TORONTO — In 2015, then-Bank of England governor Mark Carney delivered a “speech without a joke” at a black-tie gathering in the Lloyd’s of London underwriting hall — a warning, he later wrote, that drew “howls of outrage” from the fossil fuel industry at the time but had proved prescient.
Climate change, he said, was a crisis not only for the planet, but also for global financial stability. As nations greened their economies, fossil fuels risked becoming “literally unburnable,” leaving firms invested in carbon-intensive industries with worthless, “stranded” assets on their balance sheets. The time to act, he said, was “finite and shrinking.”
“We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors, imposing a cost on future generations that the current generation has no direct incentive to fix,” he said. “Once climate change becomes a defining issue for financial stability, it may already be too late,” he added — a paradox he called “the tragedy of the horizon.”
Now, Carney is Canada’s prime minister. And the former U.N. special envoy on climate action and finance is charting a new climate agenda for the country — one that, in a twist, is drawing standing ovations in the oil patch and criticism from environmentalists and members of his caucus. The shift has led to the resignations in recent weeks of a cabinet minister and members of the government’s Net-Zero Advisory Body.
“We were expecting different,” said Marc-André Viau, director of government relations for the environmental group Équiterre. “What we were not expecting is the great dismantling that we’re facing now since he took office. … It’s really disappointing.”
Much has changed since Carney delivered the 2015 speech.
Climate change has fallen in the list of top voter priorities here, polls show, despite deadly floods and heat waves and a run of record wildfire seasons fueled by hotter, drier conditions. A secessionist movement in the oil-rich province of Alberta, where officials have long complained that Ottawa throttles its energy industry, threatens national unity.
And Canada is facing what Carney has called the “crisis of our lifetimes”: fracturing ties with the United States. He plans to make Canada an “energy superpower” — it boasts the world’s fourth-largest proven oil reserves, after Venezuela, Saudi Arabia and Iran — to help cushion the blow of President Donald Trump’s economic aggression.
“There are multiple things that have changed,” said Kathryn Harrison, a political scientist at the University of British Columbia. “That makes it hard to say how much of the shift that we’re seeing is because it’s Mark Carney rather than [his predecessor and fellow Liberal] Justin Trudeau and how much is the moment we’re in.”
Carney, who as a central banker encouraged green investing, has defended his climate agenda.
“I’m the same me. I’m focused on the same issues,” he told Bloomberg’s “The Mishal Husain Show” podcast in October, adding, “Canadians care about the world, they care about climate action, they care about their fellow citizens. …
“What we need to do is to be as effective as possible in terms of addressing climate change while growing our economy.”
Trudeau, who stepped down in March after more than nine years as prime minister, also argued that boosting the economy, addressing climate change and repairing Canada’s relationship with Indigenous people go “hand in hand.” His approach drew criticism on all sides.
When Carney took over, he wasted little time in abandoning Trudeau’s climate policies.
In one of his first acts as prime minister, he signed a directive scrapping the consumer carbon tax, which he had once supported but now said had become “divisive.”
He also paused an electric vehicles mandate, another type of policy he backed in his 2021 book “Value(s): Building a Better World for All.” He canceled a plan to plant 2 billion trees by 2031 and pared back anti-greenwashing laws.
The list of “nation-building” projects his government wants to fast-track includes the expansion of a liquefied natural gas plant in Kitimat, British Columbia, that would be the world’s second-largest such facility.
Then last month, Carney and Alberta’s United Conservative Premier Danielle Smith signed a memorandum of understanding that exempts the province from several environmental laws and makes possible “one or more” new, privately financed oil pipelines to the West Coast from which crude would be shipped to Asia. In exchange, Alberta agreed to adopt a stricter carbon tax system for industrial emitters and contribute to a $12 billion carbon-capture and storage megaproject.
The nonbinding agreement would scrap or delay regulations to cut methane gas emissions, clean-electricity rules, and a planned cap on oil and gas emissions. If the pipeline is built, Ottawa will also consider amending a ban on oil tankers off British Columbia’s northern coast.
On the day Carney signed the memo, he was greeted by the Calgary Chamber of Commerce with a standing ovation.
