Canada’s natural resources — including oil, gas, critical minerals, lumber, and aluminum — make up nearly 20% of our GDP and 58% of exports to the U.S. As these industries are essential to strengthening our national, economic and energy security, and asserting our sovereignty, it’s important government acknowledge the seriousness of our economic situation and not hurt our economy — unintentionally or not — through prescriptive environmental policy.

There is little value in Prime Minister Carney putting forward policies that the next Conservative government will remove. However, there is common ground that weaves through business and the Canadian Chamber is excited to help pave that path.

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The Economy and the Environment Need to Advance in Lockstep

Natural resources commodities can be carbon-intensive to retrieve, refine, and transport, contributing to national and global emissions. For the sake of the next generations, we need to work towards a future that values decarbonization and clean technology. At the same time, we cannot ignore the impact our environmental policies have and will continue to have on our economic stability, resilience and sovereignty. This issue of Policy Matters uncovers the flaws in Canada’s environmental process and policy.

Prior to the federal election, many in the resource industry pleaded with political decision makers in Ottawa to preserve the industrial carbon tax. So much investment had been made, and Canada’s resource sector was on the cusp of realizing a return on that investment. Plus, if we intend to build trade routes through Europe, exporters need these policies to set up a European business license.

So far, implementation of emissions reduction policy has fallen short. Government intervention has led to inefficiencies and economic risk rather than clarity or coherence, making it challenging for businesses to adhere to the regulations while still operating effectively and transparently.

Why? Because the right intentions do not automatically lead to the right outcomes. Ambitious emission reduction targets are good — but all stretch goals must have off-ramps. And not meeting a stretch goal shouldn’t be considered a failure, so long as it is paired with policies that are grounded in the four principles that the government itself laid out:

1. Regulations protect and advance the public interest and support good government.
2. The regulatory process is modern, open, and transparent.
3. Regulatory decision-making is evidence-based.
4. Regulations support a fair and competitive economy.

However, the government’s environmental policies fail to follow these guiding principles, and as a result lack realism, transparency and evidence and are doing harm to the economy and the businesses that make our economy function. Further, the four principles ought to be considered in the context of the change-up in the global trade order as well as our sovereignty and economic security.

Realism

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We must be realistic about the important role natural resources play in the Canadian economy and pragmatic about what we can reasonably do and when. That means looking at least a decade into the future to project the repercussions on GDP, jobs and the industry the regulations apply to. Since emissions do not respect national borders, Canada must not only work to reduce its own emissions but also recognize the unique role it can play in supporting global emissions reductions. As a responsible and reliable jurisdiction, Canada can help provide the world with the critical minerals, LNG, nuclear energy, oil, gas, and other resources needed to power economies.

Transparency

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Canadians have a fundamental right to clear, honest discourse around public policy. After all, the government exists to serve the people — and that responsibility includes ensuring citizens are fully informed and actively included in decisions that shape their future. Withholding facts, misrepresenting costs and ignoring consultation all undermine public trust, especially when the government’s narrative is distributed by the media as fact.

Evidence

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It’s tough to create sound policy when everyone is working with different numbers and can’t agree on basic facts. Yet, the insights of industry experts often go ignored and participation in consultations can feel futile. The government has also been known to use various cost-benefit analysis (CBA) methods to assess the impacts of their regulations; however, industry stakeholders have often contested the analytical approaches used, arguing that they may underestimate compliance costs or overstate projected benefits. Businesses and Canadians want genuine dialogue and problem-solving, not one-sided regulation — government should want that too.

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Examples

When environmental policy is developed without an economic lens or realism, transparency and evidence, the result resembles the following four examples:

The Emissions Cap

In November 2024, the government announced the proposed Oil and Gas Sector Greenhouse Gas Emissions Cap regulations that intended to “put a clear limit on greenhouse gas pollution from oil and gas production.” The cap was set at 35% below 2019 levels of emissions. Supposedly, the regulations put a cap on pollution, not production.

The reality: Growing international demand for energy requires that Canada produce more oil and gas, not less. These draft regulations, without adequately considering industry concerns or realities, will make Canada uncompetitive in the fight for global capital that actually encourages investment in decarbonization technologies like Carbon Capture, Utilization, and Storage projects (CCUS).

