year review timeline, it stops short of providing any guarantee of overriding potential Indigenous or provincial resistance. And what of all the projects that aren’t elevated to the major projects list? Does that mean they receive even less attention now and become no longer investable? Why are the federal and Alberta governments at the centre of negotiating potential new pipelines and industry investment agreements? If the regulatory and fiscal environment were properly constituted, couldn’t it just be left to the private companies to decide if they invest or not? The fact that private companies must wait for governments to reach agreements and provide support means that something very serious is wrong. Canada’s approach to its Indigenous people has also complicated the investment arena, as it supports reconciliation and effective veto rights, making the government (and the courts) the ultimate arbiter of future disagreements. The recent agreement between the federal government and the Musqueam Band has highlighted the uncertainty caused by the overall approach to Indigenous matters, particularly as it relates to property rights in B.C. Persuasion to comply with the government agenda In a recent report on ESG Underground, Tammy Nemeth reveals how the federal government continues to pressure Canadian banks to reduce capital to the oil and gas industry via policy guidelines related to risk assessment and energy transition. The world is focused on energy security, yet Canada appears to be still stuck on energy transition. What are the right boundaries for governments? Most agree that a national government should act to defend our country, ensure the rule of law and judicial fairness, represent Canada in international affairs and trade matters, create and maintain an appropriate social safety net for its citizens, and ensure an appropriate and competitive environment for the conduct of business. But even though the government is failing on these matters, it still thinks it has the right to tell companies what to do. It’s time for governments to step back, cut regulations, and let private companies make their own decisions.