Shortly after the pact was announced, Steven Guilbeault, a former Greenpeace activist who had served as Trudeau’s environment minister, resigned as culture minister. In his resignation letter, he acknowledged the “profound disruptions” wrought by the rupture in U.S.-Canada ties but said for him, “environmental issues must remain front and center.”
Carney, in a statement on X, warned that “a climate strategy based solely on regulations and prohibitions will not achieve our climate objectives not least because it will fail to generate the alignment of interests required for this historic undertaking.”
It’s unclear if his own policy will generate that alignment. Ottawa is constitutionally required to consult with Indigenous people when their traditional territories are affected by resource projects, and several First Nations in British Columbia oppose a new pipeline. Officials there also worry a pipeline could threaten the British Columbia coastline.
The pipeline, so far, is notional. No business has proposed one, and analysts question whether it would be a good economic bet. In “Value(s): Building a Better World for All” and public remarks, Carney has identified pipelines as assets that could become “stranded.”
“That’s the sort of thing Mark Carney used to talk about,” Harrison said, “but he doesn’t seem to anymore.”
For some analysts, the Alberta deal is a welcome reset in ties between the province and the federal government that will enable Canada to diversify its trade away from the U.S. in which both sides make concessions to make the goal of reducing emissions while supporting the energy sector possible. There is support in Canada for a new pipeline, polls show.
Others view it as skewed in favor of the energy sector and at odds with the advocacy of a prime minister who has often said “great powers will be green powers.” Environmentalists say his climate agenda makes it impossible for Canada to meet its 2030 emissions goal under the Paris climate accord. The country, among the world’s highest greenhouse gas emitters per capita, has a history of not meeting its emissions targets.
Society “won’t settle for worthy statements followed by futile gestures,” Carney said in a lecture series broadcast by the British Broadcasting Corp. in 2020. “It won’t settle for countries announcing plans in Paris … that they don’t even meet.”
David King, a former chief scientific adviser to the British government who attended the 2020 lecture, said he was “sure” a Prime Minister Carney would be “a welcome leader on the global climate crisis.”
“That has not happened,” King, founder of the Climate Crisis Advisory Group, wrote in an email. “Just the reverse. All his clear statements while running the Bank of England, telling global banks to stop investing in new fossil fuel recovery to avoid creating stranded assets, seem now to have evaporated. It is, so far, extremely disappointing.”
Rick Smith, president of the Canadian Climate Institute, said Carney is “extremely literate” on climate policy. He applauded Ottawa’s climate competitiveness strategy and its budget — but not the memorandum of understanding.
“Our concern is that it may well result in copycat requests from other provinces” looking for their own climate exemptions, he said.
Michael Bernstein, president and chief executive of Clean Prosperity, said he views Carney’s policies as “consistent with the kind of philosophy he’s had around climate in the past” about how markets can incentivize low-carbon solutions. Bernstein is also a member of the government’s Net-Zero Advisory Body.
Trudeau’s climate agenda wasn’t working, he said, but Carney’s could herald “a real breakthrough on decarbonization.”
That’s in part because the pact with Alberta would require strengthening the industrial carbon price, which environmental advocates say is one of the most effective tools for cutting emissions. Under the current system, the price of carbon credits relative to the headline carbon price is too low to encourage companies to cut emissions and invest in green technologies. The deal would aim to remedy this problem, though it’s vague on details.
“There’s reason to think that this grand bargain is different because it has a set of financial incentives that give both parties skin in the game and motivates them to stick with the deal over the long term,” Bernstein said.
Two of his colleagues on the net-zero body resigned last week, including the co-chair, citing the direction of the government’s climate policy and concerns the body was being ignored.
Climate advocate Catherine Abreu is one of them. She said she had observed Carney in international climate circles and offered critiques of his net-zero banking alliance project, a U.N.-backed initiative launched in 2021 to align global banks with efforts to achieve net-zero emissions by 2050. The alliance shut down this year.
Abreu said she had a sense that Carney’s approach to climate change was marred by “internal inconsistencies,” but she still hoped he “would be the person who could finally think about how to modernize the Canadian economy” away from fossil fuels.
“I think a lot of our disappointment stems from him just seeming to fall into the same behavior that we’ve seen government after government adopt that hasn’t worked so far,” she said.
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