Oil production can’t be turned on and off. When production is wound down, the reservoir is permanently damaged, forever reducing our supply.

Then in March 2025, the Parliamentary Budget Officer (PBO) confirmed what we and industry have been warning all along: the Oil and Gas Emissions Cap will directly curb production, cost jobs and ultimately make Canada and its citizens economically worse off. The government reported that, “Over the time frame of this analysis (2025 to 2032) …. The proposed Regulations are also estimated to have some incremental impacts on the economy, valued at $3.3 billion, and some administrative costs to industry and government estimated to be $219 million.” The PBO impact assessment on the other hand found that the required reduction in upstream oil and gas sector production levels will reduce nominal GDP by $20.5 billion.

Clean Electricity Regulations

Finalized in December 2024, the Clean Electricity Regulations “will set limits on carbon dioxide pollution from almost all electricity generation units that use fossil fuels.”

The reality: Canada’s electricity grid is increasingly being relied upon to deliver clean, reliable and affordable electricity for many economic sectors, driving job creation and growth. To meet demand, the grid will need to grow as much as three times by 2050! It is critical that federal policy supports this expansion.

Because of insufficient industry consultation, the proposed Clean Electricity Regulations will be counterproductive to this objective in many parts of Canada and leave a system that is expensive and unreliable compared to peer jurisdictions, hindering economic growth and investments into Canada.

The ZEV Mandate

Another example of flawed policy is the zero-emission vehicle sales targets set by the government: “To help decarbonize the transportation sector, Canada committed to achieving 100% zero-emission vehicle sales by 2035 for all new light-duty vehicles, including interim targets of at least 20% by 2026 and at least 60% by 2030.”

The reality: Introducing a ZEV mandate while simultaneously announcing the end of the federal Incentives for Zero-Emission Vehicles program — and as some provinces suspend or pause their own programs — sends mixed signals and reflects incoherent policymaking. Further, without adequate charging infrastructure in municipalities and across the country — made possible by a Canadian electricity grid — drivers won’t be able to effectively and reliably charge their vehicles. As well, without a reciprocal increase in critical minerals mining and supply chains and automotive production the timeline for even 20% sales is unrealistic.

Greenwashing Amendment to Bill C-59

Bill C-59, which took effect on June 20, 2024, introduced major changes to the Competition Act —including new provisions targeting misleading environmental claims aiming to improve greenwashing regulations. Notably, the amendments shift the burden of proof to businesses, requiring them to substantiate environmental claims using “internationally recognized methodologies”. This marks a significant departure from previous standards.

The amendment applies broadly — not just to consumer advertising, but to any environmental claims made to investors, regulators, partners, or the public. It affects private companies, industry associations, and advocates across nearly every sector of the Canadian economy.

The reality: Not only was the late-stage amendment unnecessary and duplicative of reporting frameworks already in place by the Canadian government, but it is also at odds with the purpose of the Competition Act itself. While tackling misleading environmental claims is important, the new provisions have created a more complex and uncertain regulatory environment. They have hindered open communication, risked stifling innovation, and discouraged industry participation in climate action. Instead of supporting Canada’s net-zero goals, the amendment has begun to silence good-faith efforts by businesses to contribute to environmental progress.

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Recommendations

Current environmental regulations like the ones above risk Canada losing its strategic leverage in global energy and emissions efforts as well as suffering from economic stagnation and decline, resulting in a lower standard of living for every Canadian. Let’s not let that happen.

The question is not about our ambition or our intentions, it is about balancing the levers so that Canada’s quest to achieve its emission reduction targets is achievable and responsible. To advance the economy and the environment in lockstep, we recommend that government:

• Treat industry as a genuine stakeholder.
• Enable constructive public and industry consultation.
• Apply an economic lens to all environmental regulations.
• Work with the business community to provide a predictable business environment and a competitive environment for investment.

Visit the Energy Security Council and the Decarbonization and Clean Technology Council to learn more about how we’re working with members on this important topic.