Climate Competitiveness Strategy a quiet step toward policy certainty business needs
Amid the major project hoopla surrounding LNG, critical minerals and the ongoing squabbling over pipelines, Budget 2025 also quietly unveiled the Carney government's Climate Competitiveness Strategy. It is the first concrete sign that the prime minister is still serious about a priority that the Trudeau Liberals never stopped talking about.
‘I’ve been meeting with climate leaders from around the world, Indigenous leaders, advocates, workers, and youth who are coming together to advance climate action for a cleaner, more resilient future. Canada is focused on results — for our environment, our communities, and our economy,’ Environment and Climate Change Minister Julie Dabrusin wrote on social media. / TWITTER PHOTO
Businesses can and should take a leading role in cutting greenhouse gas emissions, but only if government provides the stable policy environment needed for long-term investment, says Geoff McCarney, executive director of the Smart Prosperity Institute.
“Government will respond to business if business looks to the future and sees that ultimately, if we aren't competitive in a low carbon economy, we are not going to be competitive globally,” McCarney told Means & Ways.
But he warned that companies cannot shoulder the burden alone, because they also need to meet objectives for their stakeholders, shareholders, employees and customers. And they need to make sure they’re competitive along the transition pathway.
“That's why the type of policies and what we see the government doing really matters,” McCarney said, adding that climate-aligned investment depends on predictable rules. “Nothing undermines business decision-making more than uncertainty in the policy environment.”
His comments come as the federal government launched its Climate Competitiveness Strategy in the 2025 budget, and as the UN Conference of the Parties on Climate Change (COP30) wrap up meetings in Brazil.
After not speaking about climate as a priority since forming government, the Liberals’ Climate Competitiveness Strategy outlines how the federal government intends to strengthen the country’s economic position while reducing emissions. It argues that global markets are shifting toward low-carbon products and technologies, and Canada must lower the emissions intensity of its industries to remain competitive.
“With the Climate Competitiveness Strategy, we are positioning climate action and economic growth as inseparable, aiming to build a stronger, more sustainable, and more competitive Canada for decades to come,” Environment and Climate Change Minister Julie Dabrusin said in a press release. “This will help us take action in a way that prioritizes affordability for Canadians and strengthens our economy.”
McCarney said Ottawa hasn’t yet shown that measures will be strong enough to meet Canada’s climate commitments. “It's not at all clear that a commitment is being made that those programs will be strong enough to continue to meet those targets.”
‘Thin’ strategy
University of Ottawa professor Nicholas Rivers, who focuses on the economic evaluation of environmental policies, agreed, calling the strategy “thin.”
“Despite the title being the climate competitiveness strategy, I don't see that as the main thrust of what's in the document,” he told Means & Ways, adding that the most significant aspect was strengthening the industrial carbon pricing system.
If the goal is continued progress in cutting emissions, the basic design of the current industrial carbon pricing system is reasonable, but it does have notable weaknesses, he said. Over the past year, it hasn’t functioned as effectively as intended. “I see this thrust to improve that system as being really important and maybe being the main foundation of our emission reduction plan going forward.”
RBC Climate Action Institute managing editor Yadullah Hussain wrote that while it’s early days, the strategy “presents a fascinating trade—stronger industrial carbon pricing and clean electricity regulations for a likely end to the emissions cap and an extension of tax incentives for carbon capture.”
Hussain said Canada needs robust carbon markets to support clean growth investments, and the government plans to work with provinces to set a multi-decade industrial carbon price trajectory that targets net-zero by 2050. “It will give businesses confidence. The plan is to fix the benchmark and harmonize across the country in providing a common, strong price signal.”
During the G7 Energy and Environment Ministers' Meeting Oct. 30-31 in Toronto, RBC Senior Vice-President John Stackhouse said in a speech to delegates that “industrial carbon pricing can be an effective tool, especially if it’s designed to re-invest capital from resource projects to the innovation and technologies needed to continue to advance them.”
‘Smart’ policies needed
The Canadian Chamber of Commerce agreed that predictability and policy certainty is needed. Bryan Detchou, senior director of natural resources, environment and sustainability, said that the competitiveness strategy is an important initial step.
“Canada urgently needs smart, predictable policies that drive economic growth, help businesses reduce emissions, and strengthen our global competitiveness,” Detchou said in a press release. “Several elements of the strategy — including strengthened industrial carbon pricing, enhanced clean economy investment through tax credits, and additional support for critical minerals projects — can help advance this objective.”
Detchou praised the government’s commitment to legislative amendments that would remove certain aspects of the greenwashing provisions and its plan to move toward a framework under which the oil and gas emissions cap would no longer be required.
The Canadian Renewable Energy Association (CanREA) said it was encouraged by the policy direction of the strategy and that it represented “a commitment to keeping Canada a top-tier place to invest in renewable energy and energy storage.” President and CEO Vittoria Bellissimo said, “By doing so, the federal government is ensuring that companies and Canadians will have access to the low-cost and low-carbon power they need to grow the economy and prosper.”
Fernando Melo, CanREA senior director of public affairs and federal policy, said however that while the clean electricity investment tax credits will help build critical infrastructure, it fails to address barriers to Indigenous participation. “By failing to provide Indigenous companies and communities with an ITC rate that is equivalent to their non-Indigenous competitors and collaborators, the federal government has not meaningfully addressed a significant barrier to Indigenous equity ownership of renewable energy and energy storage projects,” Melo said.
When asked whether the urge to quickly move on building national major projects and focus on the adoption of AI, which requires massive data centres and has an environmental toll, is contradictory to growing Canada’s economy, Rivers said no.
“We can definitely grow our economy and shrink our emissions at the same time. I don’t think those two things have to be in opposition to one another,” he said, noting that in 2005, Canada’s emissions peaked and have since gone down while our economy has grown one and half times since then. “We have grown our economy substantially in the last generation, while decarbonizing our economy. So certainly we can do that.”
The government says it wants to catalyze $1 trillion in investment over the next five years, but it’s not clear how much of that will be for the green economy.
“We should be trying to develop a niche of green technology that can outcompete other technology to give us a leg up in the future global economy,” Rivers said, noting that China has been doing this for a long time and leading electric vehicles and solar power sales globally. “We've got to figure out what's next for us after oil and gas go away. That could be something like nuclear, or it could be something like a renewable or geothermal type of energy.”
It’s something that states were discussing and were divided on at COP30. As host, Brazil’s COP30 president André Corrêa do Lago called for unity following a draft deal that was presented Friday without mentioning the role of fossil fuels on climate change. As a result, 30 countries signed a letter refusing to adopt the deal because in its current form it “does not meet the minimum conditions required for a credible COP outcome.”
“We cannot support an outcome that does not include a roadmap for implementing a just, orderly, and equitable transition away from fossil fuels,” the letter said.
CBC reported that Canada did not sign the letter.
Rivers, who spoke to Means & Ways before the draft deal was released, said climate change is a collective problem that requires all countries and businesses to work together to address. He said the geopolitical environment currently has made it more difficult to work together, but Canada can lead by working with like-minded countries on decarbonization strategies that are focused on sectors where Canadians have expertise like carbon capture and storage.
McCarney agreed. “We are showing that we do have investments and technologies and sectors where Canada can be competitive in a low carbon world,” he said. “At the same time, it is important that the policy environment is supportive along the way, otherwise it makes it more difficult for businesses to lead.”
